Growth Within the Embolotherapy Market

We also believe that significant growth opportunities exist in the use of other embolotherapy procedures, notably in the treatment of liver cancer. We are seeking to obtain CE mark approval in the European Union of our Hepasphere SAP Microspheres and our Hepasphere SAP Microspheres are currently in clinical evaluation in Japan. We continue to conduct and support research on the safety and effectiveness of our products in other indications. Specifically, we are currently engaged in preclinical research on the development of temporary or dissolving embolics and the use of our microsphere technology for the targeted delivery of radiation therapy. We have sought to develop new, improved technologies. For example, in 2002 we introduced our EmboCath® Infusion Catheter and our Segway® Guidewire, the first products in our microsphere delivery system product line.

We believe that our platform microsphere technologies also have several non-embolotherapy applications, such as tissue bulking, repair and regeneration. For example, we have explored the use of our microspheres in the treatment of stress urinary incontinence, gastroesophageal reflux disease, urinary reflux and certain dermal defects. Our efforts in these areas led to a number of patent applications related to these technologies. Although our current focus is on embolotherapy markets, we believe that these non-embolotherapy applications have the potential to deliver value through internal efforts or third party licensing, collaboration or similar opportunities.

Embolotherapy has been in use for more than 20 years by interventional radiologists to mechanically block the flow of blood to treat certain peripheral tumors and arteriovenous malformations and to control blood loss. In the past decade, interventional radiologists around the world have adopted new embolotherapy procedures, including uterine fibroid embolization and the treatment of certain cancers, especially liver cancer. Moreover, we believe that an increasing number of affected people have taken proactive steps in seeking alternative treatments due to their desire for less invasive treatment options.

Worldwide, liver cancer is the most prevalent form of malignancy. In the U.S., metastatic liver cancer usually arises from cancer in other sites in the body, especially from the colon. However, the rate of primary liver cancer, where the cancer originates in the liver, is expected to increase dramatically in the United States due to increased incidences of hepatitis C, a key risk factor for primary liver cancer.

Primary liver cancer is typically diagnosed at a state that is too advanced for surgical cure. For the 70 percent of patients in the U.S. that fall into this category, remaining treatment options are primarily designed to improve quality of life rather than cure the underlying disease. Many conventional forms of cancer therapy, such as systemic chemotherapy or external beam radiation, do not show significant effectiveness for most patients and, therefore, are rarely used alone.

Numerous studies and medical publications indicate that embolotherapy has been used for decades to treat liver cancer. For example, particle embolization is commonly used in Japan to manage liver cancer patients. In the United States, embolic particles are commonly injected with chemotherapeutic agents to control and limit distribution of the chemotherapy agents, thereby increasing the therapeutic exposure at the target area.

A number of other, less invasive technologies are either in use or in development to treat inoperable primary liver cancer. Selective tumor ablation, using needle-like devices containing thermal energy or chemicals that are placed directly through the skin and into the tumor, can be used. However, application of this technique is practically limited to those with adequate liver function and relatively small tumors.

Recently, a new, targeted approach to treating liver cancer, using radioactive particles, has become available. These particles, which are similar to our Embosphere Microspheres, are delivered in a targeted fashion, through catheters placed in the feeding vessels near the tumor site. We have been working on related technologies, which we believe will offer significant advantages over the first generation products currently available.

Product Product Candidates Potential Markets Status Embosphere® Microspheres Uterine fibroids, hypervascularized tumors, arteriovenous malformations Marketed in United States, Canada, Australia and European Union EmboGold® Microspheres Hypervascularized tumors, arteriovenous malformations Marketed in United States, Canada, Australia and European Union EmboCath® Infusion Catheter Peripheral embolization procedures Marketed in United States, Canada and European Union Segway® Guidewire Peripheral embolization procedures Marketed in United States, Canada and European Union Hepasphere™ Microspheres Liver cancer Seeking CE Mark approval in the European Union. Clinical evaluation in Japan. TempRx™ Microspheres Trauma, hemorrhage Early Stage Pre-clinical Research Radiosphere™ Microspheres Cancer Early Stage Pre-clinical Research