924717--12/14/2007--SURMODICS

related topics

{property, intellectual, protect}

{product, candidate, development}

{acquisition, growth, future}

{customer, product, revenue}

{product, liability, claim}

{product, market, service}

{stock, price, operating}

{personnel, key, retain}

{regulation, change, law}

{cost, regulation, environmental}

RISKS RELATING TO OUR BUSINESS, STRATEGY AND INDUSTRY The loss of, or significant reduction in business from, one or more of our major customers could significantly reduce our revenue, earnings or other operating results. The long-term success of our business may suffer if we are unable to expand our licensing base to reduce our reliance upon several major customers. Surface modification and drug delivery are competitive markets and carry the risk of technological obsolescence. Failure to identify strategic investment and acquisition opportunities may limit our growth. Any acquisitions that we undertake could be difficult to integrate, disrupt our business, dilute shareholder value, or harm our operating results. Our acquisition of Brookwood Pharmaceuticals could be difficult to integrate and may disrupt our business, dilute shareholder value, or harm our operating results. Our failure to expand our management systems and controls to support anticipated growth or integrate acquisitions could seriously harm our operating results and business. Research and development of new technologies may adversely affect our operating results. We recognize revenue in accordance with various complex accounting standards, and changes in circumstances or interpretations may lead to accounting adjustments. RISKS RELATING TO OUR OPERATIONS AND RELIANCE ON THIRD PARTIES We rely on third parties to market, distribute and sell the products incorporating our technologies, and those third parties may not perform or agreements with those parties could be terminated. We have limited or no redundancy in our manufacturing facilities, and we may lose revenue and be unable to maintain our customer relationships if we lose our production capacity. We have limited experience manufacturing pharmaceutical products for commercial sale and use, and we may be subject to adverse consequences if we fail to comply with applicable regulations. We may face product liability claims related to participation in clinical trials or the use or misuse of our products. Our manufacture and supply of pharmaceutical products may subject us to product liability claims directly against us that could result in costly litigation and significant liability Our revenue will be harmed if we cannot purchase sufficient reagent components we use in our manufacture of reagents. We are dependent upon key personnel and may not be able to attract qualified personnel in the future. RISKS RELATING TO CLINICAL AND REGULATORY MATTERS Products incorporating our technologies are subject to continuing regulations and an extensive approval process. If our licensees are unable to obtain or maintain the necessary regulatory approvals for such products, then our licensees will not be able to commercialize those products on a timely basis, if at all. Any adverse results in the clinical trials involving the I-vation intravitreal implant could weaken our ability to commercialize the implant in a timely, cost-effective manner, if at all. We may face liability if we mishandle or improperly dispose of the hazardous materials used in some of our research, development and manufacturing processes. RISKS RELATING TO OUR INTELLECTUAL PROPERTY If we cannot adequately protect our technologies and proprietary information, we may be unable to sustain a competitive advantage. We may become involved in expensive and unpredictable patent litigation or other intellectual property proceedings which could result in liability for damages, or impair our development and commercialization efforts. If we are unable to keep our trade secrets confidential, our technology and proprietary information may be used by others to compete against us. If we or any of our licensees breach any of the agreements under which we have in-licensed intellectual property from others, we could be deprived of important intellectual property rights and future revenue. RISKS RELATING TO OUR SECURITIES Our stock price has been volatile and may continue to be volatile.

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924717--12/14/2007--SURMODICS_INC