As filed with the Securities and Exchange Commission on
January 23, 2008.
Registration
No. 333-
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form S-3
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF
1933
HANSEN MEDICAL, INC.
(Exact Name of Registrant as
Specified in its Charter)
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Delaware
(State or Other Jurisdiction
of
Incorporation or Organization)
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14-1850535
(I.R.S. Employer
Identification Number)
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380 North Bernardo Avenue
Mountain View, CA 94043
(650) 404-5800
(Address, including zip code,
and telephone number, including
area code, of registrants
principal executive offices)
Frederic H. Moll, M.D.
Founder and Chief Executive Officer
Gary C. Restani
President and Chief Operating Officer
380 North Bernardo Avenue
Mountain View, CA 94043
(650) 404-5800
(Name, address, including zip
code, and telephone number, including area code, of agent for
service)
Copies to:
David T. Young
Ivan A. Gaviria
Gunderson Dettmer Stough
Villeneuve Franklin & Hachigian, LLP
155 Constitution Drive
Menlo Park, CA 94025
(650) 321-2400
Approximate date of commencement of proposed sale to the
public:
From time to time following the effective
date of this registration statement.
If the only securities being registered on this Form are to be
offered pursuant to dividend or interest reinvestment plans,
please check the following
box:
o
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, other than
securities offered only in connection with dividend or interest
reinvestment plans, check the following
box:
þ
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same
offering:
o
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering:
o
If this Form is a registration statement pursuant to General
Instruction I.D. or a post-effective amendment thereto that
shall become effective upon filing with the Commission pursuant
to Rule 462(e) under the Securities Act, check the
following
box:
o
If this Form is a post-effective amendment to a registration
statement filed pursuant to General Instruction I.D. filed to
register additional securities or additional classes of
securities pursuant to Rule 413(b) under the Securities
Act, check the following
box:
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CALCULATION OF REGISTRATION FEE
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Proposed Maximum
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Title of Each Class of
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Amount to be
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Offering Price per
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Proposed Maximum
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Amount of
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Securities to be Registered
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Registered(1)
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Unit(2)
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Aggregate Offering Price
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Registration Fee
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Common Stock, $0.0001 par value
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140,048
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$20.77
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$2,908,796.96
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$114.32
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(1)
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All shares of common stock are to
be offered and sold by the selling stockholders.
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(2)
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Estimated solely for the purpose of
calculating the registration fee pursuant to Rule 457(c)
under the Securities Act of 1933, as amended. The maximum
offering price per unit and the maximum aggregate offering price
is based upon the average of the high and low prices of the
Registrants shares of common stock reported on the NASDAQ
Global Market on January 18, 2008.
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The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act or until this Registration Statement shall
become effective on such date as the Commission, acting pursuant
to said Section 8(a), may determine.
The
information in this preliminary prospectus is not complete and
may be changed. The securities may not be sold until the
registration statement filed with the Securities and Exchange
Commission is effective. This preliminary prospectus is not an
offer to sell nor does it seek an offer to buy these securities
in any jurisdiction where the offer or sale is not permitted.
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SUBJECT TO COMPLETION. DATED
JANUARY 23, 2008
140,048 Shares
Common Stock
Hansen Medical, Inc. is registering 140,048 shares of
common stock for the account of certain of our stockholders
listed beginning on page 27. See the section titled
Selling Stockholders in this prospectus. We issued
these shares in connection with our acquisition of AorTx, Inc.
on November 15, 2007. We are not selling any shares of
common stock under this prospectus and will not receive any of
the proceeds from the sale of shares of our common stock by the
selling stockholders pursuant to this prospectus.
Our common stock is listed on the NASDAQ Global Market under the
symbol HNSN. The last reported sale price of our
common stock on January 22, 2008 was $20.10 per share.
Investing in our common stock involves risks. See Risk
Factors beginning on page 3.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
Prospectus dated January ,
2008
TABLE OF
CONTENTS
You should rely only on the information contained or
incorporated by reference in this prospectus. We have not, and
the selling stockholders have not, authorized anyone to provide
you with information different from or in addition to that
contained or incorporated by reference in this prospectus. If
anyone provides you with different or inconsistent information,
you should not rely on it. Offers to sell, and solicitations of
offers to buy, shares of our common stock are being made only in
jurisdictions where offers and sales are permitted. The
information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery
of this prospectus or of any sale of the common stock. Our
business, financial conditions, results of operations and
prospects may have changed since that date.
We have applied for trademark registration of and/ or claim
trademark rights in the marks, Hansen Medical,
Sensei, Artisan,
Intellisense, Elite, Hansen
Artisan, Hansen Elite, as well as in the
Hansen Medical heart design logo, whether standing
alone or in connection with the words Hansen
Medical. All other trademarks, trade names and service
marks appearing in this prospectus are the property of their
respective owners.
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PROSPECTUS
SUMMARY
The following summary is qualified in its entirety by, and
should be read together with, the more detailed information
contained elsewhere in this prospectus and the documents
incorporated herein by reference. You should read the entire
prospectus carefully, especially the risks of investing in our
common stock discussed under Risk Factors before you
to decide to invest in our common stock.
Overview
We develop, manufacture and sell a new generation of medical
robotics designed for accurate positioning, manipulation and
stable control of catheters and catheter-based technologies.
While earlier generations of medical robotics were designed
primarily for manipulating rigid surgical instruments, our
Sensei
tm
Robotic Catheter System, or Sensei system, is designed to allow
physicians to instinctively navigate flexible catheters with
greater stability and control in interventional procedures.
Instinctive navigation refers to the ability of our Sensei
system to enable physicians to direct the movements of our
Artisan
tm
Control Catheter, or Artisan catheter, to a desired anatomical
location in a way that is natural and inherently simple. The
control console of our Sensei system directly translates the
motions of the physicians hands into corresponding motions
of the catheters and catheter-based technologies inside the
body. We believe that robotic control of these flexible
instruments has the potential to revolutionize a broad range of
interventional procedures in the same way that robotic control
of surgical devices has revolutionized a growing number of
surgical procedures over the past decade.
We believe our Sensei system and its corresponding disposable
Artisan catheter will enable physicians to perform procedures
that historically have been too difficult or time-consuming to
accomplish routinely with existing catheters and catheter-based
technologies, or that we believe could be accomplished only by
the most skilled physicians. We believe that our Sensei system
will benefit patients, physicians, hospitals and third-party
payors by improving clinical outcomes, permitting more complex
procedures to be performed interventionally and reducing
treatment times.
Corporate
Information
We were incorporated in Delaware in September 2002 under the
name AutoCath, Inc. and changed our name to Hansen Medical, Inc.
in March 2003. The address of our principal executive office is
380 North Bernardo Avenue, Mountain View, California 94043, and
our telephone number is
(650) 404-5800.
Our website address is www.hansenmedical.com. We do not
incorporate the information on our website into this prospectus,
and you should not consider it part of this prospectus. As used
in this prospectus, references to we,
our, us and Hansen refer to
Hansen Medical, Inc. unless the context requires otherwise.
Description
of the Private Placement
On November 15, 2007, we consummated the acquisition of
AorTx, Inc. (AorTx). At the closing of the acquisition we issued
140,048 shares of common stock and paid approximately
$4.5 million in cash to former AorTx stockholders. Also at
the closing, we paid or cancelled approximately
$1.0 million of AorTx liabilities. The Agreement and Plan
of Merger and Reorganization (Merger Agreement) governing the
acquisition of AorTx also provides for possible milestone
payments of up to $30.0 million, payable half in cash and
half in shares of our common stock, upon achievement of
regulatory clearances and revenue and partnering milestones. In
accordance with a registration rights agreement we entered into
in connection with the acquisition, we are registering
140,048 shares of our common stock issued in the
acquisition for resale by the former AorTx stockholders.
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Summary
of the Offering
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Common stock offered by the selling stockholders
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Up to 140,048 shares
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Offering Price
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Our selling stockholders may sell the shares of common stock
offered hereby from time to time at prevailing market prices or
in privately negotiated transactions.
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Use of proceeds
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We will not receive any proceeds from the sale of the shares of
our common stock by the selling stockholders pursuant to this
prospectus.
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NASDAQ Global Market symbol
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HNSN
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RISK
FACTORS
An investment in our common stock involves a high degree of
risk. You should carefully consider the following risks, as well
as all of the other information contained in this prospectus,
incorporated by reference into this prospectus and any
applicable prospectus supplement, including our financial
statements and related notes, before investing in our common
stock. If any of the following possible events actually occur,
our business, business prospects, cash flow, results of
operations or financial condition could be harmed. In this case,
the trading price of our common stock could decline, and you
might lose all or part of your investment in our common stock.
Additional risks and uncertainties not presently known to us or
that we currently deem immaterial may also impair our
operations.
Risks
Related to Our Business
We are
a company with a limited history of operations, which makes our
future operating results difficult to predict.
We are a medical device company with a limited operating history
and no significant revenues to date. Prior to the second quarter
of 2007, we were a development stage company. We have been
engaged in research and product development since our inception
in late 2002. Our Sensei Robotic Catheter System, or Sensei
system, and our corresponding disposable Artisan control
catheters, or Artisan catheters, have only recently received
U.S. Food and Drug Administration, or FDA, clearance for
commercialization to facilitate manipulation, positioning and
control of certain mapping catheters during electrophysiology
procedures. We have also only recently received the CE Mark in
Europe for our Sensei system and Artisan catheters. The future
success of our business will depend on our ability to generate
and increase product sales, successfully introduce new products,
establish our sales force and distribution network, manufacture
and assemble our products in sufficient quantities and in
accordance with applicable regulatory requirements and control
costs, all of which we may be unable to do. We have a limited
history of operations upon which you can evaluate our business
and our operating expenses are increasing. Our lack of a
significant operating history also limits your ability to make a
comparative evaluation of us, our products and our prospects. If
we are unable to successfully operate our business, our business
and financial condition will be harmed.
We
have limited sales, marketing and distribution experience and
capabilities, which could impair our ability to achieve
profitability.
We have recently received clearance to market, sell and
distribute our products in the United States and Europe. We have
no prior experience as a company in undertaking these efforts.
In the United States, we market our products through a direct
sales force of regional sales employees, supported by clinical
account managers who provide training, clinical support and
other services to our customers. Developing a direct sales force
is expensive and time-consuming and could delay the success of
any product launch. Additionally, any direct sales force that we
develop will be competing against the experienced and
well-funded sales organizations of our competitors. Our revenues
will depend on our ability to establish an effective sales force
in a timely manner. We face significant challenges and risks in
establishing a direct sales force and marketing our products,
including, among others:
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our ability to recruit, train and retain adequate numbers of
qualified sales and marketing personnel;
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the ability of sales personnel to obtain access to or persuade
adequate numbers of hospitals to purchase our products or
physicians to use our products;
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costs associated with hiring, maintaining and expanding an
independent sales and marketing organization; and
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government scrutiny and labeling restrictions with respect to
promotional activities in the healthcare industry.
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Outside the United States, primarily in the European Union, or
EU, we are establishing a combination of a direct sales force
and distributors to market, sell and support our products. If we
fail to select appropriate
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distributors or effectively use our distributors or sales
personnel and coordinate our efforts for distribution of our
products in the EU or if their and our sales and marketing
strategies are not effective in generating sales of our
products, our revenues would be adversely affected and we may
never become profitable.
We
have limited experience in manufacturing and assembling our
products and may encounter problems at our manufacturing
facilities or otherwise experience manufacturing delays that
could result in lost revenue.
We do not have significant experience in manufacturing,
assembling or testing our products on a commercial scale. In
addition, for our Sensei system, we subcontract the
manufacturing of major components and complete the final
assembly and testing of those components in-house. In order to
produce our Sensei system and disposable Artisan catheters in
quantities sufficient to meet anticipated market demand, we will
need to increase our manufacturing capacity significantly over
the current level. We face significant technical challenges to
increasing manufacturing capacity, including equipment design
and automation, material procurement, low or variable production
yields on Artisan catheters, space constraints and quality
control and assurance. Developing commercial scale manufacturing
facilities will require the investment of substantial funds, the
hiring and retention of additional management and technical
personnel who have the appropriate manufacturing and compliance
experience and the relocation to a larger facility and the
resulting costs will have a significant impact on our gross
margins and may result in significant fluctuations of gross
margins from quarter to quarter. We may not successfully
complete any required increase in manufacturing capacity on a
timely basis or at all. As a result, we may be unable to meet
the expected demand for our Sensei system or Artisan catheters,
maintain control over our expenses or otherwise successfully
increase our manufacturing capabilities. If we are unable to
satisfy demand for our Sensei system or Artisan catheters, our
ability to generate revenue could be impaired and hospitals may
instead purchase, or physicians may use, our competitors
products. Since our Sensei system requires the use of disposable
Artisan catheters, our failure to meet demand for Artisan
catheters from hospitals that have purchased our Sensei system
could adversely affect the market acceptance of our products and
damage our commercial reputation.
In addition, all of our operations are conducted at our
facilities leased in Mountain View, California. We could
encounter problems at these facilities, which could delay or
prevent us from manufacturing, assembling or testing our
products or maintaining our manufacturing capabilities or
otherwise conducting operations. Our current Mountain View
facility leases are scheduled to expire in June 2008. In July
2007, we entered into a lease agreement for approximately
63,000 square feet of space at a separate facility in
Mountain View, California. The term of this new lease is until
approximately November 30, 2014, depending on the initial
occupancy date, but we have an option to extend the new lease
for an additional five years after its initial term. Delays in
preparing our new facility for our needs, moving into our new
facility or the execution of the move could disrupt our assembly
and testing activities and divert the attention of our
management and other key personnel from our business operations.
Our
reliance on third-party manufacturers and on suppliers, and in
one case, a single-source supplier, could harm our ability to
meet demand for our products in a timely manner or within
budget, and could cause harm to our business and financial
condition.
We depend on third-party manufacturers to produce most of the
components of our Sensei system and other products, and have not
entered into formal agreements with several of these third
parties. We also depend on various third-party suppliers for
various components we use in our Sensei systems and for our
Artisan catheters and sheaths. For example, we obtain the motors
for our Sensei system from a single supplier, Maxon Motor AG,
from whom we purchase on a purchase order basis, and we
generally do not maintain large volumes of inventory. Force
Dimension Sàrl, a single-source supplier, manufactures
customized motion controllers that are also part of our Sensei
system. Additionally, in October 2007, we entered into a
purchase agreement with Plexus Services Corp., or Plexus, under
which Plexus will manufacture certain components for us in
quantities determined by a non-binding forecast and by purchase
orders.
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Our reliance on third parties involves a number of risks,
including, among other things, the risk that:
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suppliers may fail to comply with regulatory requirements or
make errors in manufacturing components that could negatively
affect the efficacy or safety of our products or cause delays in
or prevent shipments of our products;
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we may not be able to respond to unanticipated changes and
increases in customer orders;
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we may be subject to price fluctuations due to a lack of
long-term supply arrangements for key components with our
suppliers;
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we may lose access to critical services and components,
resulting in an interruption in the manufacture, assembly and
shipment of our systems and other products;
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our suppliers manufacture products for a range of customers, and
fluctuations in demand for products these suppliers manufacture
for others may affect their ability to deliver components to us
in a timely manner;
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our suppliers may wish to discontinue supplying goods or
services to us beyond the development phase for risk management
reasons, such as intellectual property reasons or medical
products liability reasons;
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we may not be able to find new or alternative components for our
use or reconfigure our system and manufacturing processes in a
timely manner if the components necessary for our system become
unavailable; and
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our suppliers may encounter financial hardships unrelated to our
demand for components, which could inhibit their ability to
fulfill our orders and meet our requirements.
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If any of these risks materialize, it could significantly
increase our costs and impact our ability to meet demand for our
products.
In addition, if these manufacturers or suppliers stop providing
us with the components or services necessary for the operation
of our business, we may not be able to identify alternative
sources in a timely fashion. Any transition to alternative
manufacturers or suppliers would likely result in operational
problems and increased expenses and could delay the shipment of,
or limit our ability to provide, our products. We cannot assure
you that we would be able to enter into agreements with new
manufacturers or suppliers on commercially reasonable terms or
at all. Additionally, obtaining components from a new supplier
may require qualification of a new supplier in the form of a new
or supplemental filing with applicable regulatory authorities
and clearance or approval of the filing before we could resume
product sales. Any disruptions in product supply may harm our
ability to generate revenues, lead to customer dissatisfaction,
damage our reputation and result in additional costs or
cancellation of orders by our customers. We currently purchase a
number of the components for our Sensei system in foreign
jurisdictions. Any event causing a disruption of imports,
including the imposition of import restrictions, could adversely
affect our business and our financial condition.
If we
fail to maintain necessary FDA clearances and CE marks for our
medical device products, or if future clearances are delayed, we
will be unable to commercially distribute and market our
products.
The process of seeking regulatory clearance or approval to
market a medical device is expensive and time-consuming and
clearance or approval is never guaranteed and, even if granted,
clearance or approval may be suspended or revoked. In May 2007,
we received FDA clearance in the United States to commercialize
our Sensei system and Artisan catheters only to facilitate
manipulation, positioning and control, for collecting
electrophysiological data within the heart atria with
electro-anatomic mapping and recording systems. Because the FDA
specifically identified a reasonable likelihood that our
products could be used by physicians for uses not encompassed by
the scope of the present FDA clearance and that such uses may
cause harm, we are required to label our products to state that
their safety and effectiveness for use with cardiac ablation
catheters in the treatment of cardiac arrhythmias including
atrial fibrillation have not been established. There can be no
assurance that we will be able to successfully market and sell
our products in the United States based on this
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label. We will be required to seek a separate 510(k) clearance
or premarket approval, or PMA, to market our Sensei system for
uses other than those currently cleared by the FDA. We cannot
assure you that the FDA would not impose a more burdensome level
of premarket review on other intended uses or modifications to
approved products. We may seek future clearances or approvals of
our Sensei system for other indications, including atrial
fibrillation or other cardiac ablation procedures but there can
be no assurance as to the timing or potential for success of
those efforts if undertaken. We received the CE Mark in Europe
for our Sensei system in September 2006 and for our Artisan
catheters in May 2007.
Seeking to obtain future clearances or approvals from the FDA
and other regulatory authorities could result in unexpected and
significant costs for us and consume managements time and
other resources. The FDA or other regulatory authorities could
ask us to supplement our submissions, collect non-clinical data,
conduct clinical trials or engage in other time-consuming
actions, or it could simply deny our applications. In addition,
clearance or approval could be revoked or other restrictions
imposed if post-market data demonstrates safety issues or lack
of effectiveness. We cannot predict with certainty how, or when,
the FDA or other regulatory authorities will act. If we are
unable to maintain our regulatory clearances and obtain future
clearance, our financial condition and cash flow may be
adversely affected, and our ability to grow domestically and
internationally may be limited.
If
physicians and hospitals are not convinced that our products are
a safe and effective alternative to existing technologies used
in atrial fibrillation and other cardiac ablation procedures, we
may not be commercially successful.
We believe that physicians will not use, and hospitals will not
purchase, our products unless they determine that our Sensei
system provides a safe and effective alternative to existing
treatments. Since we have received FDA clearance to market our
Sensei system and disposable Artisan catheters only for guiding
catheters to map the heart anatomy, we will not be able to label
or promote these products, or train physicians, for use in
guiding catheters for cardiac ablation procedures. Currently,
there is only limited clinical data on our Sensei system with
which to assess its safety and efficacy in any procedure,
including atrial fibrillation and other cardiac ablation
procedures. If longer-term or more extensive clinical studies
performed by us or others or clinical experience indicate that
procedures with our Sensei system are less effective or less
safe than our current data suggest, physicians may choose not to
use our Sensei system. Reluctance by physicians to use our
Sensei system would harm sales. Further, unsatisfactory patient
outcomes or patient injury could cause negative publicity for
our products, particularly in the early phases of product
introduction. In addition, physicians may be slow to adopt our
products if they perceive liability risks arising from the use
of these new products. It is also possible that as our products
become more widely used, latent defects could be identified,
creating negative publicity and liability problems for us,
thereby adversely affecting demand for our products. If
physicians do not use our products in cardiac ablation
procedures, we likely will not become profitable and our
business will be harmed.
In addition, our research and development efforts and our
marketing strategy depend heavily on obtaining support and
collaboration from highly regarded physicians at leading
hospitals. If we are unable to gain or maintain such support and
collaboration, our ability to market our Sensei system and, as a
result, our business and results of operations, could be harmed.
We
expect to derive substantially all of our revenues from sales of
our Sensei system and Artisan catheters. If hospitals do not
purchase our system, we may not generate sufficient revenues to
continue our operations.
Our initial commercial offering consists primarily of two
products, our Sensei system and our corresponding disposable
Artisan catheters. In order for us to achieve sales, hospitals
must purchase our Sensei system and Artisan catheters. Our
Sensei system is a novel device, and hospitals are traditionally
slow to adopt new products and treatment practices. In addition,
our Sensei system is an expensive capital equipment purchase,
representing a significant portion of an electrophysiology
laboratorys annual budget. In addition, because it is only
now being commercially introduced, our Sensei system has limited
product and brand recognition. Furthermore, we do not believe
hospitals will purchase our products unless the physicians at
those hospitals
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express a strong desire to use our products and we cannot
predict whether or not they will do so. If hospitals do not
widely adopt our Sensei system, or if they decide that it is too
expensive, we may never achieve significant revenue or become
profitable.
Such a failure to adequately sell our Sensei system would have a
materially detrimental impact on our business, results of
operations and financial condition.
We
have incurred substantial losses since inception and anticipate
that we will incur continued losses for the foreseeable
future.
We have experienced substantial net losses since our inception
in late 2002. At September 30, 2007, we had an accumulated
deficit of $85.5 million. We have funded our operations to
date principally from the sale of our securities and through
issuance of indebtedness. We expect to incur substantial
additional net losses for at least the next several years as we
generally scale up our manufacturing, marketing and sales
operations to commercialize our products and seek additional
regulatory clearances. We expect our general and administrative
expenses to increase as we continue to add the infrastructure
necessary to support operating as a public company, develop our
intellectual property portfolio and incur other intellectual
property related legal expenses, including litigation expenses.
Because we may not be successful in significantly increasing
sales of our products, the extent of our future losses and the
timing of profitability are highly uncertain, and we may never
achieve profitable operations. If we require more time than we
expect to generate significant revenue and achieve
profitability, we may not be able to continue our operations.
Even if we achieve significant revenues, we may never become
profitable or we may choose to pursue a strategy of increasing
market penetration and presence at the expense of profitability.
We may
incur significant liability if it is determined that we are
promoting off-label use of our products in violation of federal
and state regulations in the United States or
elsewhere.
We have received FDA clearance of our Sensei system and Artisan
catheters only to facilitate manipulation, positioning and
control for collecting electrophysiological data within the
heart atria with electro-anatomic mapping and recording systems,
which is a critical step in the identification of the heart
tissue generating abnormal heart rhythms that may require
ablation or other treatment. Because the FDA specifically
determined that it believes there is a reasonable likelihood
that physicians may choose to use our products off-label, and
that harm may result, we are required to label our products to
state that their safety and effectiveness for use with cardiac
ablation catheters in the treatment of cardiac arrhythmias
including atrial fibrillation have not been established. We may
subsequently seek regulatory clearance for use of our Sensei
system for a variety of other interventional procedures in
electrophysiology, including atrial fibrillation and other
cardiovascular procedures. Our business and future growth will
depend primarily on the use of our Sensei system in the
treatment of atrial fibrillation and other cardiovascular
procedures, for which we do not yet, and may never, have FDA
clearance or approval.
Unless and until we receive regulatory clearance or approval for
use of our Sensei system in these procedures, uses in these
procedures will be considered off-label uses of our Sensei
system. Under the Federal Food, Drug, and Cosmetic Act and other
similar laws, we are prohibited from labeling or promoting our
products, or training physicians, for such off-label uses. This
prohibition means that the FDA could deem it unlawful for us to
make claims about the safety or effectiveness of our Sensei
system in cardiac ablation procedures and that we may not
proactively discuss or provide information or training on the
use of our product in cardiac ablation procedures or use with
unapproved catheters, with very limited exceptions. We presently
believe that to date, all of the procedures in which our
products have been used in the U.S. have included off-label
uses such as cardiac ablation, for which our Sensei system and
Artisan Catheters have not been cleared by the FDA.
The FDA and other regulatory agencies actively enforce
regulations prohibiting promotion of off-label uses and the
promotion of products for which marketing clearance has not been
obtained. A company that is found to have improperly promoted
off-label uses may be subject to significant liability,
including civil and
7
administrative remedies under the Federal False Claims Act and
various other federal and state laws, as well as criminal
sanctions.
Due to these legal constraints, our sales and marketing efforts
focus on the general technical attributes and benefits of our
Sensei system and the use of this device to guide catheters for
heart mapping and engaging with customer hospitals and
physicians on off-label uses of our technology only as permitted
by the FDA. Although we believe that our communications and
activities regarding our Sensei system will be in compliance
with the relevant regulatory requirements, the application of
these requirements can be varying and are evolving, creating a
material risk that the FDA or another regulatory authority could
disagree with our position. If regulatory authorities believe we
are not in compliance with such requirements, we could be
subject to significant liability for promoting our Sensei system
for off-label uses, including civil and administrative remedies,
injunctions against sales for off-label uses, and criminal
sanctions. Enforcement measures taken against us could harm our
business or force us to cease operations.
The
training required for physicians to use our Sensei system could
reduce the market acceptance of our system and reduce our
revenue.
Physicians must be trained to use our Sensei system
proficiently. It is critical to the success of our sales efforts
to ensure that there are a sufficient number of physicians
familiar with, trained on and proficient in the use of our
Sensei system. Convincing physicians to dedicate the time and
energy necessary for adequate training in the use of our system
is challenging, and we cannot assure you that we will be
successful in these efforts.
In addition, we will only train physicians to insert, navigate
and remove catheters using our Sensei system. The physicians
must obtain training elsewhere to learn how to map or ablate
cardiac tissue to treat atrial fibrillation. This training may
be provided by hospitals and universities and through
independent peer-to-peer training among doctors. We cannot
assure you, however, that a sufficient number of physicians will
become aware of training programs or that physicians will
dedicate the time, funds and energy necessary for adequate
training in the use of our system. Additionally, we will have no
control over the quality of these training programs. If
physicians are not properly trained, they may misuse or
ineffectively use our products. This may result in
unsatisfactory outcomes, patient injury, negative publicity or
lawsuits against us, any of which could negatively affect our
reputation and sales of our products. Furthermore, our inability
to educate and train physicians to use our Sensei system for
atrial fibrillation or other cardiac ablation procedures may
lead to inadequate demand for our products and have a material
adverse impact on our business, financial condition and results
of operation.
Because
our markets are highly competitive, customers may choose to
purchase our competitors products, which would result in
reduced revenue and harm our financial results.
Our Sensei system is a new technology and must compete with
established manual interventional methods and methods of our
competitors, such as Stereotaxis, Inc., in remote navigation.
Conventional manual methods are widely accepted in the medical
community, have a long history of use and do not require the
purchase of additional, expensive capital equipment. The
Stereotaxis
Niobe
®
system, which has been in the market for approximately four
years, has been adopted by a number of leading clinicians. In
addition, many of the medical conditions that can be treated
using our products can also be treated with existing drugs or
other medical devices and procedures. Many of these alternative
treatments are widely accepted in the medical community and have
a long history of use.
We also face competition from companies that are developing
drugs or other medical devices or procedures to treat the
conditions for which our products are intended. The medical
device and pharmaceutical industries make significant
investments in research and development and innovation is rapid
and continuous. If new products or technologies emerge that
provide the same or superior benefits as our products at equal
or lesser cost, they could render our products obsolete or
unmarketable. We cannot be certain that physicians will use our
products to replace or supplement established treatments or that
our products will be competitive with current or future products
and technologies.
8
Most of our competitors enjoy several competitive advantages
over us, including:
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significantly greater name recognition;
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longer operating histories;
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established relations with healthcare professionals, customers
and third-party payors;
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established distribution networks;
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additional lines of products, and the ability to offer rebates
or bundle products to offer higher discounts or incentives to
gain a competitive advantage;
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greater experience in conducting research and development,
manufacturing, clinical trials, obtaining regulatory clearance
for products and marketing approved products; and
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greater financial and human resources for product development,
sales and marketing, and patent litigation.
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In addition, as the markets for medical devices develop,
additional competitors could enter the market. As a result, we
cannot assure you that we will be able to compete successfully
against existing or new competitors. Our revenues would be
reduced or eliminated if our competitors develop and market
products that are more effective and less expensive than our
products.
We
will likely experience extended and variable sales cycles, which
could cause significant variability in our results of operations
for any given quarter.
Our Sensei system will likely have a lengthy sales cycle because
it involves a relatively expensive capital equipment purchase,
which will generally require the approval of senior management
at hospitals, inclusion in the hospitals electrophysiology
laboratory budget process for capital expenditures and, in some
instances, a certificate of need from the state or other
regulatory clearance. We continue to estimate that this sales
cycle may take between 12 and 18 months. These factors may
contribute to substantial fluctuations in our quarterly
operating results, particularly in the near term and during any
other periods in which our sales volume is relatively low. As a
result, in future quarters our operating results could fall
below the expectations of securities analysts or investors, in
which event our stock price would likely decrease. These
fluctuations also mean that you will not be able to rely upon
our operating results in any particular period as an indication
of future performance. In addition, the introduction of new
products could adversely impact our sales cycle, as customers
take additional time to assess the benefits and investments on
capital products.
The
use of our products could result in product liability claims
that could be expensive, divert managements attention and
harm our reputation and business.
Our business exposes us to significant risks of product
liability claims that are inherent in the testing, manufacturing
and marketing of medical devices. Moreover, the FDA has
expressed concerns regarding the safety and efficacy of our
Sensei system for ablation and other therapeutic indications,
including for the treatment of atrial fibrillation and has
specifically instructed that our products be labeled to inform
our customers that the safety and effectiveness of our
technology for use with cardiac ablation catheters in the
treatment of cardiac arrhythmias, including for atrial
fibrillation, have not been established. We presently believe
that to date, all of the procedures in which our products have
been used in the U.S. have included off-label uses such as
cardiac ablation, for which our Sensei system and Artisan
catheters have not been cleared by the FDA and which therefore
could increase the risk of product liability claims. The medical
device industry has historically been subject to extensive
litigation over product liability claims. We may be subject to
claims by consumers, healthcare providers, third-party payors or
others selling our products if the use of our products were to
cause, or merely appear to cause, injury or death. Any weakness
in training and services associated with our products may also
result in product liability lawsuits. Although we maintain
clinical trial liability and product liability insurance, the
coverage is subject to deductibles and limitations, and may not
be adequate to cover future claims. Additionally, we may be
unable to maintain our existing product liability
9
insurance in the future at satisfactory rates or adequate
amounts. A product liability claim, regardless of its merit or
eventual outcome could result in:
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decreased demand for our products;
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injury to our reputation;
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diversion of managements attention;
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withdrawal of clinical trial participants;
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significant costs of related litigation;
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payment of substantial monetary awards to patients;
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product recalls or market withdrawals;
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loss of revenue; and
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the inability to commercialize our products under development.
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We may
be unable to complete the development and commercialization of
our existing and anticipated products without additional
funding.
Our operations have consumed substantial amounts of cash since
inception. We expect to continue to spend substantial amounts on
research and development. We expect to spend significant
additional amounts on commercializing our products, including
development of a direct sales force and expansion of
manufacturing capacity. In 2006, our net cash used in operating
activities was $22.0 million. For the nine months ended
September 30, 2007, our net cash used in operating
activities was $22.7 million. We expect that our cash used
by operations will be significant in each of the next several
years, and we may need additional funds to continue the
development and commercialization of our Sensei system.
Additional financing may not be available on a timely basis on
terms acceptable to us, or at all. Any additional financing may
be dilutive to stockholders or may require us to grant a lender
a security interest in our intellectual property assets. The
amount of funding we will need will depend on many factors,
including:
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the success of our research and product development efforts;
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the expenses we incur in selling and marketing our products;
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the costs and timing of future regulatory clearances;
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the revenue generated by sales of our current and future
products;
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the costs to scale-up manufacturing capacity;
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the costs to build out our new facility;
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the rate of progress and cost of our clinical trials and other
development activities;
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the emergence of competing or complementary technological
developments;
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the costs of filing, prosecuting, defending and enforcing any
patent claims and other intellectual property rights, or
participating in litigation-related activities;
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the terms and timing of any collaborative, licensing or other
arrangements that we may establish; and
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the acquisition of businesses, products and technologies.
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If adequate funds are not available, we may have to delay
development or commercialization of our products or license to
third parties the rights to commercialize products or
technologies that we would otherwise seek to commercialize. We
also may have to reduce marketing, customer support or other
resources devoted to our products. Any of these factors could
harm our financial condition.
10
Our
products and related technologies can be applied in different
applications, and we may fail to focus on the most profitable
areas.
Our Sensei system is designed to have the potential for
applications beyond electrophysiology, including in a variety of
endoscopic procedures which require a control catheter to
approach diseased tissue. We further believe that our Sensei
system can provide multiple opportunities to improve the speed
and capability of many diagnostic and therapeutic procedures. We
will be required to seek a separate 510(k) clearance or PMA from
the FDA for these applications of our Sensei system. However, we
have limited financial and managerial resources and therefore
may be required to focus on products in selected applications
and to forego efforts with regard to other products and
industries. Our decisions may not produce viable commercial
products and may divert our resources from more profitable
market opportunities. Moreover, we may devote resources to
developing products in these additional areas but may be unable
to justify the value proposition or otherwise develop a
commercial market for products we develop in these areas, if
any. In that case, the return on investment in these additional
areas may be limited, which could negatively affect our results
of operations.
If we
fail to obtain or acquire imaging and visualization technology,
or successfully collaborate with a strategic partner to provide
such technology on terms favorable to us, or at all, our Sensei
system may not be able to gain market acceptance and our
business may be harmed.
Our success depends on our ability to continually enhance and
broaden our product offerings in response to changing
technologies, customer demands and competitive pressures. We
believe that integrating our Sensei system with key imaging and
visualization technologies using an open architecture approach
is a key element in establishing our Sensei system as important
for complex interventional procedures. Our Sensei system
currently utilizes a variety of imaging means to visualize and
assist in navigating our Artisan catheters. These imaging
systems include fluoroscopy, intravascular ultrasound and
electro-anatomic mapping systems, as well as pre-operatively
acquired three-dimensional computed tomography and magnetic
resonance imaging. We believe that in the future, as imaging
companies develop increasingly sophisticated three-dimensional
imaging systems, we will need to integrate advanced imaging into
our Sensei system in order to compete effectively. There can be
no assurance that we can timely and effectively integrate these
systems or components into our Sensei system in order to remain
competitive. We expect to face competition from companies that
are developing new approaches and products for use in
interventional procedures and that have an established presence
in the field of interventional cardiology, including the major
imaging, capital equipment and disposables companies that are
currently selling products in the electrophysiology laboratory.
We may not be able to acquire or develop three-dimensional
imaging and visualization technology for use with our Sensei
system. In addition, developing or acquiring key imaging and
visualization technologies could be expensive and time-consuming
and may not integrate well with our Sensei system. If we are
unable to timely acquire, develop or integrate imaging and
visualization technologies, or any other changing technologies,
effectively, our revenue may decline and our business will
suffer.
In April 2007, we entered into agreements with St. Jude
Medical, Inc., or St. Jude, to integrate our Sensei system with
St. Judes Ensite system and to co-market the integrated
product. We are not obligated to undertake any other development
projects except for the integration of the Sensei system with
the EnSite system. We are solely responsible for gaining
regulatory approvals for, and all costs associated with, our
portion of the integrated products developed under the
arrangement. There can be no assurance that we will successfully
complete the integration or maintain compatibility of our
products under the collaboration.
In addition, under the terms of the co-marketing agreement, we
granted St. Jude the exclusive right to distribute products
developed under the joint development agreement when ordered
with St. Jude products worldwide, excluding certain specified
countries, for the diagnosis
and/or
treatment of certain cardiac conditions. There can be no
assurance that we will successfully collaborate or that St. Jude
will generate significant sales under this arrangement. If we
are not able to successfully collaborate with St. Jude or are
unable to successfully integrate our systems, we may not be able
to effectively compete with new technologies and our business
may be harmed.
11
Our
acquisition of AorTx, Inc. and future acquisitions are subject
to a number of risks.
Our recent acquisition of AorTx, Inc. (AorTx) and the proposed
completion of any future acquisitions will be subject to a
number of risks, including:
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with respect to future acquisitions, the possibility that an
announced acquisition does not close;
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the diversion of managements time and resources;
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the difficulty of assimilating the operations and personnel of
the acquired companies;
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the potential disruption of our ongoing business;
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the difficulty of incorporating acquired technology and rights
into our products and services;
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unanticipated expenses related to integration of the acquired
companies;
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difficulties in implementing and maintaining uniform standards,
controls, procedures and policies; and
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potential unknown liabilities associated with acquired
businesses, including additional risks of third parties
asserting claims that acquired intellectual property infringes
on the rights of such third parties.
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We consummated our acquisition of AorTx with the expectation
that the acquisition will result in various benefits including,
among other things, leveraging our Sensei system into the
developing market for percutaneous heart valve therapy. AorTx is
a development stage company and its products have not received
FDA clearance or CE mark approval. There can be no assurance
that such clearances or approvals will be obtained for the uses
we propose, and we may not realize any of the benefits of the
AorTx acquisition or may not realize them as rapidly, or to the
extent, anticipated by our management and certain financial or
industry analysts. AorTxs contribution to our financial
results may not meet the current expectations of our management
for a number of reasons, including integration risks, and could
dilute our profits beyond the current expectations of our
management. Potential liabilities assumed in connection with our
acquisition of AorTx also could have an adverse effect on our
business, financial condition and operating results. If these
risks materialize, our stock price could be materially adversely
affected.
Software
defects may be discovered in our products.
Our Sensei system incorporates sophisticated computer software.
Complex software frequently contains errors, especially when
first introduced. Because our products are designed to be used
to perform complex interventional procedures, we expect that
physicians and hospitals will have an increased sensitivity to
the potential for software defects. We cannot assure you that
our software will not experience errors or performance problems
in the future. If we experience software errors or performance
problems, we would likely also experience:
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loss of revenue;
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delay in market acceptance of our products;
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damage to our reputation;
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additional regulatory filings;
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product recalls;
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increased service or warranty costs; and/or
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product liability claims relating to the software defects.
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Our
costs could substantially increase if we receive a significant
number of warranty claims.
We warrant each of our products against defects in materials and
workmanship for a period of approximately 12 months from
the acceptance of our product by a customer. We accrue the
estimated cost of warranties at the time revenue is recognized;
however, we have a very limited history of commercial
12
placements from which to judge our rate of warranty claims. Our
warranty obligation may be impacted by product failure rates,
material usage and warranty service costs. We periodically
evaluate and adjust the warranty reserve to the extent actual
warranty expense differs from the original estimates; however,
if warranty claims are significant or differ significantly from
estimates, we could incur additional expenditures for parts and
service and our reputation and goodwill in the electrophysiology
lab market could be damaged. Unforeseen warranty exposure in
excess of our reserves could negatively impact our business,
financial condition and results of operations.
Hospitals
or physicians may be unable to obtain coverage or reimbursement
from third-party payors for procedures using our Sensei system,
which could affect the adoption or use of our Sensei system and
may cause our revenues to decline.
We anticipate that third-party payors will reimburse hospitals
and physicians under existing billing codes for the vast
majority of the procedures involving our products. We expect
that healthcare facilities in the United States will bill
various third-party payors, such as Medicare, Medicaid, other
governmental programs and private insurers, for services
performed using our products. We believe that procedures
targeted for use with our products are generally already
reimbursable under government programs and most private plans.
Accordingly, we believe providers in the United States will
generally not be required to obtain new billing authorizations
or codes in order to be compensated for performing medically
necessary procedures using our products on insured patients.
There can be no assurance, however, that coverage and
reimbursement policies of third-party payors will not change in
the future with respect to some or all of the procedures that
would use our Sensei system. Additionally, in the event that a
physician uses our Sensei system for indications not approved by
the FDA, there can be no assurance that the coverage or
reimbursement policies of third-party payors will be comparable
to FDA-approved uses. Future legislation, regulation or coverage
and reimbursement policies of third-party payors may adversely
affect the demand for our products currently under development
and limit our ability to profitably sell our products. For
example, under recent regulatory changes to the methodology for
calculating payments for current inpatient procedures in certain
hospitals, Medicare payment rates for surgical and cardiac
procedures have been decreased, including those procedures for
which our products are targeted. The reductions are to be
transitioned over the next three years, beginning in fiscal year
2007. The Centers for Medicare and Medicaid Services, or CMS,
responsible for administering the Medicare program, also
indicated it will begin to move forward with developing revised
reimbursement codes that better reflect the severity of
patients conditions in the hospital inpatient prospective
payment system for fiscal year 2008. It is unclear whether the
changes in the reimbursement codes will result in further
reduction in payments for cardiac procedures that would use our
products.
Our success in international markets also depends upon the
eligibility of our products for coverage and reimbursement by
government-sponsored healthcare payment systems and third-party
payors. In both the United States and foreign markets,
healthcare cost-containment efforts are prevalent and are
expected to continue. The failure of our customers to obtain
sufficient reimbursement could have a material adverse impact on
our financial condition and harm our business.
We may
lose our key personnel or fail to attract and retain additional
personnel.
We are highly dependent on the principal members of our
management and scientific staff, in particular Frederic
Moll, M.D., our Founder and Chief Executive Officer and one
of our directors, and Gary Restani, our President and Chief
Operating Officer and one of our directors. Dr. Moll has
extensive experience in the medical device industry, and we
believe his expertise in the robotic device field may enable us
to have proposals reviewed by key hospital decision-makers
earlier in the sales process than may otherwise be the case.
Mr. Restani is important to our operational effectiveness
and plays key roles within our organization. We do not carry
key person insurance covering any members of our
senior management. Each of our officers and key employees may
terminate his employment at any time without notice and without
cause or good reason. The loss of any of these persons could
prevent the implementation and completion of our objectives,
13
including the development and introduction of our products, and
could require the remaining management members to direct
immediate and substantial attention to seeking a replacement.
We expect to rapidly expand our operations and grow our research
and development, sales and marketing and administrative
operations. This expansion is expected to place a significant
strain on our management and will require hiring a significant
number of qualified personnel. Accordingly, recruiting and
retaining such personnel in the future will be critical to our
success. There is intense competition from other companies and
research and academic institutions for qualified personnel in
the areas of our activities. If we fail to identify, attract,
retain and motivate these highly skilled personnel, we may be
unable to continue our development and commercialization
activities.
If we
do not effectively manage our growth, we may be unable to
successfully develop, market and sell our
products.
Our future revenue and operating results will depend on our
ability to manage the anticipated growth of our business. We
have experienced significant growth in the scope of our
operations and the number of our employees since our inception.
This growth has placed significant demands on our management, as
well as our financial and operations resources. In order to
achieve our business objectives, however, we will need to
continue to grow, which presents numerous challenges, including:
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implementing appropriate operational and financial systems and
controls;
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expanding manufacturing capacity and increasing production;
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developing our sales and marketing infrastructure and
capabilities;
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identifying, attracting and retaining qualified personnel in our
areas of activity; and
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training, managing and supervising our personnel worldwide.
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Any failure to effectively manage our growth could impede our
ability to successfully develop, market and sell our products
and our business will be harmed.
We
commenced sales of our Sensei system internationally and are
subject to various risks relating to such international
activities which could adversely affect our international sales
and operating performance.
A portion of our current and future revenues will come from
international sales. To expand internationally, we will need to
hire, train and retain additional qualified personnel. Engaging
in international business inherently involves a number of
difficulties and risks, including:
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required compliance with existing and changing foreign
regulatory requirements and laws;
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export or import restrictions and controls relating to
technology;
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pricing pressure;
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laws and business practices favoring local companies;
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longer payment cycles;
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the effects of fluctuations in foreign currency exchange rates;
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shipping delays;
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difficulties in enforcing agreements and collecting receivables
through certain foreign legal systems;
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political and economic instability;
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potentially adverse tax consequences, tariffs and other trade
barriers;
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international terrorism and
anti-American
sentiment;
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difficulties in penetrating markets in which our
competitors products are more established;
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difficulties and costs of staffing and managing foreign
operations; and
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difficulties in enforcing intellectual property rights.
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If one or more of these risks are realized, it could require us
to dedicate significant resources to remedy the situation, and
if we are unsuccessful at finding a solution, our revenue may
decline.
Our
business may be harmed by a natural disaster, terrorist attacks
or other unanticipated problems.
Our manufacturing and office facilities are located in Mountain
View, California. Despite precautions taken by us, a natural
disaster such as fire or earthquake, a terrorist attack or other
unanticipated problems at our facilities could interrupt our
ability to manufacture our products or operate our business.
These disasters or problems may also destroy our product
inventories. While we carry insurance for certain natural
disasters and business interruption, any prolonged or repeated
disruption or inability to manufacture our products or operate
our business could result in losses that exceed the amount of
coverage provided by this insurance, and in such event could
harm our business.
We may
be liable for contamination or other harm caused by materials
that we handle, and changes in environmental regulations could
cause us to incur additional expense.
Our research and development, manufacturing and clinical
processes involve the handling of potentially harmful biological
materials as well as other hazardous materials. We are subject
to federal, state and local laws and regulations governing the
use, handling, storage and disposal of hazardous and biological
materials and we incur expenses relating to compliance with
these laws and regulations. If violations of environmental,
health and safety laws occur, we could be held liable for
damages, penalties and costs of remedial actions. These expenses
or this liability could have a significant negative impact on
our financial condition. We may violate environmental, health
and safety laws in the future as a result of human error,
equipment failure or other causes. Environmental laws could
become more stringent over time, imposing greater compliance
costs and increasing risks and penalties associated with
violations. We are subject to potentially conflicting and
changing regulatory agendas of political, business and
environmental groups. Changes to or restrictions on permitting
requirements or processes, hazardous or biological material
storage or handling might require an unplanned capital
investment or relocation. Failure to comply with new or existing
laws or regulations could harm our business, financial condition
and results of operations.
Changes
to existing accounting pronouncements or taxation rules or
practices may affect how we conduct our business and affect our
reported results of operations.
A change in accounting pronouncements or taxation rules or
practices can have a significant effect on our reported results
and may even affect our reporting of transactions completed
before the change is effective. During the first quarter of
fiscal 2006, we adopted the provisions of the Financial
Accounting Standards Boards Statement of Financial
Accounting Standards No. 123 revised 2004, or
SFAS No. 123R,
Share-Based Payment,
which
replaced Statement of Financial Accounting Standards
No. 123, or SFAS 123,
Accounting for Stock-Based
Compensation
and superseded APB Opinion No. 25,
Accounting for Stock Issued to Employees.
Adoption of
this statement had a significant impact on our 2006 financial
statements and is expected to have a significant impact on our
future financial statements, as we are now required to expense
the fair value of our stock option grants and stock purchases
under our employee stock purchase plan rather than disclose the
impact on our net loss within our footnotes. Other new
accounting pronouncements or taxation rules and varying
interpretations of accounting pronouncements or taxation
practice have occurred and may occur in the future. Changes to
existing rules, future changes, if any, or the questioning of
current practices may adversely affect our reported financial
results or the way we conduct our business.
15
Risks
Related to Our Intellectual Property
If we
are unable to protect the intellectual property contained in our
products from use by third parties, our ability to compete in
the market will be harmed.
Our commercial success will depend in part on obtaining patent
and other intellectual property protection for the technologies
contained in our products, and on successfully defending our
patents and other intellectual property against third party
challenges. We expect to incur substantial costs in obtaining
patents and, if necessary, defending our proprietary rights. The
patent positions of medical device companies, including ours,
can be highly uncertain and involve complex and evolving legal
and factual questions. We do not know whether we will be able to
obtain the patent protection we seek, or whether the protection
we do obtain will be found valid and enforceable if challenged.
We also do not know whether we will be able to develop
additional patentable proprietary technologies. If we fail to
obtain adequate protection of our intellectual property, or if
any protection we obtain is reduced or eliminated, others could
use our intellectual property without compensating us, resulting
in harm to our business. We may also determine that it is in our
best interests to voluntarily challenge a third partys
products or patents in litigation or administrative proceedings,
including patent interferences or reexaminations. In the event
that we seek to enforce any of our owned or exclusively licensed
patents against an infringing party, it is likely that the party
defending the claim will seek to invalidate the patents we
assert, which, if successful could result in the loss of the
entire patent or the relevant portion of our patent, which would
not be limited to any particular party. Any litigation to
enforce or defend our patent rights, even if we were to prevail,
could be costly and time-consuming and could divert the
attention of our management and key personnel from our business
operations. Our competitors may independently develop similar or
alternative technologies or products without infringing any of
our patent or other intellectual property rights, or may design
around our proprietary technologies.
We cannot assure you that we will obtain the patent protection
we seek, that any protection we do obtain will be found valid
and enforceable if challenged or that it will confer any
significant commercial advantage. U.S. patents and patent
applications may also be subject to interference proceedings and
U.S. patents may be subject to reexamination proceedings in
the U.S. Patent and Trademark Office, and foreign patents
may be subject to opposition or comparable proceedings in the
corresponding foreign patent offices, which proceedings could
result in either loss of the patent or denial of the patent
application, or loss or reduction in the scope of one or more of
the claims of, the patent or patent application. In addition,
such interference, reexamination and opposition proceedings may
be costly. Some of our technology was, and continues to be,
developed in conjunction with third parties, and thus there is a
risk that such third parties may claim rights in our
intellectual property. Thus, any patents that we own or license
from others may provide limited or no protection against
competitors. Our pending patent applications, those we may file
in the future, or those we may license from third parties, may
not result in patents being issued. If issued, they may not
provide us with proprietary protection or competitive advantages
against competitors with similar technology.
Non-payment or delay in payment of patent fees or annuities,
whether intentional or unintentional, may result in loss of
patents or patent rights important to our business. Many
countries, including certain countries in Europe, have
compulsory licensing laws under which a patent owner may be
compelled to grant licenses to third parties. In addition, many
countries limit the enforceability of patents against third
parties, including government agencies or government
contractors. In these countries, the patent owner may have
limited remedies, which could materially diminish the value of
the patent. In addition, the laws of some foreign countries do
not protect intellectual property rights to the same extent as
do the laws of the United States, particularly in the field of
medical products and procedures.
Our trade secrets, nondisclosure agreements and other
contractual provisions to protect unpatented technology provide
only limited and possibly inadequate protection of our rights.
As a result, third parties may be able to use our unpatented
technology, and our ability to compete in the market would be
reduced. In addition, employees, consultants and others who
participate in developing our products or in commercial
relationships with us may breach their agreements with us
regarding our intellectual property, and we may not have
adequate remedies for the breach.
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Third
parties may assert that we are infringing their intellectual
property rights which may result in litigation.
Successfully commercializing our Sensei system, and any other
products we may develop, will depend in part on our not
infringing patents held by third parties. It is possible that
one or more of our products, including those that we have
developed in conjunction with third parties, infringes existing
patents. From time to time, we have received, and likely will
continue to receive, communications from third parties inviting
us to license their patents or accusing us of infringement.
There can be no assurance that a third party will not take
further action, such as filing a patent infringement lawsuit,
including a request for injunctive relief, to bar the
manufacture and sale of our Sensei system in the United States.
We may also choose to defend ourselves by initiating litigation
or administrative proceedings to clarify or seek a declaration
of our rights. As competition in our market grows, the
possibility of a patent infringement claim against us or
litigation we will initiate increases.
There may be existing patents which may be broad enough to cover
aspects of our future technology. In addition, because patent
applications in many countries such as the United States are
maintained under conditions of confidentiality and can take many
years to issue, there may be applications now pending of which
we are unaware and which may later result in issued patents that
our products infringe. We do not know whether any of these
patents, if challenged, would be upheld as valid, enforceable
and infringed by our products or technology. From time to time,
we receive, and likely will continue to receive, letters from
third parties accusing us of infringing their patents or
inviting us to license their patents. We may be sued by, or
become involved in an administrative proceeding with, one or
more of these or other third parties. We cannot assure you that
a court or administrative body would agree with any arguments or
defenses we may present concerning the invalidity,
unenforceability or noninfringement of any third-party patent.
In addition to the issued patents of which we are aware, other
parties may have filed, and in the future are likely to file,
patent applications covering products that are similar or
identical to ours. We cannot assure you that any patents issuing
from applications will not cover our products or will not have
priority over our own products and patent applications.
We may
not be able to maintain or obtain all the licenses from third
parties necessary or advisable for commercializing our Sensei
system, which may cause harm to our business, operations and
financial condition.
We rely on technology that we license from others, including
technology that is integral to our Sensei system, such as
patents and other intellectual property that we have
co-exclusively licensed from Intuitive Surgical, Inc.
(Intuitive). Under our agreement with Intuitive, we received the
right to apply Intuitives patent portfolio in the field of
intravascular approaches for the diagnosis or treatment of
cardiovascular, neurovascular and peripheral vascular diseases.
To the extent that we develop or commercialize robotic
capability outside the field of use covered by our license with
Intuitive, which we may choose to do at some time in the future,
we may not have the patent protection and the freedom to operate
outside the field which may be afforded by the license inside
the field. Although we believe that there are opportunities for
us to operate outside the licensed field of use without using
Intuitives intellectual property, Intuitive from time to
time has told us that it believes certain of our past activities
that have fallen outside the licensed field have infringed its
intellectual property rights. Although we disagree with
Intuitives position, we presently remain focused within
our licensed field and so have agreed to inform Intuitive before
commencing any further outside clinical investigations for
endoluminal applications or engaging in external technology
exhibitions at non-intravascular conferences. There can be no
assurance that Intuitive will not challenge any activities we
engage in outside the intravascular space, and we cannot assure
you that in the event of such a challenge we would be able to
reach agreement with Intuitive on whether activities outside our
licensed field may be conducted without the use of the
Intuitives intellectual property. If Intuitive asserts
that any of our activities outside the licensed field are
infringing their patent or other intellectual property rights or
commences litigation against us, we will incur significant costs
defending against such claims or seeking an additional license
from Intuitive, and we may be required to limit use of our
Sensei system or future products and technologies within our
licensed intravascular field if any of our activities outside
the licensed field are judged to infringe Intuitives
intellectual property, any of which could cause substantial harm
our business, operations and financial condition. Although
Intuitive is restricted in how it can terminate our license, if
Intuitive were ever to successfully do so, and if we are unable
to obtain another license from Intuitive, we could be required
to abandon use of our existing Sensei
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technology completely and could have to undergo a substantial
redesign and design-around effort, which we cannot assure you
would be successful.
The
medical device industry is characterized by patent litigation
and we could become subject to litigation that could be costly,
result in the diversion of managements attention, require
us to pay damages and discontinue selling our
products.
The medical device industry is characterized by frequent and
extensive litigation and administrative proceedings over patent
and other intellectual property rights. Whether a product
infringes a patent involves complex legal and factual issues,
the determination of which is often difficult to predict, and
the outcome may be uncertain until the court has entered final
judgment and all appeals are exhausted. Our competitors may
assert, and have asserted in the past, that our products or the
use of our products are covered by United States or foreign
patents held by them. This risk is heightened due to the
numerous issued and pending patents relating to the use of
robotic and catheter-based procedures in the medical technology
field.
If relevant patents are upheld as valid and enforceable and we
are found to infringe, we could be prevented from selling our
system unless we can obtain a license to use technology or ideas
covered by such patent or are able to redesign our Sensei system
to avoid infringement. A license may not be available at all or
on commercially reasonable terms, and we may not be able to
redesign our products to avoid infringement. Modification of our
products or development of new products could require us to
conduct additional clinical trials and to revise our filings
with the FDA and other regulatory bodies, which would be
time-consuming and expensive. If we are not successful in
obtaining a license or redesigning our products, we may be
unable to sell our products and our business could suffer. In
addition, our patents may be subject to various invalidity
attacks, such as those based upon earlier filed patent
applications, patents, publications, products or processes,
which might invalidate or limit the scope of the protection that
our patents afford.
Infringement actions, validity challenges and other intellectual
property claims and proceedings, whether with or without merit,
may cause us to incur substantial costs and could place a
significant strain on our financial resources, divert the
attention of management from our business and harm our
reputation. We have incurred, and expect to continue to incur,
substantial costs in obtaining patents and expect to incur
substantial costs defending our proprietary rights. Incurring
such costs could have a material adverse effect on our financial
condition, results of operations and cash flow.
We cannot be certain that we will successfully defend our
patents from infringement or claims of invalidity or
unenforceability, or that we will successfully defend against
allegations of infringement of third-party patents. In addition,
any public announcements related to litigation or administrative
proceedings initiated or threatened by us, or initiated or
threatened against us, could cause our stock price to decline.
If we
are unsuccessful in our litigation with Luna Innovations, Inc.,
our business may be materially harmed
In June 2007, we filed suit against Luna Innovations, Inc.
(Luna) alleging that Luna has, among other things, breached a
2006-2007
development and intellectual property agreement between us and
Luna that we believe establishes our ownership of all
intellectual property in medical robotics developed by the
parties during performance of the agreement, misappropriated our
trade secrets and has revealed confidential information of ours
to other companies who might improperly benefit from it. In
October 2007, Luna filed counterclaims against us, including
counterclaims for misappropriation of trade secrets and breach
of the parties agreements. Luna has also indicated its
intention to amend its cross-complaint against us to challenge
the inventorship of several patent applications we filed during
that same time period. We will vigorously defend all of
Lunas claims. This litigation will require substantial
resources, both financial and managerial and there can be no
assurance that we will be the prevailing party on all or any of
the issues being litigated. If we do not succeed in prosecuting
our rights against Luna or if Luna prevails on one or more of
its counterclaims, other companies, including companies who may
attempt to compete with our flexible robotic technology, may
benefit from work we performed with Luna without compensation to
us. In addition, if Luna is successful, we may have to pay
substantial damages and may lose rights to the patent
applications in
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question that pertain to certain aspects of flexible robotics
that we do not presently use but which may limit certain
development paths for our technology unless we can design around
the intellectual property in question or obtain a license which,
if available at all, may require us to pay substantial
royalties, any or all of which could materially harm our
business.
We may
be subject to damages resulting from claims that our employees
or we have wrongfully used or disclosed alleged trade secrets of
their former employers.
Many of our employees were previously employed at universities
or other medical device companies, including our competitors or
potential competitors. We could in the future be subject to
claims that these employees, or we, have inadvertently or
otherwise used or disclosed trade secrets or other proprietary
information of their former employers. Litigation may be
necessary to defend against these claims. If we fail in
defending against such claims, a court could order us to pay
substantial damages and prohibit us from using technologies or
features that are essential to our products, if such
technologies or features are found to incorporate or be derived
from the trade secrets or other proprietary information of the
former employers. An inability to incorporate technologies or
features that are important or essential to our products would
have a material adverse effect on our business, and may prevent
us from selling our products. In addition, we may lose valuable
intellectual property rights or personnel. A loss of key
research personnel or their work product could hamper or prevent
our ability to commercialize certain potential products, which
could severely harm our business. Even if we are successful in
defending against these claims, such litigation could result in
substantial costs and be a distraction to management. Incurring
such costs could have a material adverse effect on our financial
condition, results of operations and cash flow.
Additional
Risks Related to Regulatory Matters
If we
fail to comply with the extensive government regulations
relating to our business, we may be subject to fines,
injunctions and other penalties that could harm our
business.
Our medical device products and operations are subject to
extensive regulation by the FDA and various other federal, state
and foreign governmental authorities. Government regulations and
foreign requirements specific to medical devices are wide
ranging and govern, among other things:
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design, development and manufacturing;
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testing, labeling and storage;
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clinical trials;
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product safety;
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marketing, sales and distribution;
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premarket clearance or approval;
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record keeping procedures;
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advertising and promotions;
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post-market surveillance, including reporting of deaths or
serious injuries and malfunctions that, if they were to recur,
could lead to death or serious injury; and
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product export.
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The FDA, state, foreign and other governmental authorities have
broad enforcement powers. Our failure to comply with applicable
regulatory requirements could result in governmental agencies or
a court taking action, including any of the following:
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issuing public warning letters to us;
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imposing fines and penalties on us;
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issuing an injunction preventing us from manufacturing or
selling our products;
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bringing civil or criminal charges against us;
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delaying the introduction of our products into the market;
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delaying pending requests for clearance or approval of new uses
or modifications to existing products;
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recalling, detaining or seizing our products; or
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withdrawing or denying approvals or clearances for our products.
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If we
fail to obtain regulatory clearances in other countries for
products under development, we will not be able to commercialize
these products in those countries.
In order to market our products outside of the United States, we
must establish and comply with numerous and varying regulatory
requirements of other countries regarding safety and efficacy.
Approval procedures vary among countries and can involve
additional product testing and additional administrative review
periods. The time required to obtain approval in other countries
might differ from that required to obtain FDA clearance. The
regulatory approval process in other countries may include all
of the risks detailed above regarding FDA clearance in the
United States. Regulatory approval in one country does not
ensure regulatory approval in another, but a failure or delay in
obtaining regulatory approval in one country may negatively
impact the regulatory process in others. Failure to obtain
regulatory approval in other countries or any delay or setback
in obtaining such approval could have the same adverse effects
described above regarding FDA clearance in the United States.
For example, the EU requires that medical products receive the
right to affix the CE mark. The CE mark is an international
symbol of adherence to quality assurance standards and
compliance with applicable European medical device directives.
In order to obtain the right to affix the CE mark to our
products, we will need to obtain certification that our
processes meet European quality standards. These standards
include certification that our product design and manufacturing
facility complies with ISO 13485 quality standards. We received
CE mark approval for our Artisan catheters in May 2007. However,
future regulatory approvals may be needed. We cannot be certain
that we will be successful in meeting European quality standards
or other certification requirements.
We may
fail to comply with continuing postmarket regulatory
requirements of the FDA and other authorities and become
subject to substantial penalties, or marketing experience may
show that our device is unsafe, forcing us to recall or withdraw
it permanently from the market.
We must comply with continuing regulation by the FDA and other
authorities, including the FDAs Quality System Regulation,
or QSR, requirements, labeling and promotional requirements and
medical device adverse event and other reporting requirements.
If the adverse event reports we file with the FDA regarding
death, serious injuries or malfunctions indicate or suggest that
the device presents an unacceptable risk to patients, including
when used off-label by physicians, we may be forced to recall
the device or withdraw it permanently from the market. The FDA
has expressed concerns regarding the safety of the device when
used with catheters and in procedures not specified in the
indication we are seeking, such as ablation catheters and
ablation procedures, and we have already filed several Medical
Device Reports reporting adverse events during procedures
utilizing our technology. Physicians are using our device
off-label with ablation catheters in ablation procedures, as
well as in other electrophysiology procedures for which we have
not collected safety data, and we therefore cannot assure you
that clinical experience will demonstrate that the device is
safe for these uses.
Any failure to comply, or any perception that we are not
complying, with continuing regulation by the FDA or other
authorities, including restrictions regarding off-label
promotion, could result in enforcement action that may include
suspension or withdrawal of regulatory clearances or approvals,
recalling products, ceasing product marketing, seizure and
detention of products, paying significant fines and penalties,
criminal
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prosecution and similar actions that could limit product sales,
delay product shipment and harm our profitability.
In many foreign countries in which we market our products, we
are subject to regulations affecting, among other things,
product standards, packaging requirements, labeling
requirements, import restrictions, tariff regulations, duties
and tax requirements. Many of these regulations are similar to
those of the FDA. In addition, in many countries the national
health or social security organizations require our products to
be qualified before procedures performed using our products
become eligible for coverage and reimbursement. Failure to
receive, or delays in the receipt of, relevant foreign
qualifications could have a material adverse effect on our
business, financial condition and results of operations. Due to
the movement toward harmonization of standards in the EU, we
expect a changing regulatory environment in Europe characterized
by a shift from a
country-by-country
regulatory system to a
EU-wide
single regulatory system. The timing of this harmonization and
its effect on us cannot currently be predicted. Adapting our
business to changing regulatory systems could have a material
adverse effect on our business, financial condition and results
of operations. If we fail to comply with applicable foreign
regulatory requirements, we may be subject to fines, suspension
or withdrawal of regulatory clearances, product recalls, seizure
of products, operating restrictions and criminal prosecution.
Our
suppliers or we may fail to comply with the QSR and California
Department of Health Services requirements, which could hurt our
ability to commercially distribute and sell our products and may
subject us to fines, injunctions, and penalties.
Our manufacturing processes must comply with the QSR, which
covers the methods and documentation of the design, testing,
production, control, quality assurance, labeling, packaging and
shipping of our products. The FDA enforces the QSR through
inspections. We cannot assure you that we would pass such an
inspection. Failure to pass such an inspection could force a
shut down of our manufacturing operations, a recall of our
products or the imposition of other sanctions, which would
significantly harm our revenues and profitability. Further, we
cannot assure you that our key component suppliers are or will
continue to be in compliance with applicable regulatory
requirements and will not encounter any manufacturing
difficulties. Any failure to comply with the QSR by us or our
suppliers could significantly harm our available inventory and
product sales and may subject us to fines, injunctions, and
penalties.
Our manufacturing facility is subject to the licensing
requirements of the California Department of Health Services, or
CDHS. Our facility has been inspected and licensed by the CDHS
and remains subject to re-inspection at any time. Failure to
maintain a license from the CDHS or to meet the inspection
criteria of the CDHS would disrupt our manufacturing processes.
If an inspection by the CDHS indicates that there are
deficiencies in our manufacturing process, we could be required
to take remedial actions at potentially significant expense, and
our facility may be temporarily or permanently closed.
If we
fail to comply with healthcare regulations, we could face
substantial penalties and our business, operations and financial
condition could be adversely affected.
While we do not control referrals of healthcare services or bill
directly to Medicare, Medicaid or other third-party payors, due
to the breadth of many healthcare laws and regulations, we
cannot assure you that they will not apply to our business. We
could be subject to healthcare fraud and patient privacy
regulation by both the federal government and the states in
which we conduct our business. The regulations that may affect
our ability to operate include:
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the federal healthcare program Anti-Kickback Law, which
prohibits, among other things, persons from soliciting,
receiving or providing remuneration, directly or indirectly, to
induce either the referral of an individual, for an item or
service or the purchasing or ordering of a good or service, for
which payment may be made under federal healthcare programs such
as the Medicare and Medicaid programs;
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federal false claims laws which prohibit, among other things,
individuals or entities from knowingly presenting, or causing to
be presented, claims for payment from Medicare, Medicaid, or
other third-
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party payors that are false or fraudulent, and which may apply
to entities like us which provide coding and billing advice to
customers or whose products are frequently used off-label;
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the federal Health Insurance Portability and Accountability Act
of 1996, or HIPAA, which prohibits executing a scheme to defraud
any healthcare benefit program or making false statements
relating to healthcare matters and which also imposes certain
requirements relating to the privacy, security and transmission
of individually identifiable health information;
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federal self-referral laws, such as STARK, which prohibit a
physician from making a referral to a provider of certain health
services with which the physician or the physicians family
member has a financial interest, and prohibits submission of a
claim for reimbursement pursuant to a prohibited
referral; and
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state law equivalents of each of the above federal laws, such as
anti-kickback and false claims laws which may apply to items or
services reimbursed by any third-party payor, including
commercial insurers, and state laws governing the privacy of
health information in certain circumstances, many of which
differ from each other in significant ways and often are not
preempted by HIPAA, thus complicating compliance efforts.
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If our operations are found to be in violation of any of the
laws described above or any other governmental regulations that
apply to us, we may be subject to penalties, including civil and
criminal penalties, damages, fines and the curtailment or
restructuring of our operations. Any penalties, damages, fines,
curtailment or restructuring of our operations could adversely
affect our ability to operate our business and our financial
results. The risk of our being found in violation of these laws
is increased by the fact that many of them have not been fully
interpreted by the regulatory authorities or the courts, and
their provisions are open to a variety of interpretations. Any
action against us for violation of these laws, even if we
successfully defend against it, could cause us to incur
significant legal expenses and divert our managements
attention from the operation of our business. Moreover, to
achieve compliance with applicable federal and state privacy,
security, and electronic transaction laws, we may be required to
modify our operations with respect to the handling of patient
information. Implementing these modifications may prove costly.
At this time, we are not able to determine the full consequences
to us, including the total cost of compliance, of these various
federal and state laws.
The
application of state certificate of need regulations and
compliance with federal and state licensing requirements could
substantially limit our ability to sell our products and grow
our business.
Some states require healthcare providers to obtain a certificate
of need or similar regulatory approval prior to the acquisition
of high-cost capital items such as our Sensei system. In many
cases, a limited number of these certificates are available and,
as a result, hospitals and other healthcare providers may be
unable to obtain a certificate of need for the purchase of our
Sensei system. Further, our sales cycle for our system is
typically longer in certificate of need states due to the time
it takes our customers to obtain the required approvals. In
addition, our customers must meet various federal and state
regulatory
and/or
accreditation requirements in order to receive reimbursement
from government-sponsored healthcare programs such as Medicare
and Medicaid and other third-party payors. Any lapse by our
customers in maintaining appropriate licensure, certification or
accreditation, or the failure of our customers to satisfy the
other necessary requirements under government-sponsored
healthcare programs, could cause our sales to decline.
Risks
Related to this Offering and Ownership of Our Common
Stock
The
trading price of our common stock has been volatile and is
likely to be volatile in the future, and you might not be able
to sell your shares at or above the public offering
price.
The trading price of our common stock has been highly volatile.
Further, our common stock has a limited trading history. Since
our initial public offering in November 2006 through
January 22, 2008, our stock price
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has fluctuated from a low of $10.02 to a high of $39.32. The
market price for our common stock may be affected by a number of
factors, including:
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the announcement of our operating results, including the number
of our Sensei systems installed during a period and our
resulting revenue for the period, and the comparison of these
results to the expectations of analysts and investors;
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the receipt, denial or timing of regulatory clearances,
approvals or actions of our products or competing products;
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changes in policies affecting third-party coverage and
reimbursement in the United States and other countries;
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ability of our products to achieve market success;
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the performance of third-party contract manufacturers and
component suppliers;
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our ability to develop sales and marketing capabilities;
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our ability to manufacturer our products to commercial standards;
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the success of any collaborations we may undertake with other
companies;
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our ability to develop, introduce and market new or enhanced
versions of our products on a timely basis;
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actual or anticipated variations in our results of operations or
those of our competitors;
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announcements of new products, technological innovations or
product advancements by us or our competitors;
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announcements of acquisitions by us or our competitors;
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developments with respect to patents and other intellectual
property rights;
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sales of common stock or other securities by us or our
stockholders in the future;
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additions or departures of key scientific or management
personnel;
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disputes or other developments relating to proprietary rights,
including patents, litigation matters and our ability to obtain
patent protection for our technologies;
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trading volume of our common stock;
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changes in earnings estimates or recommendations by securities
analysts, failure to obtain analyst coverage of our common stock
or our failure to achieve analyst earnings estimates;
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public statements by analysts or clinicians regarding their
perceptions of the effectiveness of our products;
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developments in our industry; and
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general market conditions and other factors unrelated to our
operating performance or the operating performance of our
competitors.
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The stock prices of many companies in the medical device
industry have experienced wide fluctuations that have often been
unrelated to the operating performance of these companies.
Following periods of volatility in the market price of a
companys securities, stockholders have often instituted
class action securities litigation against those companies.
Class action securities litigation, if instituted against us,
could result in substantial costs and a diversion of our
management resources, which could significantly harm our
business.
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Securities
analysts may not continue, or additional securities analysts may
not initiate, coverage for our common stock or may issue
negative reports, and this may have a negative impact on the
market price of our common stock.
Currently, several securities analysts provide research coverage
of our common stock. Several analysts have already published
statements that do not portray our technology, products or
procedures using our products in a positive light. If we are
unable to educate those who publicize such reports about the
benefits we believe our technology provides, or if one or more
of the analysts who elects to cover us downgrades our stock, our
stock price would likely decline rapidly. If one or more of
these analysts ceases coverage of our company, we could lose
visibility in the market, which in turn could cause our stock
price to decline. The trading market for our common stock may be
affected in part by the research and reports that industry or
financial analysts publish about us or our business. If
sufficient securities analysts do not cover our common stock,
the lack of research coverage may adversely affect the market
price of our common stock. It may be difficult for companies
such as ours, with smaller market capitalizations, to attract
and maintain sufficient independent financial analysts that will
cover our common stock. This could have a negative effect on the
market price of our stock.
Our
principal stockholders, directors and management own, and will
continue to own following the offering, a large percentage of
our voting stock, which allows them to exercise significant
influence over matters subject to stockholder
approval.
Our executive officers, directors and stockholders holding 5% or
more of our outstanding common stock beneficially own or control
approximately 48.1% of the outstanding shares of our common
stock as of September 30, 2007. Accordingly, these
executive officers, directors and principal stockholders, acting
as a group, have substantial influence over the outcome of
corporate actions requiring stockholder approval, including the
election of directors, any merger, consolidation or sale of all
or substantially all of our assets or any other significant
corporate transaction. These stockholders may also delay or
prevent a change of control or otherwise discourage a potential
acquirer from attempting to obtain control of us, even if such a
change of control would benefit our other stockholders. This
significant concentration of stock ownership may adversely
affect the trading price of our common stock due to
investors perception that conflicts of interest may exist
or arise.
We
have not paid dividends in the past and do not expect to pay
dividends in the future, and any return on investment may be
limited to the value of our common stock.
We have never paid dividends on our common stock and do not
anticipate paying dividends on our common stock in the
foreseeable future. The payment of dividends on our common stock
will depend on our earnings, financial condition and other
business and economic factors affecting us at such time as our
board of directors may consider relevant. If we do not pay
dividends, our common stock may be less valuable because a
return on your investment will only occur if our stock price
appreciates. Pursuant to our agreement with Silicon Valley Bank
(SVB), we must obtain SVBs prior written consent in order
to pay any dividends on our common stock.
Some
provisions of our charter documents and Delaware law may have
anti-takeover effects that could discourage an acquisition of us
by others, even if an acquisition would be beneficial to our
stockholders.
Provisions in our amended and restated certificate of
incorporation and amended and restated bylaws, as well as
provisions of Delaware law, could make it more difficult for a
third party to acquire us, even if doing so would benefit our
stockholders. These provisions:
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permit our board of directors to issue up to
10,000,000 shares of preferred stock, with any rights,
preferences and privileges as they may designate, including the
right to approve an acquisition or other change in our control;
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provide that the authorized number of directors may be changed
only by resolution of the board of directors;
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24
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provide that all vacancies, including newly created
directorships, may, except as otherwise required by law, be
filled by the affirmative vote of a majority of directors then
in office, even if less than a quorum;
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divide our board of directors into three classes;
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require that any action to be taken by our stockholders must be
effected at a duly called annual or special meeting of
stockholders and not be taken by written consent;
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provide that stockholders seeking to present proposals before a
meeting of stockholders or to nominate candidates for election
as directors at a meeting of stockholders must provide notice in
writing in a timely manner, and also specify requirements as to
the form and content of a stockholders notice;
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do not provide for cumulative voting rights, therefore allowing
the holders of a majority of the shares of common stock entitled
to vote in any election of directors to elect all of the
directors standing for election, if they should so choose;
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provide that special meetings of our stockholders may be called
only by the chairman of the board, our chief executive officer
or by the board of directors pursuant to a resolution adopted by
a majority of the total number of authorized directors; and
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provide that stockholders will be permitted to amend our amended
and restated bylaws only upon receiving at least
66
2
/
3
%
of the votes entitled to be cast by holders of all outstanding
shares then entitled to vote generally in the election of
directors, voting together as a single class.
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In addition, we are subject to Section 203 of the Delaware
General Corporation Law, which generally prohibits a Delaware
corporation from engaging in any broad range of business
combinations with any stockholder who owns, or at any time in
the last three years owned, 15% or more of our outstanding
voting stock for a period of three years following the date on
which the stockholder became an interested stockholder. This
provision could have the effect of delaying or preventing a
change of control, whether or not it is desired by or beneficial
to our stockholders.
Future
sales of a substantial number of shares of our common stock in
the public market, the announcement to undertake such sales, or
the perception that they may occur, may depress the market price
of our common stock.
Sales of substantial amounts of our common stock by us or by our
stockholders, announcements of the proposed sales of substantial
amounts of our common stock or the perception that substantial
sales may be made, could cause the market price of our common
stock to decline. We may issue additional shares of our common
stock in follow-on offerings to raise additional capital or in
connection with acquisitions or corporate alliances and we plan
to issue additional shares to our employees, directors or
consultants in connection with their services to us. All of the
currently outstanding shares of our common stock are freely
tradable under federal and state securities laws, except for
shares held by our directors, officers and certain greater than
5% stockholders, which may be subject to volume limitations, and
shares issued in connection with our acquisition of AorTx, which
shares may be resold pursuant to this prospectus. Due to these
factors, sales of a substantial number of shares of our common
stock in the public market could occur at any time. Such sales
could reduce the market price of our common stock.
We
incur significant costs as a result of operating as a public
company, and our management is required to devote substantial
time to new compliance initiatives.
We completed our initial public offering in November 2006. As a
public company, we incur significant legal, accounting and other
expenses that we did not incur as a private company. In
addition, the Sarbanes-Oxley Act, as well as rules subsequently
implemented by the Securities and Exchange Commission and the
NASDAQ Global Market, have imposed various new requirements on
public companies, including requiring establishment and
maintenance of effective disclosure and financial controls and
changes in corporate governance practices. Our management and
other personnel need to devote a substantial amount of time to
these new compliance initiatives. Moreover, these rules and
regulations increase our legal and financial compliance costs
and make some activities
25
more time-consuming and costly. For example, we expect these
rules and regulations to make it more difficult and more
expensive for us to obtain director and officer liability
insurance, and we may be required to incur substantial costs to
maintain the same or similar coverage.
The Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley Act, requires,
among other things, that we maintain effective internal controls
for financial reporting and disclosure controls and procedures.
In particular, commencing in fiscal 2007, we must perform system
and process evaluation and testing of our internal controls over
financial reporting to allow management and our independent
registered public accounting firm to report on the effectiveness
of our internal controls over financial reporting, as required
by Section 404 of the Sarbanes-Oxley Act. As a result of
our compliance with Section 404, we will incur substantial
accounting expense and expend significant management efforts and
we will need to hire additional accounting and financial staff
with appropriate public company experience and technical
accounting knowledge to ensure such compliance.
26
FORWARD-LOOKING
STATEMENTS
Some of the statements under the sections of this prospectus
entitled Prospectus Summary, Risk
Factors, and Use of Proceeds and elsewhere in
this prospectus contain forward-looking statements. In some
cases, you can identify forward-looking statements by the
following words: may, will,
could, would, should,
expect, intend, plan,
anticipate, believe,
estimate, predict, project,
potential, continue, ongoing
or the negative of these terms or other comparable terminology,
although not all forward-looking statements contain these words.
These statements involve known and unknown risks, uncertainties
and other factors that may cause our actual results, levels of
activity, performance or achievements to be materially different
from the information expressed or implied by these
forward-looking statements. Although we believe that we have a
reasonable basis for each forward-looking statement contained in
this prospectus, we caution you that these statements are based
on a combination of facts and factors currently known by us and
our projections of the future, about which we cannot be certain.
Many important factors affect our ability to achieve our
objectives, including:
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our ability to obtain and maintain regulatory clearance or
approval of our products;
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our plans to develop and commercialize our products;
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our ability to obtain and maintain intellectual property
protection for our products;
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the successful development of our sales and marketing
capabilities; and
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the performance of third party manufacturers and our ability to
maintain and expand our manufacturing capacity.
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In addition, you should refer to the section of this prospectus
entitled Risk Factors for a discussion of other
important factors that may cause our actual results to differ
materially from those expressed or implied by our
forward-looking statements. As a result of these factors, we
cannot assure you that the forward-looking statements in this
prospectus will prove to be accurate. Furthermore, if our
forward-looking statements prove to be inaccurate, the
inaccuracy may be material. In light of the significant
uncertainties in these forward-looking statements, you should
not regard these statements as a representation or warranty by
us or any other person that we will achieve our objectives and
plans in any specified time frame, or at all.
USE OF
PROCEEDS
We will not receive any proceeds from the sale of the shares of
our common stock by the selling stockholders pursuant to this
prospectus.
27
SELLING
STOCKHOLDERS
On November 15, 2007, we consummated the acquisition of
AorTx. At the closing of the acquisition we issued
140,048 shares of common stock and paid approximately
$4.5 million in cash to former AorTx stockholders. Also at
the closing, we paid or cancelled approximately
$1.0 million of AorTx liabilities. In connection with the
acquisition we entered into employment agreements with each of
Brian Becky, David C. Forster, Alex T. Roth and
Brandon Walsh. In accordance with a registration rights
agreement entered into in connection with the acquisition, we
are registering 140,048 shares of our common stock issued
in the acquisition for resale by the former AorTx stockholders.
The following table sets forth the name of each selling
stockholder, the number of shares owned by each of the selling
stockholders, the number of shares that may be offered under
this prospectus and the number of shares of our common stock
owned by each of the selling stockholders assuming all of the
shares covered hereby are sold. The percentage ownership
information shown in the table is based upon
21,823,225 shares of common stock outstanding as of
December 31, 2007. Except as otherwise disclosed above with
respect to the employment agreements, none of the other selling
stockholders has, or within the past three years has had, any
position, office or other material relationship with us. The
number of shares in the column Number of Shares Being
Offered represents all of the shares that a selling
stockholder may offer under this prospectus. The selling
stockholders may sell some, all or none of their shares. We do
not know how long the selling stockholders will hold the shares
before selling them, and we currently have no agreements,
arrangements or understandings with the selling stockholders
regarding the sale or other disposition of any of the shares,
other than our agreement pursuant to a registration rights
agreement to register for resale certain shares of common stock
held by the selling stockholders.
Beneficial ownership is determined in accordance with the rules
of the Securities and Exchange Commission. These rules generally
attribute beneficial ownership of securities to persons who
possess sole or shared voting power or investment power with
respect to those securities. In addition, the rules include
shares of common stock issuable pursuant to the exercise of
stock options or warrants that are either immediately
exercisable or exercisable on or before February 29, 2008,
which is 60 days after December 31, 2007. These shares
are deemed to be outstanding and beneficially owned by the
person holding those options or warrants for the purpose of
computing the percentage ownership of that person, but they are
not treated as outstanding for the purpose of computing the
percentage ownership of any other person. Unless otherwise
indicated, the persons or entities identified in this table have
sole voting and investment power with respect to all shares
shown as beneficially owned by them, subject to applicable
community property laws.
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Number of
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Shares
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Beneficially
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Number of
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Owned Prior to
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Shares Beneficially Owned After Offering(2)
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Name of Selling Stockholder
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Offering(1)
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Number
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Percent
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Thomas Afzal
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54
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0
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*
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Steven Bailey
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273
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0
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*
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Brian Beckey
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1,814
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0
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*
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Bio-Star Private Equity Fund, LLC(3)
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28,333
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0
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*
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Bio-Star Private Equity Fund FP, LLC(3)
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5,994
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0
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*
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George Caffell
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54
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0
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*
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Louis Cannon
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875
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0
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*
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Robert Chin, Ph.D.
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328
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0
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*
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Jeff Christian
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19
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0
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*
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Robert M. Curtis and Patricia M. Marcus, Trustees of the
Curtis/Marcus Family Trust Dated April 11, 2002
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1,008
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0
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*
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Geoff Dillon
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184
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0
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*
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William F. Fearon, M.D.
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191
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0
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*
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Fitz Partners, LP
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478
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0
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*
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28
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Number of
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Shares
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Beneficially
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Number of
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Owned Prior to
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Shares Beneficially Owned After Offering(2)
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Name of Selling Stockholder
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Offering(1)
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Number
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Percent
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Peter J. Fitzgerald, M.D.
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1,537
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0
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*
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Flea Street Translational, LLC(4)
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1,183
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0
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*
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David C. Forster, P.E.
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22,811
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0
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*
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Richard Ginn
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262
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0
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*
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Thuzar Han
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27
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0
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*
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HBM-MedFocus, LLC(5)
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8,208
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0
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*
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France Dixon Helfer
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82
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0
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*
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Scott Heneveld
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1,641
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0
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*
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JAIC-Henson MedFocus Fund II, LLC(5)
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9,020
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0
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*
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JAIC-Henson MedFocus Accelerator Fund, LLC(5)
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1,938
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0
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*
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Thomas Jones
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328
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0
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*
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Liisa Ann Larson
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405
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0
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*
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James J. Leftwich
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27
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0
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*
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Yen Liao
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66
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|
|
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0
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*
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John Lonergan
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54
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|
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0
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*
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Kate Marshall
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54
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|
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|
0
|
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*
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Renee Masi
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273
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|
|
|
0
|
|
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|
*
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Daniel Murray
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82
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|
|
|
0
|
|
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|
*
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William ONeill
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328
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|
|
|
0
|
|
|
|
*
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Matthew Pease
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191
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|
|
|
0
|
|
|
|
*
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Richard Popp
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273
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|
|
|
0
|
|
|
|
*
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Mark Reisman
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656
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|
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0
|
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*
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Alex T. Roth
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1,506
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|
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|
0
|
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|
*
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Marc Sakwa, M.D.
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328
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|
|
|
0
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|
|
|
*
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Saratoga Ventures IV, L.P.(6)
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4,609
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0
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*
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Saratoga Ventures V, L.P.(7)
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3,687
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0
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*
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Kem Schankareli
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109
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|
|
|
0
|
|
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|
*
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St. Jude Medical, Inc.(8)
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35,163
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|
0
|
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*
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Greg Stone
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273
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|
|
|
0
|
|
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|
*
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Ted Tussing
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|
136
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|
0
|
|
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|
*
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Jeffrey Valko
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109
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|
0
|
|
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*
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Brandon Walsh
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2,701
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0
|
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|
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*
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WS Investment Company, LLC (2004A)(9)
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997
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0
|
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*
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WS Investment Company, LLC (2004D)(9)
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997
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|
|
|
0
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|
*
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Kenton Zehr
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328
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|
|
|
0
|
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|
|
*
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Ji Zhang
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54
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|
|
|
0
|
|
|
|
*
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Total
|
|
|
140,048
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0
|
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*
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*
|
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Represents beneficial ownership of less than 1%.
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(1)
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The number of shares held by each selling stockholder is subject
to change in accordance with the Merger Agreement.
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(2)
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We have assumed for the purposes of this table that all of the
shares offered by the prospectus will be sold by the selling
stockholders.
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(3)
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Bio-Star Management Company is the management company of
Bio-Star Private Equity Fund, LLC and Bio-Star Private Equity
Fund FP, LLC. The managers of Bio-Star Management Company
are Louis A. Cannon, M.D., Steve Almany, M.D. and
Renee Masi. Each of the managers exercises shared voting and
investment power over the shares held by Bio-Star Private Equity
Fund, LLC and Bio-Star Private Equity Fund FP, LLC. Each of
the managing members disclaims beneficial ownership of the
shares held by Bio-Star Private Equity Fund, LLC and Bio-Star
Private Equity Fund FP, LLC except to the extent of his or
her pecuniary interest therein.
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(4)
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Ted Tussing is the managing member of Flea Street Translational,
LLC and exercises sole voting and investment power over the
shares held by Flea Street Translational, LLC. Mr. Tussing
disclaims beneficial ownership of the shares held by Flea Street
Translational, LLC except to the extent of his pecuniary
interest therein.
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(5)
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Michael R. Henson is the principal manger of the HMB-MedFocus,
LLC, JAIC-Henson MedFocus Fund II, LLC and JAIC-Henson
MedFocus Accelerator Fund, LLC and is empowered by the operating
agreement of each of such funds to exercise voting and
investment power over the shares held by HMB-MedFocus, LLC,
JAIC-Henson MedFocus Fund II, LLC and JAIC-Henson MedFocus
Accelerator Fund, LLC. Mr. Henson disclaims any beneficial
ownership of the shares held by HMB-MedFocus, LLC, JAIC-Henson
MedFocus Fund II, LLC and JAIC-Henson MedFocus Accelerator
Fund, LLC.
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(6)
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The general partner of Saratoga Ventures IV, L.P. is
Saratoga IV Management LLC and the general partner of
Saratoga IV Management LLC is Foster Hendrix.
Mr. Hendrix exercises voting and investment power over the
shares held by Saratoga Ventures IV, L.P. and disclaims
beneficial ownership of the shares held by Saratoga Ventures IV,
L.P. except to the extent of his pecuniary interest therein.
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(7)
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The general partner of Saratoga Ventures V, L.P. is
Saratoga V Management LLC and the general partners of Saratoga V
Management LLC are Foster Hendrix and Gwen Watanbe. The general
partners of Saratoga V Management LLC exercise shared voting and
investment power over the shares held by Saratoga Ventures IV,
L.P. and disclaim beneficial ownership of the shares held by
Saratoga Ventures IV, L.P. except to the extent of his or her
pecuniary interest therein.
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(8)
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Any authorized officer of St. Jude Medical, Inc. can exercise
voting or dispositive power over the shares.
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(9)
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WS Investment Management Company is the Manager of WS Investment
Company, LLC (2004A) and WS Investment Company, LLC (2004D) and
exercises sole voting and investment power over the shares held
by WS Investment Company, LLC (2004A) and WS Investment Company,
LLC (2004D).
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30
PLAN OF
DISTRIBUTION
The selling stockholders may use this prospectus to sell the
shares at any time while the prospectus is in effect, unless we
have notified the selling stockholders that the prospectus is
not available at that particular time. The selling stockholders
will determine if, when and how they will sell the shares they
own. Any sales may occur in one or more of the following types
of transactions (including block transactions):
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transactions on the Nasdaq Global Market or any other organized
market or quotation system where the shares may be traded;
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privately negotiated transactions between a selling stockholder
and a purchaser;
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transactions effected with or through a broker-dealer acting as
either agent or principal;
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sales pursuant to Rule 144; or
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any other method permitted pursuant to applicable law.
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These transactions may involve the transfer of the shares upon
exercise or settlement of put or call options, or the delivery
of the shares to replace shares that were previously borrowed
from another stockholder or a combination of such methods. If a
broker-dealer is used in the sale of shares, that person may
solicit potential purchasers. The shares may also be transferred
as a gift or as a result of a pledge, or may be sold to a
broker-dealer acting as principal. These persons may then sell
the shares to another person, either directly or through another
broker-dealer, subject to compliance with the requirements of
the Securities Act.
The price at which sales of the shares occur may be based on
market prices or may be negotiated between the parties, and the
consideration may be cash or another form negotiated between the
parties. Broker-dealers acting as agents or principals may be
paid compensation in the form of discounts, concessions or
commissions from the selling stockholders
and/or
from
the purchasers of the shares, or both. Brokers or dealers may be
deemed to be underwriters within the meaning of the
Securities Act. Any profits on the resale of shares by a
broker-dealer acting as principal might be deemed to be
underwriting discounts or commissions under the Securities Act.
Discounts, concessions, commissions and similar selling
expenses, if any, that can be attributed to the sale of shares
will be paid by the selling stockholders
and/or
the
purchasers. We have agreed to pay certain of the costs, expenses
and fees of preparing, filing and maintaining this prospectus
and the registration statement of which this prospectus is a
part, but we will not receive any proceeds from sale of these
shares. The selling stockholders may agree to indemnify any
agent, dealer or broker-dealer that participates in transactions
involving sales of the shares if liabilities are imposed on it
under the Securities Act.
The selling stockholders have advised us that he, she or it has
not entered into any agreements, understandings or arrangements
with any underwriters or broker-dealers regarding the sale of
such shares, nor is there an underwriter or coordinating broker
acting in connection with a proposed sale of shares by any
selling stockholder. If we are notified by any selling
stockholder that any material arrangement has been entered into
with a broker-dealer for the sale of shares, if required, we
will file a supplement to this prospectus. If the selling
stockholders use this prospectus for any sale of the shares,
they will be subject to the prospectus delivery requirements of
the Securities Act. The anti-manipulation rules of
Regulation M under the Securities Exchange Act of
1934 may apply to sales of our common stock and activities
of the selling stockholders.
LEGAL
MATTERS
The validity of the shares of common stock being offered by this
prospectus will be passed upon for us by Gunderson Dettmer
Stough Villeneuve Franklin & Hachigian, LLP, Menlo
Park, California.
EXPERTS
The financial statements incorporated into this prospectus by
reference to our Annual Report on
Form 10-K
for the year ended December 31, 2006 have been so
incorporated in reliance on the report of PricewaterhouseCoopers
LLP, an independent registered public accounting firm, given on
the authority of said firm as experts in auditing and accounting.
31
WHERE YOU
CAN FIND ADDITIONAL INFORMATION
We file annual, quarterly and other periodic reports, proxy
statements and other information with the Securities and
Exchange Commission. You can read our Securities and Exchange
Commission filings, including this registration statement, over
the Internet at the Securities and Exchange Commissions
website at www.sec.gov. You may also read and copy any document
we file with the Securities and Exchange Commission at its
public reference facilities at 100 F Street NE,
Washington, D.C. 20549. You may also obtain copies of these
documents at prescribed rates by writing to the Public Reference
Section of the Securities and Exchange Commission at
100 F Street NE, Washington, D.C. 20549. Please
call the Securities and Exchange Commission at
1-800-SEC-0330
for further information on the operation of the public reference
facilities.
Our Internet address is www.hansenmedical.com. There we make
available free of charge, on or through the investor relations
section of our website, annual reports on
Form 10-K,
quarterly reports on
Form 10-Q,
current reports on
Form 8-K
and amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Exchange Act as soon as
reasonably practicable after we electronically file such
material with, or furnish it to, the Securities and Exchange
Commission. The information found on our website is not part of
this or any other report we file with or furnish to the
Securities and Exchange Commission.
This prospectus does not contain all of the information in the
registration statement and its exhibits. For further information
with respect to Hansen Medical and the common stock offered by
this prospectus, we refer you to the registration statement and
its exhibits. Statements contained in this prospectus as to the
contents of any contract or any other document referred to are
not necessarily complete, and in each instance, we refer you to
the copy of the contract or other document filed as an exhibit
to the registration statement. Each of these statements is
qualified in all respects by this reference.
INCORPORATION
BY REFERENCE
Some of the important business and financial information that
you may want to consider is not included in this prospectus, but
rather is incorporated by reference to documents
that have been previously filed by us with the Securities and
Exchange Commission pursuant to the Exchange Act of 1934. The
information incorporated by reference is considered to be part
of this prospectus, and information that we file later with the
Securities and Exchange Commission will automatically update and
supersede this information. We incorporate by reference the
documents listed below and any future filings we will make with
the Securities and Exchange Commission under Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934:
1. Annual Report on
Form 10-K
for the year ended December 31, 2006 filed on
March 28, 2007.
2. Quarterly Report on
Form 10-Q
for the quarterly period ended March 31, 2007, filed on
May 14, 2007.
3. Quarterly Report on
Form 10-Q
for the quarterly period ended June 30, 2007, filed on
August 14, 2007.
4. Quarterly Report on
Form 10-Q
for the quarterly period ended September 30, 2007, filed on
November 2, 2007.
5. Current Reports on
Form 8-K
(excluding any portions thereof that are deemed to be furnished
and not filed), filed on February 16, 2007, May 1,
2007, May 4, 2007, July 24, 2007, October 12,
2007, November 2, 2007, and November 19, 2007.
6. The description of our common stock contained in our
form 8-A
filed November 14, 2006.
You may request, and we will provide you with, a copy of these
filings, at no cost, by calling us at
(650) 404-5800
or by writing to us at the following address:
Hansen Medical, Inc.
380 North Bernardo Avenue
Mountain View, CA 94043
Attn: Investor Relations
32
140,048 Shares
Common Stock
PROSPECTUS
January , 2008
PART II
INFORMATION
NOT REQUIRED IN PROSPECTUS
|
|
ITEM 14.
|
Other
Expenses of Issuance and Distribution.
|
The following table sets forth all costs and expenses payable by
us in connection with the sale of the common stock being
registered. All amounts shown are estimates except for the
Securities and Exchange Commission registration fee.
|
|
|
|
|
SEC Registration fee
|
|
$
|
90
|
|
Printing expenses
|
|
|
10,000
|
|
Legal fees and expenses
|
|
|
27,500
|
|
Accounting fees and expenses
|
|
|
10,000
|
|
Miscellaneous fees and expenses
|
|
|
1,000
|
|
|
|
|
|
|
Total
|
|
$
|
48,590
|
|
|
|
|
|
|
|
|
ITEM 15.
|
Indemnification
of Directors and Officers.
|
We are incorporated under the laws of the State of Delaware.
Section 145 of the Delaware General Corporation Law
provides that a Delaware corporation may indemnify any persons
who are, or are threatened to be made, parties to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other
than an action by or in the right of such corporation), by
reason of the fact that such person was an officer, director,
employee or agent of such corporation, or is or was serving at
the request of such person as an officer, director, employee or
agent of another corporation or enterprise. The indemnity may
include expenses (including attorneys fees), judgments,
fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or
proceeding, provided that such person acted in good faith and in
a manner he or she reasonably believed to be in or not opposed
to the corporations best interests and, with respect to
any criminal action or proceeding, had no reasonable cause to
believe that his or her conduct was illegal. A Delaware
corporation may indemnify any persons who are, or are threatened
to be made, a party to any threatened, pending or completed
action or suit by or in the right of the corporation by reason
of the fact that such person was a director, officer, employee
or agent of such corporation, or is or was serving at the
request of such corporation as a director, officer, employee or
agent of another corporation or enterprise. The indemnity may
include expenses (including attorneys fees) actually and
reasonably incurred by such person in connection with the
defense or settlement of such action or suit provided such
person acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the corporations best
interests except that no indemnification is permitted without
judicial approval if the officer or director is adjudged to be
liable to the corporation. Where an officer or director is
successful on the merits or otherwise in the defense of any
action referred to above, the corporation must indemnify him or
her against the expenses which such officer or director has
actually and reasonably incurred. Our amended and restated
certificate of incorporation and amended and restated bylaws,
each of which will become effective upon the completion of this
offering, provide for the indemnification of our directors and
officers to the fullest extent permitted under the Delaware
General Corporation Law.
Section 102(b)(7) of the Delaware General Corporation Law
permits a corporation to provide in its certificate of
incorporation that a director of the corporation shall not be
personally liable to the corporation or its stockholders for
monetary damages for breach of fiduciary duties as a director,
except for liability for any:
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|
|
|
|
transaction from which the director derives an improper personal
benefit,
|
|
|
|
act or omission not in good faith or that involves intentional
misconduct or a knowing violation of law,
|
|
|
|
unlawful payment of dividends or redemption of shares, or
|
|
|
|
breach of a directors duty of loyalty to the corporation
or its stockholders.
|
Our amended and restated certificate of incorporation and
amended and restated bylaws include such a provision. Expenses
incurred by any officer or director in defending any such
action, suit or proceeding in advance of its final disposition
shall be paid by us upon delivery to us of an undertaking, by or
on behalf of
II-1
such director or officer, to repay all amounts so advanced if it
shall ultimately be determined that such director or officer is
not entitled to be indemnified by us.
Section 174 of the Delaware General Corporation Law
provides, among other things, that a director, who willfully or
negligently approves of an unlawful payment of dividends or an
unlawful stock purchase or redemption, may be held liable for
such actions. A director who was either absent when the unlawful
actions were approved, or dissented at the time, may avoid
liability by causing his or her dissent to such actions to be
entered in the books containing minutes of the meetings of the
board of directors at the time such action occurred or
immediately after such absent director receives notice of the
unlawful acts.
As permitted by the Delaware General Corporation Law, we have
entered into indemnity agreements with each of our directors and
executive officers, a form of which is attached as
Exhibit 10.1 to our registration statement on
Form S-1
for our initial public offering and incorporated herein by
reference. The form agreement provides that we will indemnify
such persons against any and all expenses (including
attorneys fees), witness fees, damages, judgments, fines,
settlements and other amounts incurred (including expenses of a
derivative action) in connection with any action, suit or
proceeding, whether actual or threatened, to which any such
person may be made a party by reason of the fact that such
person is or was a director, an officer or an employee of Hansen
Medical or any of its affiliated enterprises, provided that such
person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to our best
interests and, with respect to any criminal proceeding, had no
reasonable cause to believe his or her conduct was unlawful. The
indemnification agreements also set forth certain procedures
that will apply in the event of a claim for indemnification
thereunder.
At present, there is no pending litigation or proceeding
involving any of our directors or executive officers as to which
indemnification is required or permitted, and we are not aware
of any threatened litigation or proceeding that may result in a
claim for indemnification.
We have an insurance policy covering our officers and directors
with respect to certain liabilities, including liabilities
arising under the Securities Act or otherwise.
Section 1.9 of our amended and restated investors
rights agreement provides for indemnification of certain of our
stockholders against liabilities described in our amended and
restated investors rights agreement, the form of which is
contained in Exhibit 4.4 to our registration statement on
Form S-1
for our initial public offering and is incorporated herein by
reference.
II-2
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ITEM 16.
|
Exhibits
and Financial Statement Schedules.
|
Exhibits.
|
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|
|
|
Exhibit
|
|
|
Number
|
|
Description of Document
|
|
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2
|
.1*
|
|
Agreement and Plan of Merger and Reorganization, dated
November 1, 2007, by and among Hansen Medical, Inc., AorTx,
Inc., Redwood Merger Subsidiary, Inc., Redwood Second Merger
Subsidiary, Inc., and David Forster and Louis Cannon, as
Stockholders Representatives (incorporated by reference to
Exhibit 2.1 of the Registrants Current Report on
Form 8-K
filed on November 19, 2007).
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|
4
|
.1*
|
|
Specimen Common Stock Certificate (incorporated by reference to
Exhibit 4.2 of Registrants
Form S-1
Registration Statement
No. 333-136685).
|
|
4
|
.2*
|
|
Form of Warrant to purchase shares of Series B convertible
preferred stock (incorporated by reference to Exhibit 4.3
of Registrants
Form S-1
Registration Statement
No. 333-136685).
|
|
4
|
.3*
|
|
Amended and Restated Investor Rights Agreement, dated
November 10, 2005, between the Registrant and certain of
its stockholders (incorporated by reference to Exhibit 4.4
of Registrants
Form S-1
Registration Statement
No. 333-136685).
|
|
4
|
.4*
|
|
Registration Rights Agreement, dated November 15, 2007, by
and among Hansen Medical, Inc. and the Investors listed therein
(incorporated by reference to Exhibit 4.1 of
Registrants Current Report on
Form 8-K
filed on November 19, 2007).
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5
|
.1
|
|
Opinion of Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian, LLP.
|
|
23
|
.1
|
|
Consent of PricewaterhouseCoopers LLP, Independent Public
Registered Accounting Firm.
|
|
23
|
.2
|
|
Consent of Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian, LLP. Reference is made to
Exhibit 5.1.
|
|
24
|
.1
|
|
Power of Attorney. Reference is made to the signature page
hereto.
|
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) to include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933, as amended;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or any decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Securities and Exchange Commission
pursuant to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the
Calculation of Registration Fee table in the
effective registration statement; and
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (a)(1)(i), (a)(1)(ii) and
(a)(1)(iii) do not apply if the information required to be
included in a post-effective amendment by those paragraphs is
contained in reports filed with or furnished to the Securities
and Exchange Commission by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange
Act of 1934, as amended, that are incorporated by reference in
the registration statement, or is contained in a form of
prospectus filed pursuant to Rule 424(b) that is a part of
the registration statement.
II-3
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, as amended, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under
the Securities Act of 1933, as amended, to any purchaser:
(i) Each prospectus filed by the registrant pursuant to
Rule 424(b)(3) shall be deemed to be part of the
registration statement as of the date the filed prospectus was
deemed part of and included in the registration
statement; and
(ii) Each prospectus required to be filed pursuant to
Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration
statement in reliance on Rule 430B relating to an offering
made pursuant to Rule 415(a)(1)(i), (vii), or (x) for
the purpose of providing the information required by
section 10(a) of the Securities Act of 1933, as amended,
shall be deemed to be part of and included in the registration
statement as of the earlier of the date such form of prospectus
is first used after effectiveness or the date of the first
contract of sale of securities in the offering described in the
prospectus. As provided in Rule 430B, for liability
purposes of the issuer and any person that is at that date an
underwriter, such date shall be deemed to be a new effective
date of the registration statement relating to the securities in
the registration statement to which that prospectus relates, and
the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof. Provided, however,
that no statement made in a registration statement or prospectus
that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the
registration statement will, as to a purchaser with a time of
contract of sale prior to such effective date, supersede or
modify any statement that was made in the registration statement
or prospectus that was part of the registration statement or
made in any such document immediately prior to such effective
date.
(5) That, for the purpose of determining liability of the
registrant under the Securities Act of 1933, as amended, to any
purchaser in the initial distribution of the securities, in a
primary offering of securities of the undersigned registrant
pursuant to this registration statement, regardless of the
underwriting method used to sell the securities to the
purchaser, if the securities are offered or sold to such
purchaser by means of any of the following communications, the
undersigned registrant will be a seller to the purchaser and
will be considered to offer or sell such securities to such
purchaser:
(i) Any preliminary prospectus or prospectus of the
undersigned registrant relating to the offering required to be
filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering
prepared by or on behalf of the undersigned registrant or used
or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus
relating to the offering containing material information about
the undersigned registrant or its securities provided by or on
behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the
offering made by the undersigned registrant to the purchaser.
II-4
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act
of 1933, as amended, each filing of the registrants annual
report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934, as amended (and, where
applicable, each filing of an employee benefit plans
annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934, as amended), that is incorporated by
reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising
under the Securities Act of 1933, as amended, may be permitted
to directors, officers and controlling persons of the
registrant, the registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act of
1933, as amended, and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act, the
Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Mountain View, State of California,
on the 23rd day of January, 2008.
HANSEN MEDICAL, INC.
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|
|
|
By:
|
/s/ Frederic
H. Moll, M.D.
|
Frederic H. Moll, M.D.
Founder and Chief Executive Officer
POWER OF
ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints Gary C. Restani
and Steven M. Van Dick, and each of them, his true and lawful
attorneys-in-fact and agents with full power of substitution,
for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including
post-effective amendments) to this registration statement, and
to sign all post-effective amendments thereto, and to file the
same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full
power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she
might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or his or
their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ Frederic
H. Moll, M.D.
Frederic
H. Moll, M.D.
|
|
Chief Executive Officer and Director
(Principal Executive
Officer)
|
|
January 23, 2008
|
|
|
|
|
|
/s/ Steven
M. Van Dick
Steven
M. Van Dick
|
|
Vice President, Finance and Administration and Chief Financial
Officer
(Principal Financial Officer)
|
|
January 23, 2008
|
|
|
|
|
|
/s/ Gary
C. Restani
Gary
C. Restani
|
|
President, Chief Operating Officer and Director
(Principal
Executive Officer)
|
|
January 23, 2008
|
|
|
|
|
|
/s/ John
G. Freund, M.D.
John
G. Freund, M.D.
|
|
Director
|
|
January 23, 2008
|
|
|
|
|
|
/s/ Russell
C. Hirsch, M.D., Ph.D.
Russell
C. Hirsch, M.D., Ph.D.
|
|
Director
|
|
January 23, 2008
|
|
|
|
|
|
/s/ Christopher
P. Lowe
Christopher
P. Lowe
|
|
Director
|
|
January 23, 2008
|
II-6
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ Joseph
M. Mandato
Joseph
M. Mandato
|
|
Director
|
|
January 23, 2008
|
|
|
|
|
|
/s/ Thomas
C. McConnell
Thomas
C. McConnell
|
|
Director
|
|
January 23, 2008
|
|
|
|
|
|
/s/ James
M. Shapiro
James
M. Shapiro
|
|
Director
|
|
January 23, 2008
|
II-7
EXHIBIT INDEX
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description of Document
|
|
|
2
|
.1*
|
|
Agreement and Plan of Merger and Reorganization, dated
November 1, 2007, by and among Hansen Medical, Inc., AorTx,
Inc., Redwood Merger Subsidiary, Inc., Redwood Second Merger
Subsidiary, Inc., and David Forster and Louis Cannon, as
Stockholders Representatives (incorporated by reference to
Exhibit 2.1 of the Registrants Current Report on
Form 8-K
filed on November 19, 2007).
|
|
4
|
.1*
|
|
Specimen Common Stock Certificate (incorporated by reference to
Exhibit 4.2 of Registrants
Form S-1
Registration Statement
No. 333-136685).
|
|
4
|
.2*
|
|
Form of Warrant to purchase shares of Series B convertible
preferred stock (incorporated by reference to Exhibit 4.3
of Registrants
Form S-1
Registration Statement
No. 333-136685).
|
|
4
|
.3*
|
|
Amended and Restated Investor Rights Agreement, dated
November 10, 2005, between the Registrant and certain of
its stockholders (incorporated by reference to Exhibit 4.4
of Registrants
Form S-1
Registration Statement
No. 333-136685).
|
|
4
|
.4*
|
|
Registration Rights Agreement, dated November 15, 2007, by
and among Hansen Medical, Inc. and the Investors listed therein
(incorporated by reference to Exhibit 4.1 of
Registrants Current Report on
Form 8-K
filed on November 19, 2007).
|
|
5
|
.1
|
|
Opinion of Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian, LLP.
|
|
23
|
.1
|
|
Consent of PricewaterhouseCoopers LLP, Independent Public
Registered Accounting Firm.
|
|
23
|
.2
|
|
Consent of Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian, LLP. Reference is made to
Exhibit 5.1.
|
|
24
|
.1
|
|
Power of Attorney. Reference is made to the signature page
hereto.
|
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