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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS

PURSUANT TO SECTIONS 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

(MARK ONE)

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004

OR

FOR THE TRANSITION PERIOD FROM              TO             

COMMISSION FILE NUMBER 000-51066

CONOR MEDSYSTEMS, INC.

(Exact name of Registrant as Specified in its Charter)

1003 HAMILTON COURT

MENLO PARK, CA 94025

(Address of Principal Executive Offices including Zip Code)

(650) 614-4100

(Registrant’s Telephone Number, Including Area Code)

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

None

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

Common Stock, $.001 par value per share

(Title of Class)

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  x    No  ¨

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 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.     ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule
12b-2).    Yes  ¨    No  x

        The aggregate market value of the voting stock held by non-affiliates of the registrant on December 31, 2004, based upon the closing price of $13.85 as reported on the Nasdaq National Market, was approximately $307.6 million. Excludes 10,244,113 shares of the registrant’s common stock held by current executive officers, directors, and stockholders whose ownership exceeds 5% of the common stock outstanding at December 31, 2004. Exclusion of such shares should not be construed to indicate that any such person possesses the power, direct or indirect, to direct or cause the direction of the management or policies of the registrant or that such person is controlled by or under common control with the registrant. The registrant has elected to use December 31, 2004 as the calculation date, as on June 30, 2004 (the last business day of the registrant’s second fiscal quarter), the registrant was a privately-held concern.

The number of outstanding shares of the registrant’s common stock on March 15, 2005 was 33,100,130.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive Proxy Statement for the 2005 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this Form 10-K are incorporated by reference in Part III, Items 10-14 of this Form 10-K.

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CONOR MEDSYSTEMS, INC.

2004 ANNUAL REPORT ON FORM 10-K

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PART I

Forward Looking Statements

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the “safe harbor” created by those sections. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management and are contained principally in the sections entitled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.” Forward-looking statements include, but are not limited to, statements about:

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential” and similar expressions intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance time frames or achievements to be materially different from any future results, performance, time frames or achievements expressed or implied by the forward-looking statements. We discuss many of these risks, uncertainties and other factors in this Annual Report on Form 10-K in greater detail under the heading “Risk Factors.” Given these risks, uncertainties and other factors, you should not place undue reliance on these forward-looking statements. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this filing. You should read this Annual Report on Form 10-K and the documents that we have incorporated by reference, completely and with the understanding that our actual future results may be materially different from what we expect. We hereby qualify all of our forward-looking statements by these cautionary statements.

Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

Item 1. Business.

Overview

We develop innovative controlled vascular drug delivery technologies. We have initially focused on the development of drug eluting stents to treat coronary artery disease. Our stents have been specifically designed for vascular drug delivery, in contrast to currently available drug eluting stents, which are conventional bare metal stents coated with a drug and a polymer. A polymer is a substance used to adhere a drug to the surface of a stent and to modulate its release. Our stents incorporate hundreds of small holes, each acting as a reservoir into which we can load a drug-polymer composition. Through this proprietary design, we can better control drug release kinetics, or the rate and direction of drug release over time. Our clinical efforts are currently focused on the development and commercialization of our CoStar stent, which is a cobalt chromium paclitaxel eluting stent, for the treatment of restenosis. While we believe that our stent technology can support a wide range of drugs, our initial clinical efforts have focused on the use of paclitaxel, an anti-proliferative drug initially developed to treat certain types of cancer. To date, we have conducted clinical trials involving over 800 patients using our drug eluting stents, including more than 300 patients with our CoStar stent. We are also investigating the potential applicability of our stent technology to the treatment of an acute myocardial infarction, or AMI, commonly known as a heart attack.

We believe that our drug eluting stents offer significant advantages over conventional surface-coated stents. Our stent design enables a wide range of drug release kinetics by allowing us to select the pattern in which drug-polymer compositions are inlayed into the reservoirs. The design of our stents also provides greater directional control over the release of the drug, which we believe allows for more targeted treatment within the artery and more efficient use of the therapeutic agent. A highly distinguishing characteristic of our stent is its use of “ductile hinges,” which are specially contoured, proprietary features that localize stress applied to the stent when the stent is expanded inside the coronary artery. This feature is designed to ensure that the drug-polymer composition inlayed into the reservoirs is not extruded, fractured or otherwise disrupted during stent expansion. As a result, we are able to use a wider range of polymers and drugs, including water-soluble compounds, as compared to conventional surface-coated stents. Further, we believe that our proprietary manufacturing technology, coupled with our stent design, allow us to benefit from high throughput, high uniformity and high manufacturing yield.

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In March 2005, we announced twelve-month follow-up data from our PISCES clinical trial, which was designed to evaluate the safety and performance of paclitaxel delivered at different release kinetics and doses using our stainless steel stent. In the PISCES trial, we enrolled 191 patients divided into six groups, each receiving a different formulation of paclitaxel that varied by dose, duration of drug release and direction of delivery. The results from our PISCES trial indicate that drug release kinetics have an effect on treatment outcomes. The formulations that demonstrated the most favorable clinical outcomes are the focus of our subsequent EuroSTAR and COSTAR I trials, as well as our planned U.S. pivotal clinical trial, which are designed to further evaluate the safety and efficacy of our CoStar stent. We anticipate that our EuroSTAR trial will ultimately involve up to 320 patients at up to 20 sites. The EuroSTAR trial supported our submission in February 2005 of an application to a designated Notified Body in the European Community, which is one of the steps we must undertake prior to marketing our CoStar stent in the European Community. In March 2005, we announced six-month follow-up data from the first arm of our EuroSTAR trial. The COSTAR I trial began in late 2003 and has completed enrollment of the three formulation groups. In September 2004, we announced four-month follow-up data for one of the three formulation groups from the COSTAR I trial, and in January 2005, we presented four-month follow up data for a second formulation group. Our COSTAR I trial enrolled 87 patients at four sites and will serve as another supporting trial for our CoStar stent in more complex patient populations. Based on the results from the PISCES, EuroSTAR and COSTAR I clinical studies, we submitted an investigational device exemption, or IDE, application to the U.S. Food and Drug Administration, or FDA, in the first quarter of 2005 for our planned U.S. pivotal clinical trial, COSTAR II, and in March 2005, we received conditional approval of our IDE application. We have not yet received any government regulatory approvals necessary to commercialize our CoStar stent. If our clinical trials proceed as scheduled and the outcomes of these clinical trials are favorable, we anticipate receiving regulatory approval for our CoStar stent in the European Community in late 2005 and in the United States in 2007. We could be delayed by adverse results or regulatory complications, and we may never achieve regulatory approval. No regulatory approval is currently required to market our CoStar stent in India.

We have entered into agreements with Biotronik AG, Interventional Technologies, Pvt., Ltd., or IVT, and affiliates of St. Jude Medical, Inc. to distribute our CoStar stent outside of the United States. We recently began a limited market release of our CoStar stent in India pursuant to our distribution agreement with IVT. We expect to pursue commercialization in the United States with our own sales force.

Industry Background

Coronary Artery Disease

Coronary artery disease is a progressive, pathological condition that leads to the obstruction of the blood vessels providing blood flow to the heart muscle. According to the National Institutes of Health, coronary artery disease affects about 13 million people in the United States and is the leading cause of death in both men and women. The disease is caused by the accumulation of fat-laden cells in the inner lining of the coronary arteries, leading to a localized patchy thickening, called an atherosclerotic plaque. As the plaque expands into the lumen, or the inner channel of the artery through which blood flows, the diameter of the lumen narrows. The portion of the heart muscle normally nourished by the affected artery can become starved for oxygen, or ischemic, causing chest pains. Moreover, plaques tend to attract platelets, which can cause clots and lead to the further obstruction of blood flow to the heart, potentially causing an AMI.

The Development of Treatments for Coronary Artery Disease

Treatments for patients with life-threatening coronary artery disease have advanced dramatically over the last 20 years, from highly invasive, open-chest bypass surgery to minimally invasive angioplasty procedures.

Coronary Artery Bypass Grafting

Coronary artery bypass grafting, or CABG, is an invasive surgical procedure developed in late 1960s that requires an incision in a patient’s chest to gain access to the heart. In this procedure, the cardiac surgeon uses a graft from another blood vessel of the patient to “bypass” the obstructed artery. CABG is an expensive procedure involving hospital stays of several days to a week or longer, and recovery periods of several weeks.

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Angioplasty

In the late 1970s, percutaneous transluminal coronary angioplasty, commonly referred to as balloon angioplasty, was developed as a less invasive treatment method to open a narrowed or blocked blood vessel. In an angioplasty procedure, an interventional cardiologist inserts a flexible catheter with a balloon tip through the femoral artery in the groin and maneuvers the catheter through the vasculature into the coronary arteries. At the site of the blockage, the balloon is inflated, compressing the plaque and stretching the artery wall to create a larger channel for blood flow. The balloon is then deflated, and the catheter is removed. A patient can generally be released from the hospital within one to two days following the procedure. The introduction of balloon angioplasty significantly improved recovery times, resulted in less patient discomfort and reduced cost per procedure as compared to CABG.

While less invasive and expensive than CABG surgery, the ultimate clinical effectiveness of balloon angioplasty has been hampered by restenosis, or the re-narrowing of the artery lumen following balloon angioplasty. Restenosis has at least two mechanisms, either or both of which can occur following an angioplasty procedure:

Evolution of Stents to Address Restenosis

The Development of Bare Metal Stents

To address the elastic recoil component of restenosis, medical devices known as stents were developed. Stents are tubular mesh devices consisting of interconnected metal struts that are inserted inside the artery to act as scaffolding, propping open the narrowed blood vessel. During an angioplasty procedure, a stent mounted on a balloon catheter is delivered to the affected segment of the artery and expanded inside the artery by inflating the balloon. The balloon catheter is then removed, leaving the stent in the artery. Bare metal stents became widely used in the mid-1990s in combination with balloon angioplasty and quickly became used in the majority of angioplasty procedures. We believe that the use of bare metal stents reduces the rate of restenosis by approximately one-third when compared to balloon angioplasty alone. While the use of bare metal stents addresses the elastic recoil component of restenosis, bare metal stents are not designed to reduce, and may in fact exacerbate, restenosis caused by the proliferation or growth of cells and extra cellular matrix materials. As a result, we estimate that restenosis after bare metal stent implantation still occurs in approximately 10% to 35% of procedures within six months of treatment, which typically necessitates repeat angioplasty, re-stenting or bypass surgery.

The Development of Drug Eluting Stents

Drug eluting stents were developed to address restenosis caused by the growth and proliferation of neointima. We believe that drug eluting stents represent the most advanced and sophisticated treatment currently available to address restenosis. Currently marketed drug eluting stents are conventional bare metal stents that are coated on the surface with a drug that is designed to reduce restenosis by inhibiting the growth or proliferation of neointima. According to published studies, currently marketed drug eluting stents have been shown in clinical trials to reduce the rate of restenosis to less than 10%.

The first two marketed drug eluting stents only recently gained regulatory approval. Johnson & Johnson’s CYPHER^™ stent was commercially launched in Europe in April 2002 and in the United States in April 2003. Boston Scientific Corporation’s TAXUS^™ Express^2™ stent was commercially launched in Europe in February 2003 and in the United States in March 2004. Market adoption of drug eluting stents has been rapid, and we believe that drug eluting stents will capture approximately 90% of the stent market within three years. In addition to premium pricing of drug eluting stents at two to three times that of bare metal stents, we expect that market growth in the drug eluting stent industry will also be driven by procedure growth since the low restenosis rates of drug eluting stents are likely to cause cardiologists to opt for angioplasty for complex, high-risk cases rather than resorting to the more invasive CABG surgery alternative.

Factors Impacting the Effectiveness of Drug Eluting Stents

The effectiveness of drug eluting stents depends on the following principal components:

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Stent Design

Drug eluting stents require an appropriate balance of several design parameters to enable effective treatment of restenosis. These design characteristics include:

The profile of the stent, in combination with the stent’s flexibility and radiopacity, affect the stent’s deliverability. Stents with a lower profile, or smaller diameter when crimped, may be more easily navigated through the coronary arteries and delivered to the site of the blockage as compared to those with a higher profile. Conversely, stents with a higher profile and less flexibility are more difficult to deliver, especially to coronary blockages in narrow, tortuous vessels in the coronary anatomy. The stent’s radiopacity also aids in delivering the stent to the site of the blockage by allowing the physician to more clearly view the stent in the coronary anatomy under x-ray imaging guidance.

Stents have traditionally been made from a stainless steel alloy, although more recently, cobalt chromium stents have been introduced. Stents made of cobalt chromium have greater tensile strength than stents made of stainless steel. The enhanced tensile strength allows the stent struts to be thinner and narrower, leading to increased flexibility, a lower profile and improved axial stability. Stents made from certain cobalt chromium alloys also provide for improved radiopacity as compared to thin strut stainless steel stents.

The Drug Delivery Mechanism

Conventional drug eluting stents are coated on the surface with a drug incorporated into a polymer matrix. The polymer is necessary to fix the drug on the surface of the stent and to modulate its release. The stent is typically sprayed with or dipped into a drug-polymer composition. Current spraying and dipping processes can result in non-uniform distribution of the drug on the stent. When these non-uniformities exceed limits specified by regulatory bodies, lower manufacturing yields can result. The coating depth of a conventional surface-coated stent is usually very thin, limiting the drug volume on the stent. Certain inherent limitations of conventional surface-coated stents include:

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The Drug

The success of a drug eluting stent depends partly on the ability of the active drug to interfere with the process of restenosis. The first drug widely studied and approved for use in a drug eluting stent for the treatment of restenosis was sirolimus, also known as rapamycin, which is an immunosuppressant agent with anti-inflammatory properties. One of a new line of immunosuppressants, sirolimus inhibits the activation of key cellular regulators, thus inhibiting cellular proliferation and growth. Paclitaxel, which is used in a recently approved drug eluting stent, also interferes with cellular proliferation and growth, but works in a different way than sirolimus. Paclitaxel interferes with the structure and function of cellular elements called microtubules, which leads to the inhibition of cell division and growth, and can lead to cell death.

In addition to sirolimus and paclitaxel, there may be other drugs that, alone or in combination, offer therapeutic benefits. These therapeutic benefits may in some circumstances be dependent upon control of release kinetics. Other sirolimus derivatives are being evaluated for the treatment of restenosis and a broad variety of immunosuppressive, anti-leukocyte or anti-proliferative agents may also be useful, although limited testing and data are available. A stent with the ability to deliver a broad range of drugs, including multiple drugs, and to control release kinetics may have potential advantages in exploiting applications of new drug candidates.

Limitations of Conventional Drug Eluting Stents

The limitations of conventional surface-coated drug eluting stents include:

Our Solution

We are seeking to capitalize on the full therapeutic potential of drug eluting stents through the development of a stent specifically designed for drug delivery. Rather than retrofitting a bare metal stent with a drug coating, our stent design incorporates hundreds of small holes, each acting as a reservoir into which we can load drug-polymer compositions. Through this proprietary design, we believe that we can greatly enhance control of drug release kinetics and direction of drug delivery, enable a wider range of drug therapies and potentially increase the effectiveness and range of clinical applications of drug eluting stents. Based on the data from our PISCES clinical study, we believe that control of drug delivery can have a direct impact on clinical outcomes.

Our stents incorporate special, proprietary structural elements called “ductile hinges,” which enable us to create drug reservoirs in our stent struts. Ductile hinges are specially contoured features that absorb virtually all of the metal deformation that occurs as a stent is expanded inside the coronary artery. The other structural elements of the stent thus remain relatively deformation-free. This has two important consequences. First, we can incorporate our reservoirs into the stent struts without compromising strength, scaffolding or flexibility. Second, since the reservoirs are largely non-deforming during stent expansion, the drug-polymer composition in the reservoirs will not be extruded, fractured or otherwise disrupted upon stent expansion. This in turn allows us to use polymers in our reservoirs which do not have the level of flexibility, adhesion and other properties required in surface coatings.

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We believe that it would be difficult to duplicate our high volume drug reservoirs in conventional stent designs without incorporating our proprietary ductile hinges. Conventional stents generally attempt to spread deformation as evenly as possible throughout the stent structure. When large reservoirs are formed in such a structure, engineering structural analysis shows severe deformation of the reservoirs as the stent expands. Material contained in the reservoirs would likely be fractured or extruded, which we believe would be unacceptable from both a clinical and regulatory standpoint.

We believe that our stents possess the following key advantages compared to conventional surface-coated drug eluting stents:

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Our Strategy

Our goal is to become a leading innovator in the emerging field of vascular drug delivery through medical devices. Key elements of our strategy include:

Clinical Development Program

We have developed three stents that have been or are being evaluated in clinical trials: a bare stainless steel stent, a stainless steel stent with paclitaxel and a cobalt chromium stent with paclitaxel, our CoStar stent. We do not intend to commercialize either our bare stainless steel stent or our stainless steel stent with paclitaxel. We have pursued a clinical development strategy of using these stents to demonstrate that the drug inlay design of our stents permits us to control drug release kinetics, to establish the safety of our stent design, to demonstrate that drug release kinetics can have a direct impact on clinical outcomes and to establish the basis for regulatory approval of our CoStar stent in Europe and the United States.

The four- and twelve-month follow-up data from our PISCES trial indicate that drug release kinetics have an effect on treatment outcomes, and an important part of our clinical strategy is to continue to demonstrate that drug release kinetics

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affect outcomes. We believe that the results of the clinical trials of our bare stainless steel stent and stainless steel stent with paclitaxel, including the PISCES trial, will provide supporting data for our applications for regulatory approval in Europe and the United States. We expect that the pivotal EuroSTAR trial will form the basis for marketing approval of the CoStar stent in the European Community, and we have received conditional approval of our IDE application from the FDA to permit commencement of our U.S. pivotal clinical trial, which we expect will form the basis for regulatory approval of the CoStar stent in the United States. We plan to conduct a trial specifically designed for Japanese marketing approval.

Our PISCES, SCEPTER, COSTAR I and EuroSTAR trials were designed to evaluate varying doses of paclitaxel eluted in one or two directions over different time periods. Because the duration of drug release in vivo is very difficult to measure, the descriptions we use for duration (i.e., “five days,” “ten days” and “30 days”) are approximations that are based on in vitro measurements.

The performance of drug eluting stents is assessed using a number of metrics, which compare data collected at the time of stent implantation to data collected when a patient is re-assessed at follow-up. The time periods for follow-up are usually four months for pilot trials, six months for pivotal trials for marketing approval in the European Community and eight to nine months for pivotal trials for FDA approval. The common metrics used to evaluate the efficacy of drug eluting stents, and the ranges for the reported results from U.S. pivotal trials of FDA-approved conventional drug eluting stents for these metrics, include:

DepoStent

The DepoStent trial was designed to evaluate the safety and performance of our basic stainless steel stent design without drugs or polymer. The intent of the DepoStent pilot study was to assess whether a stent with drug reservoirs would perform differently than a conventional bare metal stent. The trial, which included 53 patients at two sites in the Netherlands, was conducted in 2003. In December 2003, we completed six-month follow-up of patients in the trial. The results from the DepoStent trial indicated that the clinical outcomes of patients receiving this stent were similar to patients receiving conventional bare metal stents, and that holes in stent struts did not lead to a higher incidence of adverse effects. We obtained marketing approval in the European Community for our bare stainless steel stent, although we do not intend to commercialize this stent. Data from this trial was used to support our IDE submission for our planned U.S. pivotal clinical trial.

PISCES

The Paclitaxel In-Stent Controlled Elution Study, or PISCES study, was designed to evaluate the safety and performance of paclitaxel delivered at different rates, doses and directions of delivery using our stainless steel stent. Enrollment for this pilot study, which consisted of 191 patients at ten sites in South America, Europe and New Zealand, was conducted in 2003. Of the 191 patients participating in the PISCES study, 187 received one of six different formulations of paclitaxel that varied by dose, estimated duration of drug release rate and directionality (drug release to

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only the arterial wall, or mural release, and release to both the arterial wall and the lumen, or bidirectional release). The last patient was treated in December 2003. Data from this trial was used to support our IDE submission for our planned U.S. pivotal clinical trial. The table below summarizes the formulations evaluated in the PISCES study.

In May 2004, we released four-month follow-up data, and in March 2005, we released twelve-month follow-up data from the PISCES trial.

At four-month follow-up, all six formulations were determined to be safe, with no deaths from discharge to 30 days. Two groups with the longest duration formulations, formulations F4 and F5, had particularly favorable outcomes. For formulation F4, the in-stent binary restenosis rate and TLR rate were both 0 percent, the in-stent late loss was 0.38mm, the in-segment restenosis rate was 2.6 percent, the in-segment late-loss was 0.20mm, the percent volume obstruction was 7.7 percent, and the MACE rate was 2.6 percent. For formulation F5, the in-stent binary restenosis rate was 3.8 percent, the TLR rate was 3.4 percent, the in-stent late loss was 0.30mm, the in-segment restenosis rate was 3.8 percent, the in-segment late-loss was 0.21mm, the percent volume obstruction was 5.1 percent, and the MACE rate was 3.4 percent. By comparison, the remaining four groups with shorter duration of drug elution, ranging from approximately five to ten days for either 10mcg or 30mcg of paclitaxel per 17mm stent and indicated as formulations F1, F2, F3 and F6 above, generally had less efficacy with respect to these endpoints. The results indicate, for what we believe to be the first time, that drug release kinetics and direction of delivery have an effect on treatment outcomes.

At twelve-month follow-up, all six formulations were determined to be safe. There were no reported cases of delayed stent thrombosis between six months, when patients ceased antiplatelet therapy, and twelve-month follow-up. For formulation F4 the in-stent binary restenosis rate and TLR rate were both 0 percent, the in-stent late loss was 0.52mm, the in-segment restenosis rate was 3.1 percent, the in-segment late-loss was 0.30mm, the percent volume obstruction was 12.0 percent, and the MACE rate was 5.1 percent. For formulation F5, the in-stent binary restenosis rate was 5.6 percent, the TLR rate was 6.9 percent, the in-segment restenosis rate was 5.6 percent, the in-segment late-loss was 0.24mm, the percent volume obstruction was 10.1 percent, and the MACE rate was 6.9 percent. We are currently in the process of evaluating the data from the remaining four groups.

Based on the data from the PISCES trial, we believe that PISCES formulations F4 and F5 represent the superior formulations for evaluation in future clinical trials. We intend to pursue formulation F4 in our planned U.S. pivotal clinical trial of our CoStar stent, COSTAR II.

SCEPTER

The Study of Controlled Elution of Paclitaxel for The Elimination of Restenosis, or SCEPTER study, was designed to evaluate our paclitaxel eluting stainless steel stent for safety and performance, measuring late loss versus our bare metal stent used in the DepoStent study and clinical safety at six months. We undertook this study, without waiting for the results from the PISCES study, with the initial objective of it serving as the basis for marketing approval in the European Community. Enrollment for this study, which included 271 patients at 15 sites in Europe and one site in New Zealand, was completed in 2003. Each patient participating in the SCEPTER study received stents with formulations equivalent to formulations F1 or F2 of the PISCES study. After analyzing the four-month follow-up data from the PISCES trial, we know that formulations F1 and F2 of the PISCES trial were not ideal. Moreover, our commercialization strategy is focused on our CoStar cobalt chromium stent platform rather than our initial stainless steel stent platform. We do not yet have final results for this trial. We are continuing to monitor patients for twelve-month safety. Data from this trial was used to support our IDE submission for our planned U.S. pivotal clinical trial.

COSTAR I

The COSTAR I study is designed to evaluate the safety and performance of three formulations of paclitaxel loaded on our CoStar stent with two formulations delivered over approximately 30 days and one formulation delivered over approximately ten days. A previously contemplated 30mcg 30-day release formulation was ultimately not enrolled since it

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was the subject of the second arm of the EuroSTAR trial. The pilot study enrolled a total of 87 patients at four sites in India and follow-up is ongoing. We intend to analyze four-month results and then continue to monitor the patients through a twelve-month follow-up period. Data from this trial was used to support our IDE submission for our planned U.S. pivotal clinical trial.

We have completed enrollment of an aggregate of 77 patients in the two 30-day formulations, one of which is similar to formulation F4 of the PISCES trial (formulation group 2 below), and the other of which is a low dose, 3mcg formulation to evaluate the lower boundary of efficacy (formulation group 1 below). We had started enrolling patients in a third group (formulation group 3 below) using a stent formulation similar to the PISCES formulation F6, but we elected to cease enrollment in this group after ten patients had been enrolled as a result of our evaluation of additional data, which indicate that the longer release formulations would be more efficacious.

In September 2004, we released four-month follow-up data for formulation group 2 and in January 2005, we presented four-month follow-up data for formulation group 3. These data are summarized below. Although enrollment is complete for formulation group 1, the results for formulation group 1 are not yet available.

The results for formulation group 2 are for a 10mcg dose per 17mm stent released over approximately 30 days. A total of 57 lesions were treated in 40 individuals from a complex patient population. More than 50% of the patients had a prior myocardial infarction, or heart attack, and 28% were diabetic. Other complex characteristics of the patient group included small diameter coronary vessels and long lesions.