Coronary artery disease is a progressive, pathological condition that leads to the obstruction of the blood vessels providing blood flow to the heart muscle. Coronary artery disease and its complications are a leading cause of death worldwide, affecting 13 million people in the United States alone.

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, 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.

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. More than 500,000 balloon angioplasty procedures are performed each year in the United States, with more than one million balloon angioplasties performed each year worldwide.

The DepoStent trial was designed to evaluate the safety and performance of the Company’s 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, the Company 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 side effects.

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 the Company’s stainless steel stent. Enrollment for this pilot study, which consisted of 191 patients at ten sites in South America and Europe, 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 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, and the Company intends to continue to monitor the patients through a twelve-month follow-up period.

The Study of Controlled Elution of Paclitaxel for The Elimination of Restenosis, or SCEPTER study, was designed to evaluate the Company’s paclitaxel eluting stainless steel stent for safety and performance, measuring late loss versus the Company’s bare metal stent used in the DepoStent study and clinical safety at six months.

The COSTAR I study is designed to evaluate the safety and performance of four formulations of paclitaxel loaded on the Company’s COSTAR stent with three formulations delivered over approximately 30 days and one formulation delivered over approximately ten days. The pilot study is planned to include up to 130 patients at six sites in India and New Zealand.

Research and development expenses were $3.4 million for the six months ended June 30, 2003, compared to $7.3 million for the six months ended June 30, 2004.

General and administrative expenses were $1.1 million for the six months ended June 30, 2003, compared to $1.7 million for the six months ended June 30, 2004.