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`10-K 1 c70592e10vk.htm 10-K
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`ALL 2138
`PROLLENIUM V. ALLERGAN
`IPR2019-01505 et al.
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`(Mark One)
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`Filed by Bowne Pure Compliance
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`UNITED STATES SECURITIES AND EXCHANGE COMMISSION
`Washington, D.C. 20549
`FORM 10-K
`
`
`ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
`EXCHANGE ACT OF 1934
`For the fiscal year ended March 31, 2007
`
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`o
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`TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
`EXCHANGE ACT OF 1934
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`or
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`Commission File No. 001-31744
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`MENTOR CORPORATION
`
`Minnesota
`(State or other jurisdiction of
`incorporation or organization)
`
`(Exact name of registrant as specified in its charter)
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`41-0950791
`(IRS Employer Identification No.)
`
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`201 Mentor Drive, Santa Barbara, California 93111
`(Address of principal executive offices) (Zip Code)
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`(805) 879-6000
`(Registrant’s telephone number, including area code)
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`Title of Each Class:
`Common Shares, par value $0.10 per share
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`Securities registered pursuant to 12(b) of the Act:
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`Name of Each Exchange on Which Registered
`New York Stock Exchange
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`Securities registered pursuant to 12(g) of the Act: None
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`Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o
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`Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ
`
`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 þ 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 Registrant’s knowledge, in a definitive proxy or information statement incorporated by reference in Part III
`of this Form 10-K or any amendment to this Form 10-K þ
`
`Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition
`of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
`
`Large accelerated filer þ Accelerated filer o Non-accelerated filer o
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`Indicate by check mark whether the Registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes o No þ
`
`Based on the closing sale price on the New York Stock Exchange as of the last business day of the Registrant’s most recently
`completed second fiscal quarter (September 30, 2006), the aggregate market value of the Common Shares of the Registrant held by
`non-affiliates of the Registrant was approximately $1,317,071,195. For purposes of this calculation, shares held by each executive
`officer, director and holder of 10% or more of the outstanding shares of the Registrant have been excluded in that such persons may be
`deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.
`
`As of May 23, 2007, there were approximately 39,732,344 Common Shares outstanding.
`
`DOCUMENTS INCORPORATED BY REFERENCE
`
`Portions of the Registrant’s Proxy Statement for its Annual Meeting of Shareholders to be held on September 17, 2007 are
`incorporated by reference into Part III of this Form 10-K.
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`MENTOR CORPORATION
`TABLE OF CONTENTS
`
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`
`
`
`
`PART I
`
`Business
`
`General
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`Principal Products and Markets
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`Sales and Marketing
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`International Operations
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`Competition
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`Government Regulations
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`Medicare, Medicaid and Third Party Reimbursement
`
`Product Development
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`Patents and Licenses
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`Raw Material Supply and Single Source Suppliers
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`Seasonality
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`Working Capital
`
`Employees
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`Discontinued Operations
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`Executive Officers of the Registrant
`
`Available Information
`
`Risk Factors
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` Unresolved Staff Comments
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`Properties
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`Legal Proceedings
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`Submission of Matters to a Vote of Security Holders
`
`
`PART II
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`Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
`Equity Securities
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`Selected Financial Data
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` Management’s Discussion and Analysis of Financial Condition and Results of Operations
` Quantitative and Qualitative Disclosures About Market Risk
`
`Financial Statements and Supplementary Data
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`Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
`
`Controls and Procedures
` Other Information
`
`
`PART III
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` Directors, Executive Officers, and Corporate Governance
`
`Executive Compensation
`Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
`Matters
`Certain Relationships and Related Transactions, and Director Independence
`Principal Accountant Fees and Services
`
`PART IV
`Exhibits and Financial Statement Schedules
`Report of Independent Registered Public Accounting Firm on the Financial Statements
`Consolidated Financial Statements
`Signatures
`Exhibit Index
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`1A.
`1B.
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` Exhibit 21
` Exhibit 23
` Exhibit 31.1
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` Exhibit 31.2
` Exhibit 32.1
` Exhibit 32.2
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`PART I
`
`FORWARD-LOOKING STATEMENTS
`
`Unless the context indicates otherwise, when we refer to “Mentor,” “we,” “us,” “our,” or the “Company” in this Form 10-K, we are
`referring to Mentor Corporation and its subsidiaries on a consolidated basis. Various statements in this Form 10-K or incorporated by
`reference into this Form 10-K, in future filings by us with the U.S. Securities and Exchange Commission (the “SEC”), in our press
`releases and in our oral statements made by or with the approval of authorized personnel, constitute “forward-looking statements”
`within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current
`expectations and are indicated by words or phrases such as “anticipate,” “estimate,” “expect,” “intend,” “project,” “plan,” “believe,”
`“will,” “seek,” and similar words or phrases and involve known and unknown risks, uncertainties and other factors which may cause
`actual results, performance or achievements to be materially different from any future results, performance or achievements expressed
`or implied by such forward-looking statements. Some of the factors that could affect our financial performance or cause actual results
`to differ from our estimates in, or underlying, such forward-looking statements are set forth under “Item 1A -Risk Factors” or
`elsewhere in this Form 10-K. Forward-looking statements include statements regarding, among other things:
`
` § Our anticipated growth strategies;
`
` § Our intention to introduce or seek approval for new products;
`
` § Our ability to continue to meet United States Food and Drug Administration (“FDA”) and other regulatory requirements;
`
` § Our anticipated outcomes of litigation and regulatory reviews; and
`
` § Our ability to replace sources of supply without disruption and regulatory delay.
`
`These forward-looking statements are based largely on our expectations and are subject to a number of risks and uncertainties, many
`of which are beyond our control. Actual results could differ materially from these forward-looking statements as a result of the facts
`described in “Item 1A - Risk Factors” or elsewhere including, among others, problems with suppliers, changes in the competitive
`marketplace, significant product liability or other claims, product recalls, difficulties with new product development, the introduction
`of new products by our competitors, changes in the economy, FDA or other regulatory delay in approval or rejection of new or
`existing products, changes in Medicare, Medicaid or third-party reimbursement policies, changes in government regulations, use of
`hazardous or environmentally sensitive materials, inability to implement new information technology systems, inability to integrate
`new acquisitions, and other events. We undertake no obligation to publicly update or revise any forward-looking statements, whether
`as a result of new information, future events or otherwise. In light of these risks and uncertainties, we cannot assure you that the
`forward-looking information contained in this Form 10-K will, in fact, transpire.
`
`ITEM 1. BUSINESS.
`
`Mentor Corporation was incorporated in Minnesota in 1969. Our fiscal year ends on March 31, and references to fiscal 2007, fiscal
`2006 or fiscal 2005 refer to the years ended March 31, 2007, 2006 or 2005, respectively.
`
`General
`
`We develop, manufacture, license and market a range of products serving the aesthetic market, including plastic and reconstructive
`surgery. Our products include surgically implantable breast implants for plastic and reconstructive surgery, as well as capital
`equipment and consumables used for soft tissue aspiration or body contouring (liposuction), and facial rejuvenation products including
`various types of products for skin restoration.
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`Historically, we operated in three reportable segments: aesthetic and general surgery, surgical urology, and clinical and consumer
`healthcare. On May 17, 2006, we entered into a definitive purchase agreement to sell our surgical urology and clinical and consumer
`healthcare business segments (collectively, the “Urology Business”) to Coloplast A/S (“Coloplast”) for total consideration of
`$463 million ($456 million in cash and the remainder consisting of the value of an indemnification provided by Coloplast to Mentor
`related to certain foreign tax credits that arose from the transaction). On June 2, 2006, the sale of the Urology Business was completed.
`The transaction was subject to a post-closing adjustment of $2.7 million that was paid by us to Coloplast in the fourth quarter of fiscal
`2007.
`
`Principal Products and Markets
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`Our aesthetic products fall into three general categories: breast implants, body contouring, and other aesthetics which includes facial
`aesthetics products. These three product lines are considered one segment for financial reporting purposes. Net sales for each of these
`product categories and the percentage contributions of such net sales to total net sales are as follows:
`
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`Year Ended March 31,
`
`
`2006
`
`
`Amount
`(in thousands)
`
`Breast implants
`
`$ 233,189
`Body contouring
`
`
`17,782
`Other aesthetics, including non-
`surgical facial products
`Total
`
`
`
`
`%
`
`86.4%
`7.4%
`
`6.2%
`100.0%
`
`
`
`
`
`2007
`Amount
`$ 262,556
`16,734
`
`
`
`
`
`
`
`
`
`22,684
`
`$ 301,974
`
`
`
`
`
`
`
`
`
`%
`
`87.0%
`5.5%
`
`7.5%
`100.0%
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`
`
`
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`17,301
`
`$ 268,272
`
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`
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`
`
`
`
`
`%
`
`
`87.0%
`6.6%
`
`2005
`Amount
`$ 217,420
`
`18,609
`
`6.4%
`100.0%
`
`
`
`
`
`
`
`15,697
`
`$ 251,726
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`We develop, produce, and market a broad line of breast implants, including saline-filled implants and silicone gel-filled
`(MemoryGel™ and Contour Profile® brand) implants. Our breast implants consist of a silicone elastomer shell that is either filled
`during surgery with a saline solution or pre-filled during the manufacturing process with silicone gel. Our MemoryGel™ breast
`implants incorporate silicone gel with varying degrees of cohesiveness. Additionally, our implants have either a smooth or textured
`surface and are provided in a variety of sizes and shapes to meet the varying preferences of patients and surgeons.
`
`Mammary prostheses have applications in both cosmetic and reconstructive plastic surgery procedures. These prostheses are used in
`augmentation procedures to enhance breast size and shape, correct breast asymmetries and help restore fullness after breast feeding.
`During reconstruction procedures, mammary prostheses are utilized as a surgical solution to create a breast mound following a
`mastectomy. Breast reconstruction is a surgical option for many women following a mastectomy, either at the time of surgery or a later
`date.
`
`We estimate the size of the markets for our products using external data and management judgment. We believe the worldwide breast
`aesthetics market to be approximately $650 million to $700 million.
`
`We work actively with the U.S. Food and Drug Administration (“FDA”) as we seek approvals of our pre-market approval applications
`and carry out our post-approval conditions. We also work with non-U.S. agencies related to these processes. Following are some key
`dates related to these activities:
`
` §
`
` On November 17, 2006, we announced that the FDA approved for sale our MemoryGelÔ silicone gel-filled breast implants
`with post-approval conditions. The post-approval conditions and other requirements associated with the FDA’s approval
`include the following: continuation of the Mentor Core Study through 10 years; physician training to access the device; a large
`post-approval study for 10 years; completion of additional device failure studies; focus group studies with patients on the
`format and content of the approved labeling; utilization of a formal informed decision process with patient labeling; cessation
`of new enrollment in the Mentor Adjunct Study; and implementation of device tracking.
`
` §
`
` On May 2, 2007, we announced that the FDA approved an amendment to our MemoryGelÔ silicone gel-filled breast implant
`post-approval study (“PAS”) protocol from a mandatory to a voluntary patient enrollment design.
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` §
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` §
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` On October 20, 2006, we received medical device licenses with terms and conditions from the Therapeutic Products
`Directorate (“TPD”) of Health Canada to begin marketing and selling our round and Contour Profile® silicone gel-filled breast
`implants in Canada for use in augmentation, reconstruction and revision procedures.
`
` On April 3, 2006, we submitted a pre-market approval application to the FDA for our Contour Profile® silicone gel-filled
`breast implant products (“CPG®”). The clinical portion of this application was submitted on September 30, 2006, and the
`application is currently under review. On September 29, 2006, we submitted our completed modular PMA for CPG. On
`November 17, 2006, the FDA notified us that they had accepted our application for filing.
`
`We carry a full line of breast reconstruction products including the Contour Profile Tissue Expander (CPX™) family of breast
`expanders. These expansion products, used in the first-stage of a two-stage breast reconstruction, create a pocket that will ultimately
`hold the breast implant that is placed in a subsequent second-stage operation. All of the CPX devices utilize our proprietary
`BufferZone®™ self-sealing technology and Centerscope™ injection port locators.
`
`We offer a line of extremity tissue expanders. Extremity tissue expansion involves the process of growing additional tissue for
`reconstruction and skin graft procedures. Some of the major applications of extremity tissue expansion include the correction of
`disfigurements such as burns, large scars and congenital deformities.
`
`With respect to body contouring, we market a complete line of liposuction products and disposable supplies. We estimate the
`worldwide market for body contouring products to be approximately $40 million to $65 million.
`
`In fiscal 2005, we established two new business lines in the aesthetics arena, which we categorize under “other aesthetics”: Mentor
`Solutions and facial aesthetics. The Mentor Solutions business line began with our acquisition of Inform Solutions, Inc. in fiscal 2005.
`The Mentor Solutions group offers software, consulting and business management tools to help plastic surgeons grow their business.
`
`In facial aesthetics, we supply dermal filler products and cosmeceutical products that help plastic surgeons and dermatologists treat a
`variety of skin conditions. We estimate the worldwide market for facial aesthetics products to be approximately $450 million to
`$500 million. Currently, we sell a line of dermal filler products outside of the United States for the cosmetic correction of lines, folds
`and wrinkles. Specifically, such products include Puragen™, our double cross-linked hyaluronic acid-based dermal filler for which we
`are pursuing regulatory approval in the United States, and Prevelle™, a single cross-linked hyaluronic acid-based dermal filler that we
`distribute pursuant to a commercialization agreement with Genzyme Corporation (“Genzyme”). Together, these products complement
`each other by offering treatment options for a wide variety of patients looking for wrinkle correction. Further, as part of the
`commercialization agreement with Genzyme, Mentor and Genzyme have also partnered to develop dermal gel extra (“DGE”), a “next-
`generation” hyaluronic acid-based dermal filler product.
`
`In March 2006, we signed a non-binding letter of intent with Niadyne, Inc., to distribute Niadyne’s innovative NIA 24™ line of
`science-based cosmeceutical products used to improve and restore the healthy appearance of the skin. Sales commenced in May of
`2006, and we signed an exclusive distribution agreement with Niadyne in October 2006. The products have begun to gain acceptance
`with plastic surgeons.
`
`On October 30, 2006, we announced that we had entered into the aforementioned commercialization agreement with Genzyme, under
`which Genzyme will manufacture and develop future hyaluronic acid dermal filler products which we will market and distribute
`through our sales channels.
`
`We are developing a next-generation botulinum toxin type A product based on proprietary technology. We estimate the worldwide
`market for botulinum toxin products to be approximately $1.4 billion, of which approximately 55% relates to therapeutic uses and
`45% to cosmetic use. During fiscal 2005, we initiated the United States phase I dose-escalation study for cosmetic indications and
`during fiscal 2006 we initiated the United States phase II dose-finding study for cosmetic indications. Both phase I and II studies have
`been completed. The phase III Studies are comprised of three separate protocols, two of which were submitted to FDA as Special
`Protocol Assessments. The first is a single treatment safety and efficacy study, while the second is a repeat treatment safety and
`efficacy trial.
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`The third study, for which subjects from the phase I and II trials and the first (and possibly second) phase III trials will be eligible, is
`designed to collect long term safety data over a three year period. We received FDA approval for the phase IIIa study on May 15, 2007
`and have initiated the study. In addition, in early fiscal 2007 we initiated the United States phase I dose-escalation study focused on
`the treatment of adult-onset spasmodic torticollis/cervical dystonia.
`
`Sales and Marketing
`
`We employ a domestic sales force for our aesthetic surgery product lines and specialists to support body contouring. The sales force
`provides product information and specific data support and related services to physicians, nurses and other health care professionals.
`We promote our products through participation in and sponsorship of medical conferences and educational seminars, specialized
`websites, journal advertising, direct mail programs, and a variety of marketing support programs. One of our most successful
`marketing initiatives in the past year has been our Mentor Masters Series which is an ongoing educational event that allows physicians
`to visit our manufacturing facility in Dallas, Texas and see first hand how our products are manufactured. We are currently the only
`company that manufactures breast implants in the United States. We employ rigorous quality standards carried out by our long-tenured
`staff. In addition, we contribute to organizations that provide counseling and education for patients suffering from certain conditions,
`and we provide educational materials for our products to physicians for use with their patients.
`
`Upon the approval of MemoryGel breast implants in the third quarter of fiscal 2007 in the U.S. and Canada, we launched a
`comprehensive marketing program to both physicians and patients on silicone gel implants. Our MemoryGel.com website is a one-
`stop easy resource for physicians and office staff to obtain all the required education and information they need to begin using these
`products. In addition, we supplied every physician office with a MemoryGel Starter Kit that was designed to help them educate and
`advertise these products to their patients through ready-made consumer advertisements and simple educational tools. We also offer a
`service called “Ask Diane” which allows patients to contact one of our on-staff nurses for questions about products or procedures.
`
`International Operations
`
`We provide most of our product lines to markets outside of the U.S., principally to Canada, Europe, Central and South America, and
`the Pacific Rim. Products are sold through our direct international sales offices in Canada, the United Kingdom, Germany, France,
`Australia, Spain and Italy, as well as through independent distributors in other countries. Total foreign net sales, which are made
`through distributors and direct international sales offices, for continuing operations were $84.2 million, $75.5 million, and
`$65.2 million in fiscal 2007, 2006 and 2005, respectively. Other than sales made through our international sales offices, which are
`denominated in the local currency of the sales office, international sales are made in U.S. dollars.
`
`In addition, we manufacture mammary implants in The Netherlands and facial products in the United Kingdom. During fiscal 2007,
`we recorded a $2.6 million impairment charge related to our decision to close our manufacturing and research facility in Scotland. We
`anticipate the closure will take place in early fiscal 2008. Total long-lived assets, excluding those related to discontinued operations,
`located in foreign countries were $21.5 million and $23.7 million as of March 31, 2007 and 2006, respectively.
`
`For additional information regarding our international operations, see “Note T – Segment Information for Continuing Operations” of
`the “Notes to the Consolidated Financial Statements.”
`
`Competition
`
`We believe we are one of the leading suppliers of cosmetic and reconstructive surgery products. In the domestic breast implant market,
`we currently compete primarily with one other company, Allergan, Inc. (“Allergan”), which acquired Inamed Corporation, our largest
`competitor in the U.S. for our breast aesthetics products, in March 2006. As a result of Allergan’s acquisition of Inamed, we are now
`competing against a much larger company. The principal competitive factors in this market are product performance and quality, range
`of styles and sizes, proprietary design, warranty programs, customer service and, in certain instances, price. In addition to current
`competition from Allergan, there is a strong possibility of additional competition from new entrants into the U.S. market. Several
`companies have clinical studies underway to receive FDA approval to market their own silicone- and saline-filled breast implants.
`Outside the U.S., we compete with Allergan and various smaller competitors. Notwithstanding relative sizes, some of the smaller
`competitors have strong market positions in their home markets, which increases the challenges associated with maintaining and
`growing our international business.
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`In facial aesthetics, we are a new entrant in the worldwide market and consequently are not a leading competitor. The
`commercialization agreement reached with Genzyme for hyaluronic acid dermal fillers is expected to provide significant benefit in the
`future as we access their manufacturing and research and development expertise in hyaluronic acid technology. The facial aesthetics
`market has many competitors, domestically and internationally, some with hyaluronic acid-based products similar to ours, and some
`with different products and technologies.
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`Government Regulations
`
`General
`
`Our manufacturing processes and facilities are subject to continuing review by the FDA and various state and international agencies
`(“Agencies”). These Agencies inspect our processes and facilities from time to time to determine whether we are in compliance with
`various regulations relating to manufacturing practices and other requirements. These Agencies have the power to prevent or limit
`further marketing of products based upon the results of these inspections. These regulations depend heavily on administrative
`interpretation. Future interpretations made by these Agencies could adversely affect us. Failure to comply with these Agencies’
`regulatory requirements may result in enforcement action by these Agencies, including product recalls, suspension or revocation of
`product approval, seizure of product to prevent distribution, imposition of injunctions prohibiting product manufacture or distribution,
`and civil or criminal penalties.
`
`Advertising and promotion of medical devices and biologic products are regulated by the FDA, the Federal Trade Commission
`(“FTC”) and other agencies in the U.S. and by comparable agencies internationally. A determination that we are in violation of
`regulatory requirements governing promotional activities could lead to imposition of various penalties, including warning letters,
`product recalls, injunctive relief, and civil or criminal penalties.
`
`Products and materials manufactured internationally may come under Homeland Security statutes from time to time and could be
`considered for restricted entry into the U.S. by the FDA and U.S. Customs. The restricted entry of such products and materials could
`affect the manufacturing and sale of product domestically and internationally. Our products may also be subject to export control
`regulations.
`
`We have incurred, and will continue to incur, substantial expenses related to laboratory and clinical testing of new and existing
`products, and the preparation and filing of documents required by the FDA for pre-market approval or clearance. The process of
`obtaining pre-market approval or clearance can be time-consuming and expensive, and there is no assurance that such approvals or
`clearances will be granted. We also may encounter delays in bringing new products to market as a result of being required by the FDA
`to conduct and document additional investigations of product safety and effectiveness, which may adversely affect our ability to
`commercialize new products or additional applications for existing products.
`
`U.S. Regulation of Medical Devices
`
`Under the Federal Food, Drug, and Cosmetic Act (“FDCA”) as amended, the FDA has the authority to adopt regulations that (i) set
`standards and general controls for medical devices; (ii) require demonstration of safety and effectiveness or substantial equivalence to
`a legally marketed device prior to marketing devices for which the FDA requires pre-market approval or clearance; (iii) require
`laboratory and/or animal test data to be submitted to the FDA prior to testing of devices in humans; (iv) establish Good Manufacturing
`Practices (“GMPs”), referred to as Quality System Regulation (“QSR”), that must be followed in device manufacture; (v) permit
`detailed inspections of device manufacturing facilities for compliance with QSR; (vi) require compliance with certain labeling
`requirements; (vii) require reporting of certain adverse events, device malfunctions, and other post-market information to the FDA;
`and (viii) prohibit device exports that do not meet certain requirements. The FDA also regulates marketing and promotional activities
`by device companies. Essentially all of our currently marketed products are medical devices and, therefore, are subject to regulation
`by the FDA in the U.S. and analogous governmental Agencies in countries outside the U.S. to which we export our products. We
`expect other products, such as Puragen Plus™, that we are developing also to be subject to FDA regulation as medical devices.
`
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`Table of Contents
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`Filed by Bowne Pure Compliance
`
`The FDCA established complex procedures for FDA regulation of devices. Devices are placed in three classes: Class I (general
`controls, such as establishment registration, device listing, and labeling requirements), Class II (special controls, such as industry
`standards or FDA guidance documents, in addition to general controls), and Class III (a pre-market approval application (“PMA”)
`before commercial marketing). Class III devices are the most extensively regulated. Class III devices require each manufacturer to
`submit to the FDA a PMA that includes information demonstrating the safety and effectiveness of the device. The majority of our
`aesthetic surgery products are in Class III.
`
`As described earlier, in November 2006, the FDA approved our PMA application for our MemoryGel™ round silicone gel-filled
`breast implants for breast augmentation, reconstruction and revision. Pursuant to conditions of approval set forth in the FDA’s
`approval letter, we are required to conduct a large, 10-year post-approval study of 42,900 women. This study is intended to address
`specific issues relating to long-term health consequences. We are incurring, and expect to continue to incur, additional expenses in
`connection with the conduct of this study, which could be substantial.
`
`As described earlier, on September 29, 2006, we submitted the completed modular PMA application to the FDA for our Contour
`Profile® silicone gel-filled breast implant products (“CPG®”). The application is currently under review.
`
`Regulation of Biologics
`
`Certain other products being developed by us are regulated by the FDA as biologics under the Public Health Service Act and require
`pre-market approval, and are subject to regulations and requirements on preclinical and clinical testing, manufacture, labeling, quality
`control, storage, advertising, promotion, marketing, distribution and export. Prior to commercial sale of a biologic, a Biologics License
`Application (“BLA”) that includes results from required, well-controlled clinical trials to establish the safety and effectiveness for the
`product’s intended use, and specified manufacturing information, must be submitted to and approved by the FDA. FDA inspection of
`the manufacturing facility during review of the BLA is required to ensure that manufacturing processes conform to FDA-mandated
`GMPs. Continued compliance with GMPs is required after product approval, and post-approval changes in manufacturing processes or
`facilities, product labeling, or other areas require FDA review and approval. We are also subject to regulation by the U.S. Department
`of Health and Human Services, Centers for Disease Control, due to the nature of the biological agent used to manufacture our
`