789132--3/15/2010--SPECTRANETICS

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{acquisition, growth, future}

{regulation, government, change}

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{financial, litigation, operation}

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{competitive, industry, competition}

{regulation, change, law}

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Our business, financial condition, results of operations and cash flows could be significantly and adversely affected if certain healthcare reform proposals are adopted in our key markets and other administration and legislative proposals are enacted into law. Our ability to increase our revenue is largely dependent on our ability to successfully penetrate our target markets and develop new products for those markets. Our future growth depends on physician adoption of our products, which requires physicians to change their screening, referral and treatment practices. We may be unable to compete successfully with bigger companies in our highly competitive industry. Our sales and marketing team may be unable to compete with our larger competitors or to reach potential customers. Our products may not achieve market acceptance. If we do not achieve our projected development goals in the timeframes we announce and expect, the commercialization of our products under development may be delayed and our business may be harmed. Our business may be adversely affected by current litigation and other legal proceedings. We are involved in securities class action litigation and shareholder derivative litigation that is expensive and could divert management's attention from operating our business. If our clinical trials are unsuccessful or significantly delayed, or if we do not complete our clinical trials, our business may be harmed. Regulatory compliance is expensive and complex, and approvals can often be denied or significantly delayed. Our regulatory compliance program cannot guarantee that we are in compliance with all potentially applicable U.S. federal and state regulations and all potentially applicable foreign regulations. Compliance with the terms and conditions of our Corporate Integrity Agreement with the Office of Inspector General of the United States Department of Health and Human Services requires significant resources and management time and, if we fail to comply, we could be subject to penalties or, under certain circumstances, excluded from government health care programs, which would materially reduce our sales. Our investments in auction rate securities are currently illiquid. Adverse changes in general domestic and worldwide economic conditions and instability and disruption of credit markets could adversely affect our operating results, financial condition, or liquidity. Some of our licensed patents have expired and others will expire in 2010, and our patents and proprietary rights may be proved invalid, which would enable competitors to copy our products. We have a history of losses and may not be able to achieve and maintain profitability. The amount of our net operating loss carryovers may be limited. Our products are subject to recalls after receiving FDA or foreign approval or clearance, which would divert managerial and financial resources, harm our reputation, and could adversely affect our business. The FDA requires the use of adjunctive balloon angioplasty in coronary procedures performed using our products, which increases the cost of performing these procedures. Technological change may result in our products becoming obsolete. Third parties may infringe our patents or challenge their validity or enforceability. We and our component suppliers may not meet regulatory quality standards applicable to our manufacturing processes, which could have an adverse effect on our business, financial condition and results of operations. Healthcare cost containment pressures and legislative or administrative reforms resulting in restrictive coverage and reimbursement practices of third-party payers could decrease the demand for our products, the prices that customers are willing to pay for those products and the number of procedures performed using our devices, which could have an adverse effect on our business. We may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws and regulations and, if we are unable to fully comply with such laws, could face substantial penalties. If we fail to obtain regulatory approvals in other countries for our products, we will not be able to market our products in such countries, which could harm our business. We are exposed to the problems that come from having international operations. Our international operations may not be successful or may not be able to achieve revenue growth. We have important sole source suppliers and may be unable to replace them if they stop supplying us. We began to relocate our manufacturing operations to our expanded leased facility in northern Colorado Springs in 2008. If we fail to conduct the relocation in an efficient manner, our operation results may be adversely affected. From time to time we engage outside parties to perform services related to certain of our clinical studies and trials, and any failure of those parties to fulfill their obligations could result in costs and delays. If we do not effectively manage our growth, our business may be harmed. Product liability and other claims against us may reduce demand for our products or result in substantial damages. We may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights, which could result in substantial costs and liability. If we are not able to protect and control unpatented trade secrets, know-how and other technological innovation, we may suffer competitive harm. Environmental and health safety laws may result in liabilities, expenses and restrictions on our operations. We depend on attracting and retaining key management, clinical, scientific and sales and marketing personnel, and the loss of these personnel could impair the development and sales of our products. The initial cost of purchasing our laser system is not reimbursed by third-party payers, which may hurt sales of both our laser systems and our disposable products. If we make acquisitions, we could encounter difficulties that harm our business. Our stock price may continue to be volatile. Protections against unsolicited takeovers in our charter and bylaws may reduce or eliminate our stockholders' ability to resell their shares at a premium over market price.

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789132--3/15/2010--SPECTRANETICS_CORP