SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORT
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

(Mark One)

ý            ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2001

OR

o            TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from               to

 

Commission file number  0-32501

Securities registered pursuant to Section 12(g) of the Act:

Common stock, par value $0.001

Indicate by check mark whether the registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ý  No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

The aggregate market value of the common stock of the registrant held by non-affiliates of the registrant on January 28, 2002 was $41,015,068, based on the average of the reported high and low sales price of the registrant’s common stock on January 28, 2002 as reported on the Neuer Markt of the Frankfurt Stock Exchange, of 3.90 Euros, or $3.3525 per share, based on the exchange rate in effect as of such date.

As of January 28, 2002, there were 15,106,623 shares of the registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s proxy statement for the 2002 Annual Meeting of Stockholders, to be held on May 28, 2002, which will be filed with the Securities and Exchange Commission within 120 days after the end of the year ended December 30, 2001, are incorporated by reference in Part III, Items 10, 11, 12 and 13 of this Form 10-K.

 

TABLE OF CONTENTS

Item 1.	Business
Item 2.	Properties
Item 3.	Legal Matters
Item 4.	Submission of Matters to a Vote of Security Holders
Item 5.	Market for Registrant’s Common Equity and Related Stockholder Matters
Item 6.	Selected Financial Data
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7a.	Quantitative and Qualitative Disclosures About Market Risk
Item 8.	Financial Statements and Supplementary Data
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Item 10.	Directors and Executive Officers of the Registrant
Item 11.	Executive Compensation
Item 12.	Security Ownership of Certain Beneficial Owners and Management
Item 13.	Certain Relationships and Related Transactions
Item 14.	Exhibits, Financial Statement Schedules and Reports on Form 8-K

 

 

 

 

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains certain statements that may be deemed ‘forward-looking statements’ within the meaning of Section 21E of the Securities Exchange Act of 1934.  All statements, other than statements of historical fact, that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements.  Such statements are based upon certain assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate.  The forward-looking statements included in this report are also subject to a number of material risks and uncertainties, including but not limited to economic, competitive, governmental and technological factors affecting our operations, markets, products and prices.  Such forward-looking statements are not guarantees of future performance and actual results, will likely differ, perhaps materially, from those envisaged by such forward-looking statements.

 

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PART I

Item 1.  Business

General

We were initially formed as a California general partnership in July 1996, and incorporated in the State of Delaware in May 1997.  We develop, manufacture and market bioresorbable surgical implants to aid in the reconstruction, repair and regeneration of bone and the healing of soft tissues throughout the body, as well as related instruments and accessories used in connection with our implants.  Our bioresorbable implants are used in craniomaxillofacial, neurological, orthopedic, spinal and reconstructive surgery.  We have also developed a bioresorbable surgical film that we intend to begin marketing later in 2002 for use in a wide variety of surgical applications.  Since all of our current products and those in development target the biosurgery market, we began doing business under the name MacroPore Biosurgery in December 2001, to better reflect our company’s technology and business as a whole.  We will ask our stockholders to approve the change of our name at our annual meeting in May 2002.

Our bioresorbable products are made from a copolymer composed of a lactic acid similar to that which occurs naturally in the human body.  The lactic acid copolymer maintains its strength during the healing process, while slowly breaking down in the body through hydrolysis into lactic acid molecules and ultimately metabolizing into carbon dioxide and water, which are then released from the body through the lungs and the kidneys.  We believe that our products are easier to use and more cost-effective than products made from alternative materials, such as titanium or other metals.  We believe the benefits of using a bioresorbable material in bone healing and regenerating applications include:

•                  no long-term growth restrictions such as those related to the use of metallic plates and screws in pediatric patients

•                  no distortion of diagnostic and therapeutic imaging and no creation of imaging artifacts such as are commonly encountered with metal systems

•                  no long-term patient palpation

•                  no interference with x-rays

•                  virtually eliminates thermal sensitivity from temperature changes

•                  reduced risk of migration of plates and screws during the bone healing process

•                  lowered risk of infection

•                  may eliminate additional surgery to remove non-bioresorbable implants

•                  encouragement of normal bone growth and increased strength of regenerated bone compared to non-bioresorbable products, particularly metal, that may shield the bone from the stress that facilitates bone growth and bone strength

In addition, because of their thermoplastic properties, our bioresorbable products are easy to shape, size and apply to varying anatomical structures, which we believe allows for a better anatomical fit and saves valuable minutes in the operating room.

 

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We have received regulatory clearance or approval to market and sell some of our products in the United States, Europe and other countries. We entered into an exclusive worldwide agreement with Medtronic, Inc. in January 2000, for the global marketing and distribution of some of our products for use in the craniofacial skeleton.  We also entered into an exclusive agreement with Medtronic to co-develop and supply them with bioresorbable implants for spinal fixation, stabilization and fusion.

During 2001, we received regulatory clearance for:

•                  the use of our MacroPore OS Spine bone graft containment system in spinal fusion procedures

•                  the use of our MacroPore ENT Reconstruction Film film in ear, nose and throat applications for the prevention of postsurgical adhesions, guided tissue regeneration, splinting and tympanic membrane repair

•                  the use of our MacroPore TS Surgi-Wrap™ film for wound support and soft tissue reinforcement throughout the entire human body

•                  the use of our MacroPore LP system in reconstructive surgery to correct pediatric skeletal birth defects and in cranial reconstruction

•                  the use of our MacroPore IB system as a cement restrictor in specified orthopedic applications

•                  the expanded use of some of our product lines, including MacroPore FX, MacroPore PS and MacroPore NS, in specified craniomaxillofacial procedures

We continue to seek patents on our technology and recently received a U.S. patent for the design of our high torque, resorbable StarBurst Screws which is used in many of our products.

We are also developing additional products for use in spinal fusion procedures, neurosurgery plating, long-bone repair, healing of non-union fractures and cyst or tumor removal site repair, among other things.  These future products may require further development and regulatory clearance or approval, potentially including clinical trials, prior to marketing and commercial use.

Products and Services

We manufacture our products solely in the United States at our San Diego facility.  We currently market nine product lines in the United States and Europe for use in the craniofacial skeleton, spine and for certain applications in the entire skeleton, and we intend to release and begin marketing two additional products, MacroPore Surgi-Wrap™ and MacroPore ENT Reconstruction Film, later in 2002.  Our current product lines are:

 

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Product Lines		Product Components		Use
MacroPore FX		over 120 bioresorbable components, including specially designed plates, screws, tacks and mesh, as well as instruments and accessories		for use in adult and pediatric patients in trauma, reconstructive procedures, and other surgeries for craniomaxillofacial and neurosurgical applications
MacroPore PS		bioresorbable macroporous sheets of various shapes and sizes, as well as instruments and accessories		for use in adult and pediatric patients to facilitate healing and bone regeneration in the skeletal system by, among other things, maintaining the position of bony fragments in trauma and bone graft procedures, and maintaining space beneath soft tissues and allowing bone growth to occur in a protected environment
MacroPore OS		bioresorbable macroporous sheets of various shapes and sizes, together with instruments, accessories and bioresorbable screws and tacks		for the containment of bone grafts other than in the spine, and for reconstruction of the iliac crest, or hip, bone graft donor site
MacroPore OS Spine		bioresorbable macroporous sheets of various shapes and sizes, together with instruments, accessories and bioresorbable screws and tacks		for the containment of bone grafts or bone graft substitutes in spinal fusion procedures
MacroPore NS		specially designed bioresorbable plates		in cranial reconstruction or cranial closure following neurosurgical applications
MacroPore LP		specially designed bioresorbable macroporous sheets of various shapes and sizes, with related instruments, accessories and low profile bioresorbable screws and tacks		in pediatric and adult patients in plastic, reconstructive, and neurosurgical procedures, as well as other specialized surgical applications
MacroPore MX		specially designed  bioresorbable plates and screws with templates and various specialized instrumentation		mandibular fracture fixation
MacroPore DX		fully and partially bioresorbable craniofacial distraction device, together with specialty instruments and accessories		to gradually lengthen the midface cranial skeleton to correct cranial skeleton growth disorders
MacroPore IB		bioresorbable surgical plug		cement restrictor in the femur, tibia and humerus
MacroPore TS Surgi-Wrap™		bioresorbable surgical reconstruction film		soft tissue reinforcement and temporary wound support throughout the body
MacroPore ENT Reconstruction Film		bioresorbable surgical reconstruction film		prevention of adhesions, guided tissue regeneration and surgical repair in specified ear, nose and throat applications

 

For the year ended December 31, 2001, revenue realized from the sale of our craniofacial products accounted for more than 67.0% of our revenue.  Since all of our products are developed and sold for use in the medical device industry and have similar purposes, production processes, markets and regulatory requirements, we report them as a single industry segment.

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We provide a range of support services to our customers and to surgeons interested in using our products, including:

 

•                  producing promotional, educational and instructional materials and literature

•                  producing scientific publications

•                  demonstrating our products

•                  training at our San Diego headquarters

•                  teaching regional and on-site training seminars and symposia

•                  providing support personnel to advise surgeons during surgery on the use of our products

Plan of Operation

During 2002, we intend to focus our efforts on:

•                  enhancing production planning systems and manufacturing processes to reduce costs and increase capacity of our high volume spinal products

•                  developing product training materials and publishing pre-clinical research reports to support 2002 Medtronic launches of MacroPore products

•                  establishing a world-wide distribution network for sales of our bioresorbable surgical film products

•                  obtaining further clearances and approvals for the use of our bioresorbable surgical film products for the prevention of post-operative adhesion and scarring

•                  expanding the distribution of our craniomaxillofacial and spinal products in overseas markets

•                  continuing our development and testing of spinal implants with Medtronic

•                  continuing our development of new bioresorbable polymers with differing resorbtion profiles and handling characteristics for our use in future product development

•                  continuing our development of the second generation of some of our existing products

•                  developing new uses for our existing products and continuing our research and development of new products, including additional products for orthopedic, spinal, craniomaxillofacial and neurologic applications

•                  continuing our development of implant systems and instrumentation to deliver biologics such as adult stem cells, and biological molecules such as bone morphogenetic proteins that may improve healing time and the quality of tissue regeneration

•                  continuing our collaboration with StemSource to determine optimal applications and techniques for the implantation of adult stem cells

 

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•                  continuing to provide marketing support to Medtronic by attending trade shows and providing product promotional materials, through training of Medtronic’s sales force and the medical community and by facilitating communications with our customers

Research and Development

We are continuing our research efforts to develop new applications for our bioresorbable products and to develop new bioresorbable products.  We are currently developing new bioresorbable products and materials for use in cardiovascular surgery, tendon and nerve repair, plastic surgery, ear, nose and throat applications, obstetrics and gynecological applications, abdominal and general surgery, craniomaxillofacial and neurosurgery applications, spinal and orthopedic indications.  We expect to continue to develop new, technologically advanced products.

In 2001, our research and development efforts focused on continued development with Medtronic of our spinal products, developing bioresorbable surgical film, our MacroPore LP system, our MacroPore MX system, our MacroPore NS system and our MacroPore DX system, and developing uses for our bioresorbable sheets, plates, screws and tacks in other indications.  Research and development expenses were $5,487,000 for the year ended December 31, 2001, $2,584,000 for the year ended December 31, 2000 and $1,172,000 for the year ended December 31, 1999.

Customers

Medtronic is our primary distributor and our principal customer, directly accounting for $5,547,000, or 98.2%, of our revenues for the year ended December 31, 2001, and $6,092,000, or 97.5%, of our revenues for the year ended December 31, 2000.  Medtronic did not act as our distributor and we did not receive any revenues from Medtronic in the year ended December 31, 1999.

We entered into a five-year distribution agreement and a five-year development and supply agreement with Medtronic in January 2000.  Under the distribution agreement, Medtronic agreed to purchase all of its bioresorbable implant products for use in the reconstruction or fixation of the cranial or facial skeleton exclusively from us.  In turn, we granted Medtronic exclusive rights in the United States and exclusive rights worldwide, except for rights granted under our then-existing distribution agreements with other distributors, to market, distribute and sell all of our bioresorbable implant products, devices, systems and instruments solely for use in the reconstruction or fixation of the cranial or facial skeleton.  Under our distribution agreement with Medtronic, we may enter into a distribution agreement with another distributor for distribution rights to any of our products other than those used in the cranial or facial skeleton, as long as we first present Medtronic with the right to distribute these other products.  If we fail to come to terms with Medtronic, or if Medtronic does not wish to distribute these other products, we may enter into a distribution agreement with a third party distributor on the same or more favorable terms than those we offered to Medtronic.

Under our development and supply agreement, we co-develop bioresorbable implants with Medtronic for spinal fixation, stabilization and fusion using proprietary information from both parties.  Medtronic has exclusive worldwide rights to market and sell all of the products that we co-develop.  We and Medtronic will each own an undivided, one-half interest in any inventions we jointly develop.

We are currently considering entering into distribution agreements with other distributors in the United States, Europe, Asia and the Pacific Region, primarily to market our products for use in applications other than craniofacial, or spinal fixation, spinal stabilization or spinal fusion applications.

 

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Market and Competition

We compete with many other companies in developing and marketing our technology and products.  In the craniofacial fixation market, we compete primarily with titanium products, although we believe that an increasing number of other companies are developing, or are offering, bioresorbable bone fixation systems.

We believe our Surgi-Wrap™ film can be used to prevent post-operative adhesions and scarring and we intend to obtain the clearances and approvals necessary to market our bioresorbable surgical film for use in cardiothoracic surgery, obstetrics and gynecology, tendon surgery and general surgery applications.  We are aware of two other companies that have entered these markets with products designed to prevent post-operative adhesions.  We believe that our bioresorbable surgical film is superior to competitive products because it is non-inflammatory, there is no need to secure our film when it is implanted into the patient, it maintains its strength and creates a clear surgical dissection plane, and it is bioresorbable where some of our competitor’s products are not.

Many of our competitors and potential competitors have substantially greater financial, technological, research and development, marketing and personnel resources than we do.  These competitors may also have greater experience in developing products, conducting clinical trials, obtaining regulatory approvals, and manufacturing and marketing such products.  Some of these competitors may obtain patent protection, approval or clearance by the FDA or from foreign countries, or may achieve product commercialization earlier than us, any of which could materially adversely affect our business or results of operations.  We cannot assure you that our competitors will not succeed in developing alternative technologies and products that are more effective, easier to use or more economical than those which have been or are being developed by us or that would render our technology and products obsolete and noncompetitive in these fields.  Furthermore, under the terms of our marketing agreement with Medtronic, Medtronic may pursue parallel development of other technologies or products, which may result in Medtronic developing additional products that will compete with our products.

Sales by Geographic Region

We sell our products in the United States and internationally through independent distributors.  International sales may be limited or disrupted by political instability, price controls, trade restrictions and changes in tariffs.  Our existing distribution agreement provides for payment in U.S. dollars and we intend to include similar payment provisions in future distribution agreements.  Fluctuations in currency exchange rates may adversely affect demand for our products by increasing the price of our products in the currency of the countries in which the products are sold.

We recorded our first sales in the year ended December 31, 1999, when we recorded $1,513,000 in revenues, including $1,472,000 of product sales in the United States and $41,000 of product sales outside the United States.  For the year end ended December 31, 2000, we recorded $6,251,000 in revenues, including $6,200,000 of product sales in the United States and $51,000 of product sales outside the United States.  For the year ending December 31, 2001, we recorded $5,648,000 in revenues, including $4,954,000 of product sales in the United States and $694,000 of product sales outside the United States.

Working Capital

We generally maintain an inventory of approximately six to twelve months of products.  Although capital expenditures may vary depending on a variety of factors, including sales, we presently intend to spend approximately $1,300,000 on capital equipment purchases in 2002.  We believe our inventory

 

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practices and capital expenditures are consistent with other similar companies at similar levels of development.

Raw Materials

We presently purchase all of our supply of lactic acid copolymer, the primary raw material used in manufacturing our medical devices, from one source.  We have entered into an agreement with B.I. Chemicals, Inc. to provide us with our required supply of lactic acid copolymer.  This agreement terminates in August 2003, but automatically renews for successive one-year terms unless we give B.I. Chemicals written notice, or B.I. Chemicals gives us written notice, that the agreement will not be renewed six months prior to the end of that term.  In the event that B.I. Chemicals is unable to supply the lactic acid copolymer, B.I. Chemicals has agreed to provide us with the manufacturing protocol to enable us to produce the lactic acid copolymer in-house.  We believe we would be able to obtain the lactic acid copolymer we use in our products from at least one other supplier if B.I. Chemicals fails to provide us with a sufficient supply.

Intellectual Property

Our success depends in large part on our ability to protect our proprietary technology and information, and operate without infringing on the proprietary rights of third parties.  We rely on a combination of patent, trade secret, copyright and trademark laws, as well as confidentiality agreements, licensing agreements and other agreements, to establish and protect our proprietary rights.  Our success also depends on our ability to obtain patents on our technology.  We have four U.S. patents for two of our products.  Our two U.S. patents for the design of our bioresorbable sheets were issued in July 1999 and August 2001.  Our two U.S. patents for the design of our high torque bioresorbable screws were issued in August 2001 and February 2002.  Each of our patents will expire 20 years from the date of the patent application.

We have filed applications for sixteen additional U.S. patents, as well as twelve corresponding patent applications outside the United States, relating to our technology.  We cannot assure you that any of the pending patent applications will be approved, that we will develop additional proprietary products that are patentable, that any patents issued to us will provide us with competitive advantages or will not be challenged by any third parties or that the patents of others will not prevent the commercialization of products incorporating our technology.  Furthermore, we cannot assure you that others will not independently develop similar products, duplicate any of our products or design around our patents.

Litigation may also be necessary to enforce any patents issued or licensed to us or to determine the scope and validity of third party proprietary rights.  If our competitors claim technology also claimed by us and prepare and file patent applications in the United States, we may have to participate in interference proceedings declared by the U.S. Patent and Trademark Office to determine priority of invention.  Any such litigation or interference proceedings, could result in substantial costs to us and divert our management’s attention from our business operations, even if the eventual outcome is favorable to us.  Litigation could subject us to significant liabilities to third parties and require disputed rights to be licensed from third parties or require us to cease using certain technology.

We currently have pending five patent applications in the European Patent Office, four in Japan and Canada, and three in Australia.  We have published five other international patent applications with all countries designated.  In addition, we have one patent issued in Australia for the design of our bioresorbable sheets that expires on August 5, 2017.  Patent law outside the United States is uncertain and in many countries is currently undergoing review and revisions.  The laws of some countries may not protect our proprietary rights to the same extent as United States laws.  Third parties may attempt to

 

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oppose the issuance of patents to us in foreign countries by initiating opposition proceedings.  Opposition proceedings against any of our patent filings in a foreign country could have an adverse effect on our corresponding patents that are issued or pending in the United States.  It may be necessary or useful for us to participate in proceedings to determine the validity of our, or our competitors’ patents that have been issued in countries other than the United States.  This could result in substantial costs, divert our efforts and attention from other aspects of our business, and could have a material adverse effect on our results of operations and financial condition.

In addition to patent protection, we rely on unpatented trade secrets and proprietary technological expertise.  We cannot assure you that others will not independently develop or otherwise acquire substantially equivalent techniques, or otherwise gain access to our trade secrets and proprietary technological expertise or disclose such trade secrets, or that we can ultimately protect our rights to such unpatented trade secrets and proprietary technological expertise.  We rely, in part, on confidentiality agreements with our marketing partners, employees, advisors, vendors and consultants to protect our trade secrets and proprietary technological expertise.  We cannot assure you that these agreements will not be breached, that we will have adequate remedies for any breach or that our unpatented trade secrets and proprietary technological expertise will not otherwise become known or be independently discovered by competitors.  Our failure to obtain or maintain patent and trade secret protection, for any reason, could have a material adverse effect on our results of operations and financial condition.

Government Regulation

Most medical devices for use in humans, including our bioresorbable protective sheets, plates, screws and tacks, are subject to stringent government regulation in the United States by the Food and Drug Administration, or FDA, under the federal Food, Drug and Cosmetic Act, or FDC Act.  The FDA regulates the clinical testing, manufacture, safety, labeling, sale, distribution and promotion of medical devices.  Included among these regulations are premarket clearance, premarket approval, and Quality System Regulation, or QSR, requirements.  Other statutory and regulatory requirements govern, among other things, registration and inspection, medical device listing, prohibitions against misbranding and adulteration, labeling and postmarket reporting.  The regulatory process may be lengthy, expensive and uncertain.  Securing FDA approvals and clearances may require us to submit extensive clinical data and supporting information to the FDA.  Failure to comply with applicable requirements can result in application integrity proceedings, fines, recalls or seizures of products, injunctions, civil penalties, total or partial suspensions of production, withdrawals of existing product approvals or clearances, refusal to approve or clear new applications or notifications, and criminal prosecution.

Under the FDC Act, medical devices are classified into Class I, Class II or Class III devices, based on their risks and the control necessary to reasonably ensure their safety and effectiveness.  Class I devices are subject to general controls such as labeling, premarket notification and adherence to QSR requirements.  Class II devices are subject to general controls, and to specific controls such as performance standards, postmarket surveillance and patient registries.  Generally, Class III devices, which include certain life-sustaining, life-supporting and implantable devices or new devices which have been found not to be substantially equivalent to certain legally marketed devices, must receive premarket approval from the FDA.  All of our implant products to date are Class II medical devices.

Before any new medical device may be introduced to the market, the manufacturer generally must obtain either premarket clearance through the 510(k) premarket notification process or premarket approval through the lengthier Premarket Approval Application, or PMA, process.  The FDA will grant a 510(k) premarket notification if the submitted data establishes that the proposed device is “substantially equivalent” to a legally marketed Class I or Class II medical device, or to a Class III medical device for which the FDA has not called for PMAs.  The FDA may request data, including clinical studies, before it

 

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can make a determination of substantial equivalence.  It generally takes from three to 12 months from submission to obtain 510(k) premarket clearance, although it may take longer.  There is no assurance that clearance will be granted.  We must file a PMA if one of our products is found not to be substantially equivalent to a legally marketed Class I or II device or if it is a Class III device for which the FDA requires PMAs.  A PMA must be supported by extensive data to demonstrate the safety and effectiveness of the device, including laboratory, preclinical and clinical trial data, as well as extensive manufacturing information.  Before initiating human clinical trials on devices that present a significant risk, we must first obtain an Investigational Device Exemption, or IDE, for the proposed medical device.  Toward the end of the PMA review process, the FDA will generally conduct an inspection of our manufacturing facilities to ensure compliance with QSRs.  Approval of a PMA could take up to one or more years from the date of submission of the application or petition.  The PMA process can be expensive, uncertain and lengthy, and there is no guarantee of ultimate approval.

Modifications or enhancements of products that could affect the safety or effectiveness or effect a major change in the intended use of a device that was either cleared through the 510(k) process or approved through the PMA process may require further FDA review through new 510(k) or PMA submissions.

As a medical device manufacturer, we are subject to periodic inspections by the FDA to ensure that devices continue to be manufactured in accordance with QSR requirements.  We are also subject to postmarket reporting requirements for deaths or serious injuries when a device may have caused or contributed to death or serious injury, and for certain device malfunctions that would be likely to cause or contribute to a death or serious injury if the malfunction were to recur.  Postmarket reporting also may be required for certain corrective actions undertaken for distributed devices.  If safety or effectiveness problems occur after the product reaches the market, the FDA may take steps to prevent or limit further marketing of the product.  Additionally, the FDA actively enforces regulations prohibiting marketing of devices for indications or uses that have not been cleared or approved by the FDA.

Under the terms of our development and supply agreement with Medtronic, Medtronic is responsible for preparing and filing applications for, and obtaining regulatory approval of the products we co-develop for use in spinal fixation, stabilization or fusion applications.  We or our marketing partners may not be able to obtain necessary 510(k) clearances or PMA approvals to market the products we are developing in the United States for their intended use on a timely basis, if at all.

 

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Our current human medical devices are at different stages of FDA review.  We have received 510(k) clearance for the following:

Product Lines		Clearance received for, among other things, the following uses:		Clearance received
MacroPore FX		trauma and reconstructive procedures in the midface and craniofacial skeleton		July 30,1998
MacroPore PS		trauma and reconstructive procedures in the midface and craniofacial skeleton		July 30, 1998
MacroPore PS		trauma, reconstructive and bone augmentation procedures of the mandible		March 19, 1999
MacroPore MX		stabilizing fractured bones in the mandible		October 19, 2000
MacroPore DX		treatment of cranial or midface conditions in reconstructive osteotomy and segment advancement		June 26, 2000
MacroPore OS		protecting iliac crest, or hip bone, graft donor sites, tumor resections where bone strength is not compromised and throughout the skeleton, other than in spinal applications, when used in conjunction with traditional rigid fixation devices		July 24, 2000
MacroPore NS		fixation of bone flaps after a craniotomy		May 2, 2001
MacroPore OS Spine		with traditional rigid fixation in spinal fusion procedures as a means to maintain the relative position of weak bony tissue such as allografts, autografts or bone graft substitutes cleared for spinal use		July 20, 2001
MacroPore IB		a cement restrictor in the femur, tibia, and humerus		September 4, 2001
MacroPore FX,  PS, NS and LP		specific pediatric and adult plastic, reconstructive and neurosurgical applications in the craniofacial skeleton