1212235--4/2/2007--XTENT

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{cost, regulation, environmental}

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Risks Related to Our Business We are a development stage company with a history of losses, and we expect to incur net losses for the foreseeable future. We are wholly dependent on a third party for the development of the drug coating placed on our drug eluting stents and any delay or failure by such third party to successfully develop the drug coating or to submit an acceptable DMF to regulatory authorities could delay our clinical trials or prevent or delay commercialization of our Custom NX DES Systems. We currently do not have, and may never have, any products available for sale and our efforts to obtain product approvals and commercialize our products may not succeed or may result in delays for many reasons. We have not received, and may never receive, FDA or other regulatory approvals to market our Custom NX DES Systems. Preliminary third-party data has raised concerns that drug eluting stents may cause an increase in late-stent thrombosis. In the event that regulatory authorities determine that such concerns are valid or otherwise require additional study and analysis, we may experience a delay in obtaining or we may be unable to obtain regulatory clearances for our products and, even if approved, the market acceptance of our products may be significantly impaired. If Biosensors fails to supply us with sufficient quantities of our drug coating, or fails to test samples of our products accurately or in a timely manner, development and commercialization of our Custom NX DES Systems may be prevented or delayed as a result. We do not have long-term data regarding the safety and efficacy of our Custom NX DES Systems. Any long-term data that is generated may not be consistent with our limited short-term data, which could affect the regulatory approval of our products or the rate at which our products are adopted. If our pre-clinical studies or clinical trials do not meet safety or efficacy endpoints, or if we experience significant delays in completing these studies or trials, our ability to commercialize our Custom NX DES Systems or other products and our financial position will be impaired. Clinical trials necessary to support a PMA application will be expensive and will require the enrollment of large numbers of patients, and suitable patients may be difficult to identify and recruit. Physicians may not widely adopt our Custom NX DES Systems unless they determine, based on experience, long-term clinical data and published peer reviewed journal articles, that the use of our Custom NX DES Systems provides a safe and effective alternative to other existing treatments for coronary artery disease. Problems with the stent to be used in the control group during our planned U.S. pivotal clinical trial could adversely affect its outcome. Our products are based on a new technology, and we have only limited experience in regulatory affairs, which may affect our ability or the time required to obtain necessary regulatory approvals, if at all. If the third parties on which we rely to conduct our clinical trials and to assist us with pre-clinical development do not perform as contractually required or expected, we may not be able to obtain regulatory approval for or commercialize our products. Even if our products are approved by regulatory authorities, if we or our suppliers fail to comply with ongoing regulatory requirements, or if we experience unanticipated problems with our products, these products could be subject to restrictions or withdrawal from the market. Failure to obtain regulatory approval in foreign jurisdictions will prevent us from marketing our products abroad. Risks Related to Our Intellectual Property Third parties hold a large number of patents related to stents and we do not have rights to many of these patents. Many of our competitors are much larger than we are, with significant resources and incentives to initiate litigation against us. Any lawsuit, whether initiated by us to enforce our intellectual property rights or by a third party against us alleging infringement, may cause us to expend significant financial and other resources, and may divert our attention from our business. If we are unable to obtain and maintain intellectual property protection covering our products, others may be able to make, use or sell our products, which would adversely affect our revenue. The medical device industry is highly competitive and subject to rapid technological change. If our competitors are better able to develop and market products that are safer, more effective, less costly or otherwise more attractive than any products that we may develop, our commercial opportunity will be reduced or eliminated. If we are unable to establish sales and marketing capabilities or enter into and maintain arrangements with third parties to sell and market our Custom NX DES Systems, our business may be harmed. We have limited device manufacturing and drug coating capabilities and manufacturing personnel, and if our device manufacturing and drug coating facilities or our suppliers are unable to provide an adequate supply of products, our growth could be limited and our business could be harmed. Our manufacturing facilities and the manufacturing facilities of our suppliers must comply with strictly enforced regulatory requirements. If we fail to achieve regulatory approval for these manufacturing facilities, our business and our results of operations would be harmed. We depend on single-source suppliers for some of the components in our Custom NX DES Systems. The loss of these suppliers could delay our clinical trials or prevent or delay commercialization of our Custom NX DES Systems. If we do not achieve our projected development goals in the time frames we announce and expect, the commercialization of our products may be delayed and, as a result, our stock price may decline. We may not be successful in our efforts to expand our portfolio of products and develop additional technologies. We depend on our officers, and if we are not able to retain them or recruit additional qualified personnel, our business will suffer. We will need substantial additional funding and may be unable to raise capital when needed, which would force us to delay, reduce or eliminate our product development programs or commercialization efforts. If we are unable to manage our expected growth, we may not be able to commercialize our products, including our Custom NX DES Systems. Risks Related to Our Industry If we fail to obtain an adequate level of reimbursement for our products from third-party payors, there may be no commercially viable markets for our products or the markets may be much smaller than expected. Legislative or regulatory reform of the healthcare system may affect our ability to sell our products profitably. We face the risk of product liability claims and may not be able to obtain insurance. Risks Related to Our Operations Our operations involve hazardous materials, and we must comply with environmental laws and regulations, which can be expensive. Because we have operated as a private company, we have no experience complying with public company obligations, including recently enacted changes in securities laws and regulations. Compliance with these requirements will increase our costs and require additional management resources, and we still may fail to comply. We are recording compensation expense that may result in an increase in our net losses for a given period. Changes in, or interpretations of, accounting rules and regulations, such as expensing of stock options, could result in unfavorable accounting charges or require us to change our compensation policies. We expect that the price of our common stock will fluctuate substantially. A sale of a substantial number of shares of our common stock may cause the price of our common stock to decline. Our directors, officers and principal stockholders have significant voting power and may take actions that may not be in the best interests of our other stockholders. Volatility in the stock price of other companies may contribute to volatility in our stock price. Anti-takeover provisions in our amended and restated certificate of incorporation and amended and restated bylaws, and Delaware law, contain provisions that could discourage a takeover. 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 stock.

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1212235--4/2/2007--XTENT_INC