1142596--3/15/2007--NUVASIVE

related topics

{product, liability, claim}

{product, candidate, development}

{product, market, service}

{acquisition, growth, future}

{property, intellectual, protect}

{control, financial, internal}

{stock, price, operating}

{customer, product, revenue}

{stock, price, share}

{provision, law, control}

We are in a highly competitive market segment and face competition from large, well-established medical device manufacturers as well as new market entrants. To be commercially successful, we must convince spine surgeons that our products are an attractive alternative to existing surgical treatments of spine disorders. Our failure to continue building an effective and exclusive distribution network for our products could significantly impair our ability to increase sales of our products. Our future success depends on our ability to timely develop and introduce new products or product enhancements that will be accepted by the market. We may encounter difficulties in integrating acquired products, technologies or businesses, which could adversely affect our business. We are dependent on single source suppliers and manufacturers for certain of our products and components, and the loss of any of these suppliers or manufacturers, or their inability to supply us with an adequate supply of materials could harm our business. Any failure in our efforts to successfully generate business from hospitals following surgeon training could significantly reduce the market acceptance of our products. We are dependent on the services of Alexis V. Lukianov and Keith Valentine, and the loss of either of them could harm our business. If we fail to properly manage our anticipated growth, our business could suffer. If clinical trials of our current or future product candidates do not produce results necessary to support regulatory approval in the United States or elsewhere, we will be unable to commercialize these products. We depend on clinical investigators and clinical sites to enroll patients in our clinical trials and other third parties to manage the trials and to perform related data collection and analysis, and, as a result, we may face costs and delays that are outside of our control. If we fail to obtain, or experience significant delays in obtaining, FDA clearances or approvals for our future products or product enhancements, our ability to commercially distribute and market our products could suffer. The safety of our products is not yet supported by long-term clinical data and may therefore prove to be less safe and effective than initially thought. If we or our suppliers fail to comply with the FDA s quality system regulations, the manufacture of our products could be delayed. Modifications to our marketed products may require new 510(k) clearances or premarket approvals, or may require us to cease marketing or recall the modified products until clearances are obtained. Risks Related to Our Financial Results and Need for Financing We have a limited operating history, have incurred significant operating losses since inception and expect to continue to incur losses, and we cannot assure you that we will achieve profitability. Our quarterly financial results are likely to fluctuate significantly because our sales prospects are uncertain. Risks Related to Our Intellectual Property and Potential Litigation Our ability to protect our intellectual property and proprietary technology through patents and other means is uncertain. If we become subject to product liability claims, we may be required to pay damages that exceed our insurance coverage. Any claims relating to our making improper payments to physicians for consulting services, or other potential violations of regulations governing interactions between us and healthcare providers, could be time consuming and costly. We or our suppliers may be the subject of claims for non-compliance with FDA regulations in connection with the processing or distribution of allograft implants. Risks Related to the Securities Markets and Ownership of Our Common Stock We expect that the price of our common stock will fluctuate substantially, potentially adversely affecting the ability of investors to sell their shares. Recent changes in the required accounting treatment for stock options have had a material negative impact on our financial statements and may affect our stock price. Anti-takeover provisions in our organizational documents and Delaware law may discourage or prevent a change of control, even if an acquisition would be beneficial to our stockholders, which could affect our stock price adversely and prevent attempts by our stockholders to replace or remove our current management.

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1142596--3/15/2007--NUVASIVE_INC