919015--3/20/2009--BIOSPHERE_MEDICAL

related topics

{product, liability, claim}

{stock, price, operating}

{product, candidate, development}

{property, intellectual, protect}

{operation, international, foreign}

{acquisition, growth, future}

{customer, product, revenue}

{product, market, service}

{regulation, change, law}

{control, financial, internal}

{financial, litigation, operation}

{stock, price, share}

{condition, economic, financial}

{personnel, key, retain}

{cost, operation, labor}

{regulation, government, change}

{provision, law, control}

Risks Relating to Our Future Profitability, Our Financial Results and Need For Financing Because we have a history of losses and our future profitability is uncertain, our common stock is a speculative investment. We will continue to need additional funds, and if additional capital is not available, we may have to limit or scale back our operations. We are a defendant in two product liability lawsuits, the outcomes of which are uncertain, which could result in adverse judgments substantially in excess of our product liability coverage and which could harm our business, reputation and financial condition. If our operating results fluctuate significantly from quarter to quarter, then our stock price may decline. Unstable market and economic conditions may have serious adverse consequences on our business. Compliance with changing regulation of corporate governance and public disclosure as well as potential new accounting pronouncements could impact our future financial position and results of operations. Failure to maintain effective internal controls in accordance with section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and stock price. Changes to our performance in each jurisdiction in which we operate, resulting from either changes in our business or as a result of routine tax audits, could materially impact our deferred tax assets or could materially impact our future financial position or results of operations. Risks Relating to Our Industry, Business and Strategy A significant portion of our revenue is derived from sales of our Embosphere Microspheres for UFE, and if we do not successfully commercialize and achieve widespread market acceptance of our Embosphere Microspheres for UFE, our business will be materially harmed and our stock price will decline. If the market concludes that our products are not safe or effective, we will not achieve widespread market acceptance of our microsphere products, and our business prospects will be seriously harmed. If gynecologists, obstetricians, interventional radiologists and other health-care providers do not recommend and endorse our products, and if health-care providers do not make the necessary referrals to interventional radiologists who administer our embolotherapy products, our sales may decline or we may be unable to increase our sales and profits. If we experience delays, difficulties or unanticipated costs in establishing and growing the sales and distribution and marketing capabilities necessary to successfully commercialize our products, we will have difficulty maintaining and seeking to increase our sales. We will be required to expend significant resources for research, development, testing and regulatory approval of our products under development, and these products may not be developed successfully. If we do not develop and introduce new products, our business may not grow and our future prospects may be adversely affected. We may be exposed to product liability claims, and if we are unable to obtain or maintain adequate product liability insurance, then we may incur substantial costs and expenses in defending such claims and may have to pay significant monetary damages in a successful product liability claim against us. If we are required to recall any of our products we may experience a decrease in the market acceptance of our products and our reputation may be harmed, hindering our ability to generate revenue from sales of our product. If we are not able to compete effectively, we may experience decreased demand for our products, which may result in price reductions. If we fail to maintain, or in some instances obtain, an adequate level of reimbursement for our products by third-party payors, there may be no commercially viable markets for our products. If we do not recruit and retain senior management and other key employees, we may not be able to successfully implement our business strategy. If we make any acquisitions, we will incur a variety of costs and may never successfully integrate the acquired businesses into ours. Because key stockholders beneficially own a significant amount of our common stock, they may be able to exert control over us. The holders of shares of our series A preferred stock have rights that could adversely affect an investment in our common stock. Our employees may engage in misconduct or other improper activities, including insider trading. Risks Relating to Regulatory Matters If we do not obtain and maintain the regulatory approvals or clearances required to market and sell our products, then our business may be unsuccessful and the market price of our stock may decline. If the FDA or other regulatory agencies place restrictions on, or impose additional approval requirements with respect to, products we are then marketing, we may incur substantial additional costs and experience delays or difficulties in continuing to market and sell these products. Even if we obtain the necessary FDA clearances or approvals, if we or our suppliers fail to comply with ongoing regulatory requirements, our products could be subject to corrections, removals or recalls from the market or other enforcement action. Recently enacted legislation may make it more difficult and costly for us to obtain regulatory approval of our product candidates and to produce, market and distribute products after approval. We may be subject, directly or indirectly, to federal and state health care fraud and abuse laws and regulations and, if we are unable to fully comply with such laws, could face substantial penalties. Risks Relating to Our Intellectual Property If we are unable to obtain patent protection for our products, their competitive value could decline. If we become involved in expensive patent litigation or other proceedings to enforce or defend our patent rights, we could incur substantial costs and expenses or substantial liability for damages or be required to stop our product development and commercialization efforts. If any of our licenses to use third-party technologies in our products are terminated, we may be unable to develop, market or sell our products. Risks Relating to the Production and Supply of Our Products If we experience manufacturing delays or interruptions in production, then we may experience customer dissatisfaction and our reputation could suffer. Because we rely on a limited number of suppliers, we may experience difficulty in meeting our customers' demands for our products in a timely manner or within budget. Risks Relating to Our Foreign Operations If we are unable to meet the operational, legal and financial challenges that we encounter in our international operations, we may not be able to grow our business. Because we translate foreign currency from international sales into U.S. dollars and are required to make foreign currency payments, we may incur losses due to fluctuations in foreign currency exchange rates. Risk Relating to Our Stock Price Because the market price of our stock is highly volatile, investments in our stock could rapidly lose their value and we may incur significant costs from class action litigation. 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.

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919015--3/20/2009--BIOSPHERE_MEDICAL_INC