1145197--3/16/2009--INSULET

related topics

{product, liability, claim}

{product, market, service}

{property, intellectual, protect}

{customer, product, revenue}

{operation, international, foreign}

{acquisition, growth, future}

{product, candidate, development}

{financial, litigation, operation}

{stock, price, operating}

{regulation, government, change}

{debt, indebtedness, cash}

{control, financial, internal}

{personnel, key, retain}

{condition, economic, financial}

{gas, price, oil}

Our ability to achieve profitability from a current net loss level will depend on our ability to reduce the per unit cost of producing the OmniPod by increasing our customer orders and manufacturing volume. Adverse changes in general economic conditions in the United States could adversely affect us. We may need to raise additional funds in the future, and these funds may not be available on acceptable terms or at all. We are dependent upon third-party suppliers, making us vulnerable to supply problems and price fluctuations. Our financial condition or results of operations may be adversely affected by international business risks. Failure to secure or retain adequate coverage or reimbursement for the OmniPod System by third-party payors could adversely affect our business, financial condition and results of operations. We face competition from numerous competitors, most of whom have far greater resources than we have, which may make it more difficult for us to achieve significant market penetration and which may allow them to develop additional products for the treatment of diabetes that compete with the OmniPod System. Technological breakthroughs in diabetes monitoring, treatment or prevention could render the OmniPod System obsolete. If our existing license agreement with Abbott Diabetes Care, Inc. is terminated or we fail to enter into new license agreements allowing us to incorporate a blood glucose meter into the OmniPod System, our business may be materially adversely impacted. The patent rights on which we rely to protect the intellectual property underlying the OmniPod System may not be adequate, which could enable third parties to use our technology and would harm our continued ability to compete in the market. Other rights and measures we have taken to protect our intellectual property may not be adequate, which would harm our ability to compete in the market. We may need to initiate lawsuits to protect or enforce our patents and other intellectual property rights, which could be expensive and, if we lose, could cause us to lose some of our intellectual property rights, which would harm our ability to compete in the market. Claims that our current or future products infringe or misappropriate the proprietary rights of others could adversely affect our ability to sell those products and cause us to incur additional costs. We are subject to extensive regulation by the U.S. Food and Drug Administration, which could restrict the sales and marketing of the OmniPod System and could cause us to incur significant costs. If we, our contract manufacturers or our component suppliers fail to comply with the FDA s quality system regulations, the manufacturing and distribution of our devices could be interrupted, and our product sales and operating results could suffer. Our current or future products are subject to recalls even after receiving FDA clearance or approval, which would harm our reputation, business and financial results. We are subject to federal and state laws prohibiting kickbacks and false or fraudulent claims, which, if violated, could subject us to substantial penalties. Additionally, any challenge to or investigation into our practices under these laws could cause adverse publicity and be costly to respond to, and thus could harm our business. If we are found to have violated laws protecting the confidentiality of patient health information, we could be subject to civil or criminal penalties, which could increase our liabilities and harm our reputation or our business. Product liability suits, whether or not meritorious, could be brought against us due to an alleged defective product or for the misuse of our devices. These suits could result in expensive and time-consuming litigation, payment of substantial damages, and an increase in our insurance rates. Our ability to grow our revenues depends in part on our retaining a high percentage of our customer base. We intend to sponsor market studies seeking to demonstrate certain aspects of the efficacy of the OmniPod System, which may fail to produce favorable results. If future clinical studies or other articles are published, or diabetes associations or other organizations announce positions that are unfavorable to the OmniPod System, our sales efforts and revenues may be negatively affected. If we expand, or attempt to expand, into foreign markets, we will be affected by new business risks that may adversely impact our business, financial condition and results of operations. Substantially all of our operations are conducted at a single location and substantially all of our inventory is held at a single location; any disruption at either of these locations could increase our expenses. Our success will depend on our ability to attract and retain our personnel. If we do not effectively manage our growth, our business resources may become strained, we may not be able to deliver the OmniPod System in a timely manner and our results of operations may be adversely affected. We may experience significant fluctuations in our quarterly results of operations. If we choose to acquire or invest in new businesses, products or technologies, instead of developing them ourselves, these acquisitions or investments could disrupt our business and could result in the use of significant amounts of equity, cash or a combination of both. We may not be able to generate sufficient cash to service all of our indebtedness, including our 5.375% Convertible Senior Notes due June 15, 2013, and may be forced to take other actions to satisfy our obligations under our indebtedness or we may experience a financial failure. We need to expand our distribution network to maintain and grow our business and revenues. If we fail to expand and maintain an effective sales force or successfully develop our relationship with distributors, our business, prospects and brand may be materially and adversely affected. If we are unable to successfully maintain effective internal control over financial reporting, investors may lose confidence in our reported financial information and our stock price and our business may be adversely impacted. The price of our common stock may be volatile.

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1145197--3/16/2009--INSULET_CORP