The American Society for Aesthetic Plastic Surgery, or ASAPS, reports that in 2006, total expenditures for non-surgical and surgical procedures designed to improve or enhance a patient’s physical appearance, were approximately $12.2 billion. From 2000 to 2006, the total number of these aesthetic procedures increased from approximately 5.7 million to over 11.5 million procedures, representing a 12.5% compound annual growth rate. Non-invasive and minimally-invasive aesthetic procedures comprised the majority of the overall increase in aesthetic procedures and rose from approximately 4.3 million to 9.5 million procedures over the same period, representing a total consumer market of more than $4.5 billion in 2006.

According to the ASAPS, the leading non-surgical aesthetic procedure in 2006 was Botox injection, followed by dermal fillers, laser hair removal, microdermabrasion, laser skin resurfacing and sclerotherapy for the treatment of varicose veins. Women represented 92% of the patients who underwent non-surgical aesthetic procedures in 2006.

According to the ASAPS, injectable aesthetic procedures are the largest segment of the non-surgical aesthetics market. Injectable aesthetic treatments include dermal fillers which are administered through a syringe into the facial skin or deeper facial tissues in order to reduce the appearance of facial wrinkles and lines, or into the lips, cheeks and other areas to add fullness. Injectable treatments also include neurotoxins, such as Botox, sclerotherapy agents for varicose veins, as well as a variety of other technologies. The ASAPS reported that, in 2006, U.S. consumers spent approximately $2.7 billion on approximately 5.7 million injectable aesthetic procedures, representing a substantial increase from 2000, when there were fewer than 2.3 million injectable procedures performed. According to ASAPS, in 2006 U.S. physicians performed, among other injectable aesthetic treatments, 3.2 million Botox injection procedures, 2.0 million dermal filler injection procedures, and 559,000 sclerotherapy procedures, representing patient fees of approximately $1.3 billion, $1.2 billion and $184 million, respectively.

Radiesse is a synthetic injectable material that is used by physicians as a dermal filler. Radiesse consists of 30% by volume smooth calcium hydroxylapatite, or CaHA, microspheres ranging in diameter from 25 to 45 microns suspended in an aqueous gel carrier which comprises 70% of the product.

The Company has also commercialized two products, Radiesse Voice and Radiesse Voice Gel, for vocal fold insufficiency. Vocal fold insufficiency is a condition in which the vocal folds are impaired in their motion, typically as a result of a stroke or neurological disorder. The impaired vocal fold motion inhibits speech or reduces voice quality. Radiesse Voice or Voice Gel can be injected into the space behind the vocal fold that is impaired to adjust the position of that fold and improve speech. Radiesse Voice may be more appropriate for patients desiring long-lasting augmentation while Radiesse Voice Gel may be appropriate for patients whose condition is temporary.

In 2005, the FDA approved the initial application of the Company’s core technology, marketed as Coaptite as a peri-urethral bulking agent to treat women who have stress urinary incontinence due to poorly functioning urethral sphincter muscles. The device consists of CaHA particles 75 to 125 microns in diameter suspended in a gel carrier similar to that used in Radiesse.

The Company has licensed Aethoxysklerol, an injectable sclerosing drug for the treatment of varicose veins from a German pharmaceutical company.

The Company has in-licensed BioGlue, a surgical adhesive that was approved by the FDA in 2001 as an adjunct to sutures and staples for use in adult patients in open surgical repair of large vessels, and it is approved in Canada and the European Union for various cardiovascular, vascular, pulmonary and general surgical applications. BioGlue is a sealant that is made of a bovine serum albumin, a cow protein, and a chemical called glutaraldehyde.

Cost of sales increased from $4.3 million in fiscal 2006 to $8.8 million in fiscal 2007.

Sales and marketing expenses increased from $20.7 million in fiscal 2006 to $38.2 million in fiscal 2007.

Research and development expenses increased from $4.3 million in fiscal 2006 to $7.8 million in fiscal 2007.