AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 10, 1997DECEMBER 17, 1999

REGISTRATION NO. 333-36657333-
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------

AMENDMENT NO. 1

TO--------------------------

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------------------------

ABIOMED, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 04-2743260
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION (I.R.S. EMPLOYER IDENTIFICATION NO.)
OR ORGANIZATION)
IDENTIFICATION NUMBER)

--------------------------

22 CHERRY HILL DRIVE
DANVERS, MASSACHUSETTS 01923
(978) 777-5410
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
-----------------------------------------

DR. DAVID M. LEDERMAN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ABIOMED, INC.
3322 CHERRY HILL DRIVE
DANVERS, MASSACHUSETTS 01923
(978) 777-5410
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
-----------------------------------------

COPIES TO:

PHILIP J. FLINK, ESQUIRE STEVEN C. BROWNE, ESQUIRE
BROWN, RUDNICK, FREED & GESMER TESTA, HURWITZ & THIBEAULT, LLP
ONE FINANCIAL CENTER 125 HIGH STREET
BOSTON, MASSACHUSETTS 02111 BOSTON, MASSACHUSETTS 02110
(617) 856-8200 (617) 248-7000

---------------
PETER M. ROSENBLUM, ESQ. WILLIAM T. WHELAN, ESQ.
FOLEY, HOAG & ELIOT LLP MINTZ, LEVIN, COHN, FERRIS, GLOVSKY AND POPEO, P.C.
ONE POST OFFICE SQUARE ONE FINANCIAL CENTER
BOSTON, MASSACHUSETTS 02109 BOSTON, MASSACHUSETTS 02111
(617) 832-1000 (617) 542-6000

--------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]/ /

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [_]/ /
- ---------------- .

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]/ /
- ---------------- .

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]/ /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]/ /
--------------------------

CALCULATION OF REGISTRATION FEE

PROPOSED PROPOSED MAXIMUM
AMOUNT MAXIMUM OFFERING AGGREGATE OFFERING AMOUNT OF
TITLE OF SHARES TO BE REGISTERED TO BE REGISTERED(1) PRICE PER SHARE(2) PRICE(2) REGISTRATION FEE

Common Stock, $.01 par value per share....... 1,725,000 shares $44.563 $76,871,175 $20,294

(1) Includes up to 225,000 shares of common stock which the underwriters have
the option to purchase solely to cover over-allotments, if any. See
"Underwriting."

(2) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933. Based upon the
average of the high and low price of the common stock as reported on the
Nasdaq National Market on December 15, 1999.
--------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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- ---------------------------------------------------------------------------------------------------------------------------------------------------------------

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THISThe information in this prospectus is not complete and may be changed without
notice. ABIOMED may not sell these securities until the registration statement
filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities, and ABIOMED is not soliciting offers to buy these
securities, in any state
where the offer or sale of these securities is not permitted.

PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED OCTOBER 10, 1997(Not Complete)
Issued December 17, 1999

1,500,000 SHARES

[ABIOMED LOGO APPEARS HERE]

2,400,000 SHARESLOGO]

ABIOMED, INC.

COMMON STOCK

Of the 2,400,000----------------

ABIOMED, Inc. is offering 1,500,000 shares of Common Stock offered hereby, 2,250,000 shares are
being offered by ABIOMED, Inc. ("ABIOMED" or the "Company") and 150,000 shares
are being offered by the Selling Stockholders. See "Principal and Selling
Stockholders."common stock in a firmly
underwritten offering.

------------------------

The Company will not receive any of the proceeds from the sale
of shares by the Selling Stockholders. On October 9, 1997, the last reported
sale price of the Company's Common Stock, as reported on the Nasdaq National
Market, was $22.125 per share. See "Price Range of Common Stock." The Company's
Common Stockcommon stock is tradedlisted on the Nasdaq National Market under the symbol
"ABMD." -----------On December 16, 1999, the last reported sale price of the common stock
on the Nasdaq National Market was $48.875 per share.

------------------------

INVESTING IN THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 6.

-----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------

UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS COMPANY(1) STOCKHOLDERS
- ---------------------------------------------------------------------------------------------Per Share Total
--------- -----

Per Share..............
- ---------------------------------------------------------------------------------------------
Total (2)..............Offering Price............................................ $ $
Discounts and Commissions to Underwriters................. $ $
Offering Proceeds to ABIOMED.............................. $ $

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Before deducting expenses payable byNeither the Company, estimated at $400,000.
(2) The CompanySecurities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

ABIOMED and one stockholder of ABIOMED have granted the Underwritersunderwriters a
30-day option to purchase up to an additional 360,000225,000 shares of Common Stock solelycommon stock to
cover over-
allotments, if any. See "Underwriting." If such optionany over-allotments. Banc of America Securities LLC expects to deliver the
shares of common stock to investors on , 2000.

BANC OF AMERICA SECURITIES LLC SALOMON SMITH BARNEY

----------------

, 2000

ABIOCOR-TM- IMPLANTABLE REPLACEMENT HEART

[Illustration of certain components of the AbioCor system positioned on
photograph of woman appears here. The following components are labeled:
replacement heart, wireless energy transmission system, controller, internal
battery and external battery pack.]

Illustration of implantable and patient-worn components of the AbioCor
Implantable Replacement Heart, which is exercised in
full,being developed for patients with
end-stage heart failure.

[Photograph of AbioCor next to diseased human heart appears here.]

Photograph of clinically configured AbioCor, scaled to illustrate size
compared to diseased human heart.

[Photograph of implantable components of the total Price to Public, Underwriting Discounts and Commissions and
Proceeds to Company will be , and , respectively.

-----------

The Common Stock is offered by the Underwriters as stated herein, subject to
receipt and acceptance by them and subject to their right to reject any order
in whole or in part. It is expected that delivery of such shares will be made
through the offices of BancAmerica Robertson Stephens, San Francisco,
California, on or about , 1997.

UBS SECURITIES
BANCAMERICA ROBERTSON STEPHENS

The date of this Prospectus is , 1997

BVS-5000(R) BI-VENTRICULAR ASSIST SYSTEMAbioCor appears here.]

Implantable AbioCor components.

THE BVS-5000 PNEUMATIC
[PHOTOGRAPHABIOCOR IS IN A PRE-CLINICAL STAGE OF THE ITEMS DESCRIBED CONSOLE WITH TWO SINGLE-USE
IN THE CAPTION] BVS BLOOD PUMPS MOUNTED ON A
BEDSIDE STAND. THE BVS-5000
PROVIDES A PATIENT'S FAILING
HEART WITH FULL CIRCULATORY
ASSISTANCE WHILE ALLOWING
THE HEART TO REST, HEALDEVELOPMENT AND RECOVER ITS FUNCTION.

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAINIS NOT APPROVED
FOR SALE OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK OF
THE COMPANY, INCLUDING STABILIZING BIDS, SYNDICATE COVERING TRANSACTIONS AND
THE IMPOSITION OF PENALTY BIDS. FOR A DISCUSSION OF THESE ACTIVITIES, SEE
"UNDERWRITING."

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS OR THEIR AFFILIATES MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS
IN THE COMMON STOCK ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 103
OF REGULATION M UNDER THE SECURITIES EXCHANGE ACT OF 1934. SEE "UNDERWRITING."

NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, ANY SELLING STOCKHOLDER OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY, ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT
RELATES OR AN OFFER TO, OR A SOLICITATION OF, ANY PERSONCLINICAL USE IN ANY JURISDICTION
IN WHICH SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY OFFER OR SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENTCOUNTRY. REGULATORY APPROVAL AND
COMMERCIALIZATION ARE SUBJECT TO THE DATE HEREOF.

----------------NUMEROUS UNCERTAINTIES AND RISKS. SEE "RISK
FACTORS."

TABLE OF CONTENTS

PAGE
------------

Summary...............................................................Prospectus Summary.......................................... 4
Risk Factors..........................................................Factors................................................ 6
Use of Proceeds.......................................................Proceeds............................................. 17
Dividend Policy.......................................................Policy............................................. 17
Price Range of Common Stock...........................................Stock................................. 17
Capitalization.............................................. 18
Capitalization........................................................ 19
Selected Consolidated Financial Data.................................. 20Data........................ 19
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................................ 21
Business.............................................................. 26
Management............................................................ 40
Certain Transactions.................................................. 43Operations................................. 20
Business.................................................... 27
Management.................................................. 52
Principal and Selling Stockholders.................................... 44Stockholders...................................... 56
Description of Capital Stock.......................................... 45
Underwriting.......................................................... 46Stock................................ 57
Underwriting................................................ 60
Legal Matters......................................................... 50
Experts............................................................... 50
Available Information................................................. 50
Incorporation of Certain Documents by Reference....................... 51Matters............................................... 62
Experts..................................................... 62
Where You Can Find More Information......................... 62
Index to Consolidated Financial Statements............................Statements.................. F-1

----------------

ABIOMED(R), ABIODENT(R) andFORWARD LOOKING STATEMENTS

This prospectus, including the ABIOMED logo are registered service marks of
the Company. BVS(R), BVS-5000(R) and PerioTemp(R) are registered trademarks of
the Company. Angioflex(TM) and Heart Booster(TM) are trademarks of the
Company. Halimeter(R) is a registered trademark of Interscan Corporation. This
Prospectus alsodocuments incorporated by reference in this
prospectus, includes trademarks of companies other than the Company.

As used herein, the term "ABIOMED" or the "Company" includes the Company and
its consolidated subsidiaries.

References to "Common Stock" include "Rights" issuable pursuant to that
certain Rights Agreement entered into in August 1997 providing for the
delivery of a Right along with each share of Common Stock issued by the
Company. See "Description of Capital Stock."

SUMMARY

This Prospectus containsforward-looking statements. We have based these
forward-looking statements which involve riskson our current expectations and uncertainties. The Company'sprojections about
future events. Our actual results could differ materially from those anticipateddiscussed
in, or implied by, these forward-looking statements. Forward-looking statements
are identified by words such as "believe," "anticipate," "expect," "intend,"
"plan," "will," "may" and other similar expressions. In addition, any statements
that refer to expectations, projections or other characterizations of future
events or circumstances are forward-looking statements. Forward-looking
statements in these documents include, but are not necessarily limited to, those
relating to:

- our plans to commence initial clinical trials of the AbioCor Implantable
Replacement Heart by the end of the year 2000;

- our intention to expand the market for our BVS-5000 product;

- our ability to obtain and maintain regulatory approval of our products in
the U.S. and internationally;

- the other competing therapies that may in the future be available to heart
failure patients;

- our plans to develop and market new products; and

- our ability to carry out our strategy.

Factors that could cause actual results or conditions to differ from those
anticipated by these and other forward-looking statements as a result of certain factors,
includinginclude those set forth undermore
fully described in the "Risk Factors" section and elsewhere in this Prospectus.

The following summary is qualified in its entirety by, and should be read in
conjunction with, the detailed information and the Consolidated Financial
Statements and Notes thereto appearing elsewhere in this Prospectus.prospectus.
We are not obligated to update or revise these forward-looking statements to
reflect new events or circumstances.
------------------------

YOU SHOULD RELY ONLY ON THE COMPANYINFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT
MAKING AN OFFER TO SELL THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR
SALE IS NOT PERMITTED. YOU SHOULD ASSUME THAT THE INFORMATION APPEARING IN THIS
PROSPECTUS IS ACCURATE AS OF THE DATE ON THE FRONT COVER OF THIS PROSPECTUS
ONLY. OUR BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS AND PROSPECTS MAY
HAVE CHANGED SINCE THAT DATE.

PROSPECTUS SUMMARY

THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS.
YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY, INCLUDING THE "RISK FACTORS"
SECTION AND OUR FINANCIAL STATEMENTS AND THE RELATED NOTES CONTAINED HEREIN.
UNLESS OTHERWISE INDICATED, THE INFORMATION IN THIS PROSPECTUS ASSUMES THAT THE
UNDERWRITERS WILL NOT EXERCISE THEIR OVER-ALLOTMENT OPTION.

ABIOMED, Inc. ("ABIOMED" or the "Company")INC.

ABIOMED is a leader inleading developer, manufacturer and marketer of medical
products designed to safely and effectively assist or replace the researchpumping
function of the failing heart. Based on technology that has been developed and
developmentrefined over a period of cardiac assistapproximately three decades, we have been developing
and are preparing to enter human clinical trials for the AbioCor Implantable
Replacement Heart, a battery-powered totally implantable replacement heart
replacement technology. The Company
developed, manufacturessystem, which we believe will be the first such device for end-stage heart
failure patients. We currently manufacture and sellssell the BVS-5000, ("BVS"), a temporary
cardiacheart assist device designed to provide a patient's failing heart with full
circulatory assistance while allowing the heart to rest, heal and recover its
function. The BVS is most frequently used in patients whose hearts fail to
immediately recover function following heart surgery. The BVS is the only
device that can provide full circulatory assistance approved by the United
States Food and Drug Administration ("FDA") as a bridge-to-recovery device, for the treatment of all patients with reversiblefailing but
potentially recoverable hearts. We are also engaged in research and development
relating to other devices to support the pumping function of the heart.

Heart disease is the number one cause of death in the U.S. In 1996,
approximately 20 million people in the U.S. were afflicted with heart disease,
resulting in over 700,000 deaths. While a number of therapies exist for the
treatment of patients in early stages of heart disease, limited therapies exist
today for most patients with severe heart failure.

The CompanyAbioCor is developing a battery-powered totally implantable artificial
heart ("TAH") intended as a permanent replacement device to assume the fullthat will replace a
patient's diseased heart and take over its blood pumping function of both the left and right ventricles of the heart. The TAHfunction. It is
designed for use by patients with irreparably damaged hearts andwho are at risk of
imminent death due to acute myocardial infarction ("AMI"), chronic ischemicheart disease, or
some form of end-stage congestive heart failure, but whose other vital organs otherwise remain viable.
Among these combined groups,We believe the Company believes thatAbioCor will provide a much-needed treatment option for
approximately 60,000125,000 patients per year could benefitin the U.S. for whom there is currently
no effective therapy available. The AbioCor has reached an advanced stage of
pre-clinical testing, including substantial laboratory and animal testing. We
have selected surgical teams from a heart replacement
device. The Company is devoting significant resourcesfive leading U.S. medical centers to accelerateperform
initial human clinical trials. To date, we have invested more than $40 million
in the development of the TAH with the goalAbioCor and, subject to initiatecompleting final testing and
securing regulatory approvals, we expect to commence clinical trials offor the
TAHAbioCor for certain patient populations by the end of the year 2000. There can be no assuranceWe
anticipate that we will sell AbioCor systems, if and when approved by applicable
U.S. and international regulatory authorities, for approximately $75,000 to
$100,000 each, subject to the Company will be
able to successfully complete pre-clinical testingestablishment of the TAH and receive FDA
approval to begin clinical trials of the TAH in a timely manner, if at all, or
that any market will develop for the TAH.

The Company sells the BVS in the United States through direct sales and
clinical support teams. Its sales force focuses on sales to new customers,
while its clinical support group focuses on training and educating existing
customers in order to improve clinical outcomes and increase BVS blood pump
usage.reimbursement levels by
third-party payors.

The BVS is intendeda "bridge-to-recovery" device that can temporarily assume the
full pumping function of the heart for use in any hospital performing open-chest
cardiac surgery, of which there are more than 900 in the United States. As of
September 30, 1997,patients with potentially reversible
heart failure. In 1992, the BVS hadbecame the first heart assist device capable of
providing full circulatory support to be approved by the the U.S. Food and Drug
Administration, known as the FDA. Since fiscal 1995, the BVS has been purchased bya
profitable product line. The BVS is the most widely used FDA-approved temporary
heart assist device. To date it has been used to support over 2753,000 patients at
over 500 medical centers inworldwide. We are pursuing several strategies to
continue the United States including manygrowth of the largest centers. The Company believes
that its installed base of customers provides an opportunityBVS product line, including implementing new market
strategies, developing new products and seeking to expand the indications for
reorders ofwhich the single-use BVS blood pumpsmay be used. We believe our experience in developing,
manufacturing and selling the BVS will provide us with a competitive advantage
in commercializing the AbioCor, as well as a reference base to assist in selling
to new accounts.

The Company's goal is to be a leader in the development, manufacture and
marketing of mechanical cardiac assist and heart replacement devices that
address the varying needs of a wide range of patients. The Company is pursuing
a variety of strategies to pursue this objective, including accelerating the
development of the TAH, increasing market penetration of the BVS, maintaining
and enhancing its technological leadership and pursuing strategic relationships
to support its research and commercialization efforts.

Since the Company's inception, United States government agencies,
particularly the National Heart, Lung and Blood Institute ("NHLBI"), have
provided significant support to the Company's product development efforts. The
Company seeks funding from third parties to support itsother future products.

Our focused research and development programsrelated to the AbioCor and generally limits the use of its own funds untilBVS has
provided us with the scientific risk is reduced. In addition, the Company intends to pursue
collaborative relationshipsproprietary technology, know-how and experience to develop
additional products. We believe we are the only company in the world with
expertise in the full range of technology to support the pumping function of the
heart. We seek to be first to market with high-quality, easy-to-use and commercialize the Company's non-
cardiac assist technologies.

The Company is a Delaware corporation. The Company's principal offices are
located at 33 Cherry Hill Drive, Danvers, Massachusetts 01923. The Company's
telephone number is (978) 777-5410 and its fax number is (978) 777-8411.cost-
effective technologies for heart failure patients who currently lack adequate
therapies.

THE OFFERING

Common Stock Offeredstock offered by the Company........... 2,250,000ABIOMED.............. 1,500,000 shares

Common Stock Offered by the Selling 150,000 shares
Stockholders.................................
Common Stock Outstandingstock outstanding after the Offering... 10,514,55610,169,867 shares
(1)offering...................................

Use of Proceeds...............................Proceeds.............................. For funding of clinical trials for the
AbioCor, continued research and development,
expansion of manufacturing capabilities,
international sales and marketing and other
general corporate purposes.purposes, including
possible acquisitions. See "Use of Proceeds."

Nasdaq National Market Symbol.................Symbol................ ABMD

The common stock to be outstanding after this offering is based on the
number of shares outstanding as of December 1, 1999 and excludes 1,345,110
shares of common stock reserved for issuance upon the exercise of outstanding
stock options at a weighted average exercise price of $11.70 per share. See
"Capitalization" and Note 7 to Consolidated Financial Statements.

SUMMARY CONSOLIDATED FINANCIAL DATA
(in thousands, except per share data)(IN THOUSANDS, EXCEPT PER SHARE DATA)

You should read the following summary consolidated financial data in
conjunction with our financial statements and accompanying notes and with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this prospectus.

SIX MONTHS ENDED
FISCAL YEAR ENDED MARCH 31, SEPTEMBER 30,
----------------------------------------- --------------
1993 1994---------------------------------------------------- --------------------
1995 1996 1997 1996 1997
------- ------- ------ ------ ------- ------ -------1998 1999 1998 1999
-------- -------- -------- -------- -------- -------- --------

STATEMENT OF OPERATIONS DATA:
Revenues:
Products..............Total revenues...................................... $ 1,709 $ 4,648 $6,893 $9,725 $12,311 $5,760 $ 9,324
Contracts............. 1,736 2,027 2,337 3,118 4,151 1,754 3,680
------- ------- ------ ------ ------- ------ -------
Total revenues...... 3,445 6,675 9,230 12,843 16,462 7,514 13,004
Costs and expenses:
Cost of products...... 2,042 2,211 3,289 3,921 5,361 2,123 3,438
Research and
development (2)...... 2,097 2,431 2,464 3,218 3,833 1,781 3,654
Selling, general and
administrative....... 3,803 4,553 4,278 5,741 7,068 3,229 4,970
------- ------- ------ ------ ------- ------ -------8,729 $11,601 $15,023 $22,446 $22,090 $10,770 $10,520
Total costs and expenses........... 7,942 9,195 10,031 12,880 16,262 7,133 12,062
------- ------- ------ ------ ------- ------ -------expenses............................ 9,176 11,463 14,282 24,647 29,994 14,522 14,724
Income (loss) from operations............. (4,497) (2,520) (801) (37) 200 381 942
Interest and other
income................. 604 537 449 528 535 256 417
------- ------- ------ ------ ------- ------ -------operations....................... (447) 138 741 (2,201) (7,904) (3,752) (4,204)
Income (loss) from continuing operations............ 2 666 1,276 (995) (6,712) (3,025) (3,807)
Loss from discontinued operations................... (354) (175) (541) (1,513) -- -- --
Net income (loss)....... $(3,893) $(1,983)................................... $ (352) $ 491 $ 735 $ 637 $ 1,359$(2,508) $(6,712) $(3,025) $(3,807)
======= ======= ====== ====== ======= ====== ======= ======= ======= =======
Income (loss) from continuing operations per diluted
share............................................. $ 0.00 $ 0.10 $ 0.18 $ (0.12) $ (0.78) $ (0.35) $ (0.44)
Loss from discontinued operations per diluted
share............................................. (0.05) (0.03) (0.08) (0.19) -- -- --
------- ------- ------- ------- ------- ------- -------
Net income (loss) per share..................diluted share................. $ (0.60) $ (0.31) $(0.05)(0.05) $ 0.07 $ 0.10 $ 0.09(0.31) $ 0.17(0.78) $ (0.35) $ (0.44)
======= ======= ====== ====== ======= ============= ======= ======= =======
Weighted average number
ofdiluted shares outstanding.. 6,441 6,461outstanding......... 6,512 6,995 7,162 7,196 7,8698,074 8,619 8,599 8,653
======= ======= ======= ======= ======= ======= =======

AS OF SEPTEMBER 30, 1997
------------------------1999
-------------------------
ACTUAL AS ADJUSTED
(3)
------- --------------------------- -----------

BALANCE SHEET DATA:
Cash, cash equivalents and short-term marketable securities.......................................... $24,312 $70,980securities............ $13,661 $82,075
Working capital...................................... 29,109 75,777capital............................................. 18,547 86,961
Total assets......................................... 36,348 83,016
Total stockholders' investment....................... 32,648 79,317assets................................................ 29,659 98,073
Long-term liabilities....................................... 159 159
Stockholders' equity........................................ 23,333 91,747

- --------

(1) Based on the number of shares outstandingThe balance sheet data as of September 30, 1997.
Excludes 964,4101999 is adjusted to reflect our
sale of 1,500,000 shares of Common Stock reserved for issuance upon the
exercise ofcommon stock options outstanding as of September 30, 1997 at a
weighted average exercise price of $10.81 per share. See Note 6 to
Consolidated Financial Statements.
(2) Research and development expenses include certain contract costs. See Note
1(e) to Consolidated Financial Statements.

(3) Adjusted to reflect the sale of 2,250,000 shares of Common Stock offered by
the Company herebyunder this prospectus at an assumed
public offering price of $22.125$48.875 per share and the application of the net
proceeds, therefrom after deducting the estimated underwriting discountsfees of the underwriters and commissions andestimated
offering expenses payable by the Company.ABIOMED. See "Use of Proceeds" and
"Capitalization."

Except as otherwise indicated, all information in this Prospectus assumes no
exercise of the Underwriters' over-allotment option.We are a Delaware corporation. Our principal offices are located at 22
Cherry Hill Drive, Danvers, Massachusetts 01923. Our telephone number is
(978) 777-5410 and our fax number is (978) 777-8411.

RISK FACTORS

This Prospectus contains forward-looking statementsTHIS OFFERING AND AN INVESTMENT IN OUR COMMON STOCK INVOLVE A HIGH DEGREE OF
RISK. YOU SHOULD CONSIDER EACH OF THE RISKS AND UNCERTAINTIES DESCRIBED IN THIS
SECTION AND ALL OF THE OTHER INFORMATION IN THIS PROSPECTUS BEFORE DECIDING TO
INVEST IN OUR COMMON STOCK. OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF
OPERATIONS COULD BE SEVERELY HARMED BY ANY OF THE FOLLOWING RISKS. THE TRADING
PRICE OF OUR COMMON STOCK COULD DECLINE IF ANY OF THESE RISKS AND UNCERTAINTIES
DEVELOP INTO ACTUAL EVENTS. YOU MAY LOSE ALL OR PART OF THE MONEY YOU PAID TO
BUY OUR COMMON STOCK.

OUR FUTURE SUCCESS IS HEAVILY DEPENDENT ON DEVELOPMENT OF THE ABIOCOR. OUR
DEVELOPMENT EFFORTS MAY NOT BE SUCCESSFUL.

We are currently devoting our principal research and development and
regulatory efforts, and significant financial resources, to the development of
the AbioCor, an implantable replacement heart system. An implantable replacement
heart is a complex medical device and has never been successfully developed or
marketed by any company. The development of the AbioCor and other new products,
including our AbioBooster and AbioVest heart assist products, presents enormous
challenges in a variety of areas, many or all of which involve riskswe may have difficulty in
overcoming, including blood compatible surfaces, blood compatible flow,
manufacturing techniques, pumping mechanisms, physiological control, energy
transfer, anatomical fit and uncertainties. The Company's actual results could differ materially from those
anticipatedsurgical techniques. For many years, we and other
parties have been attempting to develop a heart replacement device, but, to
date, none of these efforts has been successful. We cannot be sure that we will
be successful in these forward-looking statements as a result of certain
factors, including those set forthour development efforts, and in the following riskevent that we are unable to
commercialize the AbioCor, our business and financial condition would be
adversely affected.

THE MARKETS FOR THE ABIOCOR AND OUR OTHER PRODUCTS UNDER DEVELOPMENT ARE
UNPROVEN.

Even if the AbioCor or any other of our products are successfully developed
and approved by the FDA and corresponding foreign regulatory authorities, they
may not enjoy commercial acceptance or success, which would adversely affect our
business and results of operations. Several factors could limit our success,
including:

- Our need to create a market for an implantable replacement heart, and
elsewherepossible limited market acceptance among physicians, medical centers,
patients and third party payors;

- The need for surgeons to develop or be trained in this Prospectus.

In additionnew surgical techniques
to use our product effectively;

- Limitations on the other informationnumber of patients who may have access to physicians
and medical centers with adequate training, equipment and personnel to
make use of our products;

- Limitations inherent in this Prospectus, the following risk
factors should be considered carefully in evaluating the Company and its
business before purchasing shares of the Common Stock offered hereby.

DEPENDENCE ON BVS PRODUCT LINE; EARLY STAGE OF BVS MARKET DEVELOPMENT

In the six months ended September 30, 1997first generation devices, and the fiscal year ended March
31, 1997, sales ofpotential
failure to develop successive improvements, including increases in service
life, which would reduce the BVS and related products and services represented more
than ninety percent of the Company's product revenues. The Company believes
that its dependence on the BVS product line is likely to continue for at least
the next several years, unless and until the Company successfully develops,
obtains regulatory approvals for and sells new products.

Theaddressable market for the BVS continuesAbioCor;

- The lifestyle limitations that patients will have to be inaccept, including
traveling with external batteries at all times and potentially avoiding
activities such as air travel or diving that involve significant pressure
changes;

- The timing and amount of reimbursement for these products, if any, by
third party payors;

- The introduction by other companies of new treatments, products and
technologies which compete with our products, and may reduce their market
acceptance, or make them obsolete;

- The reluctance, due to ethical considerations, of physicians, patients and
society as a whole to accept medical devices that replace the early stageheart; and

- The reluctance of development.
The Company has initially focused its marketing efforts on larger medical
centersphysicians, patients and hospitals.society as a whole to accept
the finite life and risk of mechanical failure of devices that replace the
heart.

The commercial success of the BVSAbioCor and other heart assist products will
be dependent
upon both the Company's ability to sell the BVS to smaller hospitalsrequire acceptance by cardiovascular surgeons and medical centers, which generally have more limited financial resources,interventional and the increase of the use of the BVS at those medical centers and hospitals
which have purchased the systems. There can be no assurance that the Company
will be successful in marketing the BVS. Advances in medical technology,
biotechnology and pharmaceuticals may reduce the size of the potential markets
for the Company's products or render those products obsolete. Failure of the
Company to expand the market for and use of the BVS would have a material
adverse effect on its business, financial condition and results of operations.
See "Business--Marketing and Sales."

UNCERTAINTY OF PRODUCT DEVELOPMENT AND CLINICAL TRIALS

The Company has developed and marketsheart
failure cardiologists, a limited number of whom significantly influence medical
device selection and purchasing decisions. We may achieve our business
objectives only if the AbioCor and our other products are accepted and
believes that its future success will in large part be dependent upon its
ability to develop and market innovative new products, such as the TAH. The
successful development of these products presents enormous challenges. The
Company must demonstrate that the TAH,recommended by leading physicians, which is being designedlikely to assume the
full pumping functionbe based on a
determination by these physicians that our products are safe, cost-effective and
represent acceptable methods of both the lefttreatment. Although we have developed
relationships with leading cardiac surgeons and right ventriclescardiologists, we cannot assure
that these existing relationships and arrangements can be maintained or that new
relationships will be established in support of the heart, can
operate effectivelyAbioCor and reliably withinour other
products. If cardiovascular surgeons and cardiologists do not consider our
products to be adequate for the treatment of our target cardiac patient
population or if a patient over an extended period. For
many years,sufficient number of physicians recommend and use competing
products, it would seriously harm our business.

PRE-CLINICAL AND CLINICAL TESTING OF OUR NEW PRODUCTS WILL INVOLVE
UNCERTAINTIES AND RISKS WHICH COULD DELAY OR PREVENT NEW PRODUCT INTRODUCTIONS,
REQUIRE US TO INCUR SUBSTANTIAL ADDITIONAL COSTS OR RESULT IN OUR FAILURE TO
BRING OUR PRODUCTS TO MARKET.

Prior to commencing clinical trials of the CompanyAbioCor and others have been attemptingour other products
under development, we must perform pre-clinical tests which consist of
demonstrating performance, durability and reliability through laboratory and
animal studies. We could encounter significant delays or other setbacks in
pre-clinical testing. Prior to develop products
that meet these criteria and have not yet been successful. Before obtaining regulatory approvals in the U.S. and
other countries for the commercial saleclinical testing in humans of any of itsthe AbioCor and other
products, under
development, the Companywe must demonstrate throughin pre-clinical studies and
clinical trialstesting that theeach product is safe
and effective. Initialhas the potential to be effective in humans for the intended duration of
use. We are now conducting pre-clinical testing of the TAH and other products being developed by the Company will be
conducted in simulated environments and animal models to demonstrate safety
and effectiveness over an extended period of time before they are permitted to
be clinically tested in humans. There can be no assurance that the Company
will be able to successfully complete pre-clinicalAbioCor. This testing of the TAH or other
products being developed by the Company and receive FDA approval to initiate
clinical trials of such products in a timely manner, if at all. Moreover, pre-
clinical trials may
not be predictive of results that will be obtained in clinical trials. Any significantA number
of companies in the medical industry have suffered delays, cost overruns and
project terminations despite achieving promising results in pre-clinical
testing. In the event that we suffer setbacks in the pre-clinical or terminationclinical
testing of the AbioCor or other heart assist products, these products may be
delayed, require further funding, and possibly may not be brought to market.

If we cannot demonstrate through clinical testing on humans that the AbioCor
or other new products are safe and effective, we will not be able to obtain
regulatory approvals in the U.S. or other countries for the commercial sale of
these products. Delays, budget overruns, and project terminations are not
uncommon even after promising pre-clinical and clinical trials of the Company's products under development would have a material
adverse effect on the Company's business, financial condition and results of
operations.

Clinical trialsmedical
products. We intend to conduct clinical testing for the Company's cardiacAbioCor and other heart
assist and heart replacement
products will be conducted with critically ill patients, who are critically ill. During the
course of treatment,and these patients may die or
suffer other adverse medical effectsresults for reasons thatwhich may or may not be related
to the product being tested but
which can nevertheless affecttested. Those outcomes could seriously delay the completion
of clinical trial results. A numbertesting, as could the unavailability of companies in
the medical device industry have suffered significant

setbacks in advancedsuitable patients for
clinical trials, even after promising results in earlier
trials. Clinical trialsboth of the Company's TAH and other products under
development may be delayed or terminated as a result of many factors, and
there can be no assurance that such delays or terminations will not occur. One
such factor is the rate of enrollment of patients, which generally varies
throughout the course of a clinical trial and which depends on the size of the
potential patient population, the number of clinical trial sites, the
proximity of the patients to clinical trial sites, the eligibility criteria
for the trial and the existence of competitive clinical trials. The Companyare outside our control. We cannot control the rate at which patients present themselves for enrollment,
and there can be no assuranceassure that
the rate of patient enrollment in our clinical trials will be consistent with
the Company'sour expectations or be sufficient to enableallow us to complete our clinical trials
offor the Company'sAbioCor or our other products under development to be completed in a timely manner, if
at all. Any significant delaysDelays could defer the marketing and commercial sale of our products,
require further funding, and possibly result in or terminationfailure to bring the products to
market.

Development and testing of clinical
trials ofdesign changes to the Company'sAbioCor and other products
under development is often extensive, expensive and time consuming. Some of the
tests for our products may require months or years to perform, and we could be
required to begin these tests again if we modify one of

our products to correct a problem identified in testing. Even modest changes to
certain components of our products can take months or years to complete and
test. If results of pre-clinical or clinical testing of the AbioCor or other
products under development indicate that design changes are required, such
changes could cause serious delays that would have a material
adverse effect on the Company's business, financial condition andadversely affect our results of
operations.

IF WE FAIL TO OBTAIN APPROVAL FROM THE FDA AND FROM FOREIGN REGULATORY
AUTHORITIES, WE CANNOT MARKET AND SELL THE ABIOCOR OR OTHER NEW HEART ASSIST
PRODUCTS IN THE U.S. AND IN OTHER COUNTRIES.

Obtaining required regulatory approvals may take several years to complete
and consume substantial capital resources. We cannot assure that the FDA or any
other regulatory authority will act quickly or favorably on our requests for
product approval, or that the FDA or any other regulatory authority will not
require us to provide additional data that we do not currently anticipate in
order to obtain product approvals. We cannot apply for FDA approval to market
the AbioCor and our other products under development until the product
successfully completes its pre-clinical and clinical trials. Several factors
could prevent successful completion or cause significant delays of these trials,
including an inability to enroll the required number of patients or failure to
demonstrate adequately that the product is safe and effective for use in humans.
If safety problems develop, the FDA could stop our trials before completion. In
addition, we are planning to conduct phased clinical trials for the Company's productAbioCor
tailored to specific patient populations with different life expectancies. If we
are successful in obtaining FDA approvals for the AbioCor based on this phased
approach, the initial approvals are likely to include conditions or limitations
to particular indications that would limit the available market for these
products. If we are not able to obtain regulatory approvals for use of the
AbioCor or our other products under development, willor if the patient populations
for which they are approved are not sufficiently broad, the commercial success
of these products could be subjectlimited.

We intend to numerousmarket the AbioCor and our other risks associated with new product development,products in international
markets, including unanticipated
delays, expenses, technical problemsthe European Union and Japan. We must obtain separate
regulatory approvals in order to market our products in other jurisdictions. The
approval process may differ among those jurisdictions and approval in the U.S.
or in any other difficulties thatjurisdiction does not ensure approval in other jurisdictions.
Obtaining foreign approvals could result in significant delays, difficulties and
costs for us, and require additional trials and additional expense.

IF WE OBTAIN REGULATORY APPROVAL OF OUR NEW PRODUCTS, THE PRODUCTS WILL BE
SUBJECT TO CONTINUING REVIEW AND EXTENSIVE REGULATORY REQUIREMENTS, WHICH COULD
AFFECT THE MANUFACTURING AND MARKETING OF OUR PRODUCTS.

The FDA continues to review products even after they have received initial
approval. If and when the abandonmentFDA approves the AbioCor or substantial change in the design, development and
commercialization of these new products. Given the uncertainties inherent with
product development and introduction, there can be no assurance that any of
the Company'sour other products under
development, will demonstrate sufficient safetythe manufacture and efficacy to obtain the requisite regulatory approvals, on a timely basis
and within budget, if at all, or that anymarketing of these products will be commercially successful if suchsubject to
continuing regulation, including compliance with current Quality Systems
Regulations and Good Manufacturing Practices, known as QSR/GMP, adverse event
reporting requirements and prohibitions on promoting a product for unapproved
uses.

We will also be required to obtain additional approvals in the event we
significantly modify the design of an approved product or the product's labeling
or manufacturing process. Modifications of this type are obtained. See "Business--ABIOMED
Productscommon with new
products, and Products under Development."

ANTICIPATED FUTURE LOSSES

The Company plans to use its own resources to fundwe anticipate that the further developmentcurrent first generation of the TAH in amounts significantly in excessAbioCor
will undergo a number of changes, refinements and improvements over time. For
example, the current configuration of the funding provided underAbioCor's thoracic unit, or
"replacement heart," is sized for patients with relatively large chest cavities,
and we anticipate that we will need to obtain regulatory approval of thoracic
units of other sizes. If we are not able to obtain regulatory approval of
modifications to our current and future products, the Company'scommercial success of
these products would be limited.

We and our third-party suppliers of product components are also subject to
inspection and market surveillance by the FDA for QSR/GMP and other
requirements. Enforcement actions resulting from

failure to comply with government requirements could result in fines,
suspensions of approvals, recalls of products, operating restrictions and
criminal prosecutions, and affect the manufacture and marketing of our products.
The FDA could withdraw a previously approved product from the market upon
receipt of newly discovered information, including a failure to comply with
regulatory requirements, the occurrence of unanticipated problems with products
following approval, or other reasons, which could adversely affect our operating
results.

THE COST OF DEVELOPING AND MANUFACTURING THE ABIOCOR AND OUR OTHER PLANNED
NEW PRODUCTS IS SUBSTANTIAL FOR A COMPANY OF OUR SIZE AND WILL EXERT A STRAIN ON
OUR AVAILABLE RESOURCES.

In recent years we have significantly increased our research and development
contractexpenditures for the TAH withAbioCor, and we expect that this trend will continue in the
NHLBI ("TAH
Contract"). The Companyfuture. We will also need to make significant expenditures to begin to
manufacture and market the AbioCor and our other planned new products in
commercial quantities for sale in the U.S. and other countries, if and when we
obtain regulatory approval to do so. We cannot be sure that our estimates thatof
capital expenditures for the AbioCor and the development of our other new
products will be accurate. We could have significant cost overruns, which could
reduce our ability to commercialize our products. Any delay or inability to
commercialize our products under development could adversely affect our business
prospects and results of operations.

WE DO NOT OPERATE AT A PROFIT AND DO NOT EXPECT TO BE PROFITABLE FOR SOME
TIME.

Our total revenues for the TAH, including
conductingsix months ended September 30, 1999 and in fiscal
1999 each declined by approximately 2% from the comparable period in the prior
year. We had a net loss of $3.8 million for the six months ended September 30,
1999 and a net loss of $6.7 million in fiscal 1999. We are committed to making
large expenditures for the AbioCor and, to a lesser extent, other new products,
in fiscal 2000 and subsequent fiscal years, which may result in losses in future
periods. These expenditures include costs associated with performing
pre-clinical and clinical studiestrials for the AbioCor, continuing our research and
obtainingdevelopment relating to the AbioCor and other new products, seeking regulatory
approvals will require substantial funds. Its spending under the TAH Contract
in the quarter ended September 30, 1997 exceeded the amount which the
government has currently appropriated for that contract, and the original
government appropriation schedule calls for no further appropriations for the TAH Contract until October 1998. There can be no assurance that the government
will appropriate any additional amounts under the TAH Contract or anyAbioCor and, if we receive these approvals, commencing
commercial manufacturing and marketing of the Company'sAbioCor. The amount of these
expenditures is difficult to forecast accurately, and cost overruns may occur.
We plan to fund a portion of these expenditures from our limited existing
financial resources, revenues from BVS sales, which are variable and uncertain,
and development contracts, which may be terminated at any time by the
government. We anticipate that we will also need to fund a substantial portion
of these expenditures from other government contractssources, such as the proceeds of this offering
or other equity and debt financing. We cannot be sure that we will have the
necessary funds to develop and commercialize our new products, or that
additional funds will be available on a timely basis,commercially acceptable terms, if at all.
Even if and
when additional amountsIn the event that we are appropriated underunable to obtain the TAH Contract, the Company
believes that its total expenses to complete the development of the TAH will
significantly exceed the remaining TAH Contract amount. As a result, the
Company believes that it is likely that the Company will incur losses,
potentially as soon as the quarter ending December 31, 1997. The amount and
duration of these losses will depend upon a number of factors, including the
Company's ability to increase sales and profitability of its present products,necessary funding to develop and
obtain regulatory approvals forcommercialize our products, our business may be adversely affected.

OUR OPERATING RESULTS MAY FLUCTUATE UNPREDICTABLY.

Our annual and quarterly operating results have fluctuated historically and
we expect these fluctuations to continue. Among the factors that may cause our
operating results to fluctuate are:

- costs we incur in developing and testing the AbioCor and other new
products andor product enhancements, and to successfully manufacture and market these new products
and enhancements, as well asenhancements;

- the timing of regulatory actions, such as product approvals or recalls;

- costs we incur in anticipation of future sales, such as inventory
purchases, expansion of manufacturing facilities, or establishment of
international sales offices;

- the timing of customer orders and extentdeliveries, particularly of BVS
consoles, which are priced significantly higher than the Company's spending
related tosingle-use BVS
blood pumps;

- competitive changes, such as price changes or new product development andintroductions
that we or our competitors may make;

- the timing of government appropriations related to our research contracts
and grants; and

- economic conditions in the Company's NHLBI contracts. See "Usehealth care industry and the state of Proceeds"cost
containment efforts, including reimbursement policies.

We believe that period-to-period comparisons of our historical and "Management's Discussionfuture
results will not necessarily be meaningful, and Analysisthat investors should not rely
on them as an indication of Financial Condition and Results of
Operations."

COMPLEX MANUFACTURING; HIGH-QUALITY REQUIREMENTS

The nature of the Company's products requires high-quality manufacturing.
The Company's manufacturing and quality testing processes and procedures are
highly dependent on the diligence and experience of the Company's personnel.future performance. To the extent we experience the
factors described above, our future operating results may not meet the
expectations of securities analysts or investors from time to time, which may
cause the market price of our common stock to decline.

THE BVS PRODUCT LINE, OUR PRINCIPAL PRODUCT AND CURRENT PRIMARY SOURCE OF
REVENUES, IS VULNERABLE TO COMPETITIVE PRESSURES, DISRUPTIONS IN SALES,
CONTINUING REVIEW AND EXTENSIVE REGULATORY REQUIREMENTS.

All of our product revenues to date have come from sales of the BVS line of
products. We believe that we will continue to be dependent on our BVS product
line for at least the next several years, unless and until we are able to
successfully develop, obtain regulatory approval for and sell new products. In
the event that a competitor were to introduce new treatments, products and
technologies which compete with our products, add new features to their existing
products or reduce their prices to make their products more financially
attractive to customers, our revenue from our BVS products could decline. For
example, in the event of the expansion of technologies which allow heart
surgical procedures to be performed without stopping the heart, a reduction in
the market for the BVS could potentially result. Further, the BVS is subject to
stringent and continuing FDA and other regulatory requirements, including
compliance with QSR/GMP, adverse event reporting, prohibitions on promoting the
BVS for unapproved uses, and continued inspection and market surveillance by the
FDA. If BVS products are recalled or otherwise withdrawn from the market, our
revenues would likely decline, which would hurt our business. In addition,
variations in the quantity and timing of sales of BVS consoles have a
disproportionate effect on our revenues, because the price of the console is
substantially greater than the price of our disposable blood pumps. If we cannot
maintain and increase our revenues from our BVS product line, our overall
business and financial condition could be adversely affected.

Revenues from our BVS product line in the six months ended September 30,
1999 declined by 3% from the comparable period in the preceding year, and in
fiscal 1999 our BVS revenues increased by 5% from revenues in fiscal 1998. To
maintain or increase revenues from sales of our BVS products, we may be required
to adopt new sales and marketing strategies, some of which may require expending
additional capital resources. The new strategies we may adopt include:

- promoting increased use of the BVS by existing customers in order to
increase disposable blood pump sales to those customers;

- selling the BVS to smaller hospitals and medical centers in the U.S.;

- regularly introducing enhancements to the BVS;

- expanding sales of our BVS product line in international markets, some of
which require separate regulatory approvals; and

- seeking new categories of patients to support with the device.

In the event that we are unsuccessful in carrying out these new strategies,
our revenues may decline.

WE MAY NOT BE SUCCESSFUL IN EXPANDING OUR SALES ACTIVITIES INTO
INTERNATIONAL MARKETS.

We are seeking to expand our international sales of the BVS and prepare for
commercialization of the AbioCor by recruiting direct sales and support teams
for selected countries in Europe and pursuing regulatory approval of the BVS in
Japan. To date we have limited experience in selling the BVS internationally. In
fiscal 1999, approximately 3% of our revenues from the BVS product line were
derived from international sales. Our international operations will be subject
to a number of risks, which may vary from the risks we experience in the U.S.,
including:

- the need to obtain regulatory approvals in foreign countries before our
products may be sold or used;

- longer sales cycles;

- dependence on local distributors;

- limited protection of intellectual property rights;

- difficulty in collecting accounts receivable;

- fluctuations in the values of foreign currencies; and

- political and economic instability.

If we are unable to effectively expand our sales activities in international
markets, our results of operations could be negatively impacted.

WE DEPEND ON THIRD PARTY REIMBURSEMENT TO OUR CUSTOMERS FOR MARKET
ACCEPTANCE OF OUR PRODUCTS. IF THIRD PARTY PAYORS FAIL TO PROVIDE APPROPRIATE
LEVELS OF REIMBURSEMENT FOR PURCHASE AND USE OF OUR PRODUCTS, OUR PROFITABILITY
WOULD BE ADVERSELY AFFECTED.

Sales of medical products largely depend on the reimbursement of patients'
medical expenses by government health care programs and private health insurers.
The cost of our BVS system is substantial, and we anticipate that the Company's manufacturing volumes expand orcost of
implanting the Company
beginsAbioCor in a patient will also be substantial. Without the
manufacture of new products, this dependence on personnel will
likely increase. In addition, the manufacturefinancial support of the blood contacting surfacesgovernment or third party insurers, the market for our
products will be limited. Medical products and devices incorporating new
technologies are closely examined by governments and private insurers to
determine whether the products and devices will be covered by reimbursement, and
if so, the level of reimbursement which may apply. We cannot be sure that third
party payors will reimburse sales of our products now under development, or
enable us to sell them at profitable prices. We also cannot be sure that third
party payors will continue the current level of reimbursement to physicians and
medical centers for use of the Company's products requires a high degree of precision. These surfaces
are manufactured from polyurethane-based materials. The quality and
composition of polyurethane-based products can vary significantly based on
numerous factors including humidity, temperature, material content and air
flow during the manufacturing process. The Company's products also incorporate
plastic components for non-blood contacting surfaces. The Company relies on
third-party vendors to provide these components to the Company's
specifications. The Company is not able to fully inspect the quality of all
vendor supplied components and, therefore, relies on its vendors with respect
to the

quality of these components. Once the plastic-based components of the Company's
products have been assembled, accessibility for inspection is limited. If a
defect is detected in as few as one of the Company's products, or in one
component of a Company product, it can resultBVS. Any reduction in the recall or restrictionamount of this
reimbursement could harm our business.

The federal government and private insurers have considered ways to change,
and have changed, the manner in which health care services are provided and paid
for in the U.S. In the future, it is possible that the government may institute
price controls and further limits on saleMedicare and Medicaid spending. These
controls and limits could affect the payments we collect from sales of our
products. Once assembled, in most cases, the Company's blood contacting
components cannot be reworked for human use. The manufacturing lead times for
parts and assemblies, particularly the polyurethane-based components, can take
many weeks from the date that all materials and components are received by the
Company. In addition, vendor lead times for materials and components of the
Company's productsInternationally, medical reimbursement systems vary significantly,
with lead timessome medical centers having fixed budgets, regardless of levels of patient
treatment, and other countries requiring application for, and approval of,
government or third party reimbursement. Even if we succeed in bringing our new
products to market, uncertainties regarding future health care policy,
legislation and regulation, as well as private market practices, could affect
our ability to sell our products in commercially acceptable quantities at
profitable prices.

Prior to approving coverage for new medical devices, most third party payors
require evidence that the product has received FDA approval, is not
experimental, and is medically necessary for the specific patient. Increasingly,
third party payors require evidence that the devices being used are
cost-effective. The AbioCor and our other products under development may not
meet these or future criteria, which could hurt our ability to market and sell
these products.

IF WE FAIL TO ACHIEVE AND MAINTAIN THE HIGH MANUFACTURING STANDARDS THAT OUR
PRODUCTS REQUIRE OR IF WE ARE UNABLE TO DEVELOP ADDITIONAL MANUFACTURING
CAPACITY, WE WILL NOT BE SUCCESSFUL.

Our products require precise, high quality manufacturing. Our failure to
achieve and maintain these high manufacturing standards, including the incidence
of manufacturing errors, design defects or component failures, could result in
patient injury or death, product recalls or withdrawals, delays or failures in
product testing or delivery, cost overruns or other problems that could
seriously hurt our business. We have from time to time voluntarily recalled
certain materials
and components exceeding sixproducts. In particular, in fiscal 1997 we initiated a voluntary recall
of BVS blood pumps when one of our outside suppliers manufactured a limited
number of defective components. This recall disrupted our ability to fill orders
from certain customers for a period of approximately eight months. The Company isDespite our
very high manufacturing standards, we cannot completely eliminate the risk of
errors, defects or failures. In addition, we are planning to expand itsmove into a new
manufacturing facility for the BVS
during the next twelve months. There canin 2000, and this move could disrupt manufacturing of our
products. We cannot be no assurancecertain that the products manufactured in the expandednew
facility will be manufactured at the same cost and quality as the BVS isand
AbioCor are currently being manufactured. In addition, to the extentwe cannot be certain that
the Company's products under development have been manufactured, they have
been manufactured as prototypes with, at most, pilot-scale production. The
Company's products under development are likely to involve additional
manufacturing complexities and high quality requirements. There can be no
assurance that the Companywe will be able to increase productionobtain ISO 9001 certification of our new facility or approval
by regulatory authorities. If we are not able to manufacture the BVS or
manufacture future products, if developedin
accordance with necessary quality standards, our business and approved, in commercial
quantities on a consistent and timely basis, with acceptable cost and quality.
The inability to manufacture current and future products in sufficient
quantities in a timely manner, and with acceptable cost and quality, would have
a material adverse effect on the Company's business, financial condition and
results of operations. See "Business--Manufacturing."

RISK OF MARKET WITHDRAWAL OR PRODUCT RECALL

Complex medical devices, such as the BVS and other of the Company's products
under development, can experience performance problems that require review and
possible corrective action by the manufacturer. Similar to many other medical
device manufacturers, the Company periodically received reports from users of
its products relating to performance difficulties they have encountered. The
Company expects that it will continue to receive customer reports regarding the
performance and use of the BVS. There can be no assurance that component
failures, manufacturing errors or design defects that could result in an unsafe
condition or injury to the patient will not occur. Certain of these failures or
defects have been deemed sufficiently serious by the Company to result in
recalls of products associated with certain manufacturing lots or containing
certain components, including a recall of certain BVS blood pumps initiated in
late 1996. Not all of the products subject to this recall have been returned to
the Company. Any product problems could result in market withdrawals or recalls
of products, voluntarily or required, which could have a material adverse
effect on the Company's business, financial condition and results of
operations. In addition, there can be no assurance that a product recall will
result in the recovery of all defective products or prevent customers from
using these products. The use of a defective product could result in injury to
a patient and significant liability to the Company which could have a material
adverse effect on its business, financial condition and results of operations.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations."

FLUCTUATIONS AND UNPREDICTABILITY OF OPERATING RESULTS

The Company's annual and quarterly operating results have fluctuated and the
Company expects these fluctuations to continue. Significant annual and
quarterly fluctuations in the Company's results of
operations may be caused by,
amongnegatively affected.

The AbioCor involves even greater manufacturing complexities than our
current product line. The AbioCor must be significantly more durable and meet
different standards, which may be more difficult to achieve, than those which
apply to our current product, the BVS. If we are unable to manufacture the
AbioCor or other factors, the overall state of health carefuture products on a timely basis at acceptable quality and
cost containment
efforts, economic conditionsand in commercial quantities, or if we experience unanticipated
technological problems or delays in production, our business will suffer.

The manufacture of our products is and will continue to be complex and
costly, requiring a number of separate processes and components. Achieving
precision and quality control requires skill and diligence by our personnel.
Further, to be successful, we believe we will need to increase our manufacturing
capacity. We may experience difficulties in scaling up manufacturing of our new
products, including problems related to product yields, quality control and
assurance, component and service availability, adequacy of control policies and
procedures, and lack of skilled personnel. If we cannot hire, train and retain
enough experienced and capable scientific and technical workers, we may not be
able to manufacture sufficient quantities of our current or future products at
an acceptable cost and on time, which could limit market acceptance of our
products or otherwise damage our business.

IF OUR SUPPLIERS CANNOT PROVIDE THE COMPONENTS WE REQUIRE, OUR ABILITY TO
MANUFACTURE OUR PRODUCTS COULD BE HARMED.

We rely on third party suppliers to provide us with certain components used
in the Company's markets,BVS, the expenseAbioCor, and timingour other products under development. Relying on
third party suppliers makes us vulnerable to component part failures and to
interruptions in supply, either of which could impair our ability to conduct
clinical tests or to ship our products to our customers on a timely basis. Using
third party vendors makes it difficult and sometimes impossible for us to test
fully certain components, such as components on circuit boards, maintain quality
control, manage inventory and production schedules and control production costs.
Vendor lead times to supply us with ordered components vary significantly and
can exceed six months or more. Both now and as we expand our manufacturing

capacity, we cannot be sure that our suppliers will furnish us with required
components when we need them. These factors could make it more difficult for us
to effectively and efficiently manufacture our products, and could adversely
impact our results of operations.

Some suppliers may be the Company's development effortsonly source for a particular component, which
makes us vulnerable to cost increases and supply interruptions. Vendors may
decide to limit or eliminate sales of certain products to the medical industry
due to product liability or other concerns, and we might not be able to find a
suitable replacement for those products. Manufacturers of our product enhancement,components
may be required to comply with FDA or other regulatory manufacturing regulations
and to satisfy regulatory inspections in connection with the timingmanufacture of regulatory actions, the
potentialcomponents. If we cannot obtain a necessary component, we may need to recallfind, test
and obtain regulatory approval for a replacement component, produce the
component ourselves or rework products from time to time, timingredesign the related product, which would cause
significant delay and could increase our manufacturing costs. Any of government appropriations related
to the Company's research contracts and grants, the timing of or changes in
third-party reimbursement policies for the Company's products, the timing of
expenditures in anticipation of future sales, variations in the Company's
product mix and component costs, the availability of components, the timing of
customer orders, adjustments of delivery schedules to accommodate customers,
inventory levels of products at customers (including inventory at

distributors), changes in the government's funding policies under the
Company's existing contracts, pricing and other competitive conditions, and
the timing of the announcement, introduction and delivery of new products and
product enhancements by the Company and its competitors. Customers may also
cancel or reschedule shipments, and production difficultiesthese
events could delay
shipments. The price for the BVS console is significantly higher than for the
single-use blood pumps. As a result, variations in the number and timing of
consoles sold have a disproportionate effect on the Company's revenues andadversely impact our results of operations.

The Company also believes that BVS sales may be
somewhat seasonal, with reduced sales in the summer months, reflecting
hospital personnel and physician vacation schedules. Beginning in fiscal 1998,
the Company anticipates potentially significant annual and quarterly
fluctuations in contract revenues and research and development costs
associated with the development of the TAH due to the need for additional
government appropriations under the TAH Contract and to increased levels of
Company spending. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

MARKETS FOR PRODUCTS UNDER DEVELOPMENT UNPROVEN

Most of the Company's products under development, including the TAH, are
targeting new and unproven markets. There can be no assurance that the TAH or
other products under development by the Company will gain any degree of market
acceptance among physicians, medical centers and third party payors, including
managed care organizations, even if necessary regulatory approvals and
reimbursement are obtained. As a result, it is likely that the Company's
evaluation of the potential markets for these products will materially vary
with time. In addition, the effective use of these products will likely
require development of new surgical techniques by well-trained physicians,
which will initially limit the market for the Company's products. Physicians,
patients and society as a whole may have ethical concerns or be reluctant to
accept medical devices designed to replace the heart. The timing and amount of
reimbursement, if any, by third-party payors for the use of these products, if
developed, will also have a significant impact on the market for these
products. Other companies may also introduce products or technologies which
will compete with these products, reduce the market for these products, or
render these products obsolete. There can be no assurance that the Company
will be able to market successfully any of its products under development, if
and when these products are developed. Failure to do so would have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business--Marketing and Sales."

DEPENDENCE ON KEY PERSONNEL; RISKS ASSOCIATED WITH GROWING NUMBER OF EMPLOYEES

The Company is highly dependent on the principal members of its scientific,
sales, and management staff, the loss of whose services could have a material
adverse effect on the Company's business, financial condition and results of
operations. Competition among medical device companies for highly skilled
scientific, sales and management personnel is intense. There can be no
assurance that the Company will be able to attract and retain all personnel
necessary for the development of its business. Failure to do so could have a
material adverse effect on its business, financial condition and results of
operations.

The Company has recently experienced a significant increase in the number of
its full-time employees, from 79 at April 1, 1996 to 166 at September 30,
1997. Moreover, the Company intends to continue to add a significant
additional number of employees to support its development and expanding
manufacturing, marketing and sales efforts. The expansion of the Company's
personnel has placed additional demands upon, and may significantly strain,
the Company's management, financial systems and other resources. There can be
no assurance that the Company will be able to successfully manage its growing
number of employees. Failure to do so would have a material adverse effect on
the Company's business, financial condition and results of operations.INTENSE COMPETITION AND TECHNOLOGICAL CHANGE

Competition in the cardiac assist market is intense and subject toCOULD HARM OUR FINANCIAL PERFORMANCE.

Intense competition, rapid technological change and evolving industry
requirements and standards. Manystandards in the heart assist markets could decrease demand for
our products or make them obsolete. Some of the companies, universities and
research organizations developing or marketing cardiac assistcompeting products 9
have substantially greater financial, product development, sales and marketing resources and
experience than the Company. Thesewe have. Our competitors maycould commence and complete clinical
testing of their products, obtain regulatory approvals and begin
commercial-scale manufacturing of their products faster than we are able to for
our products. They could develop superior products or products of similar
quality at the same or lower prices. Moreover, there can be no assurance that improvements in current or new
technologies will not make them technically equivalent or superior to the
Company's products inIn addition, to providing cost or other advantages. Other
advances in medical technology, biotechnology and pharmaceuticals may reduce
the size of the potential markets for the Company's products or render those
products obsolete.

The BVS is the only device that can provide full circulatory assistance
approved by the FDA as a bridge-to-recovery device for the treatment of
patients with reversible heart failure. However, the Company is aware of at
least one other company, Thoratec Laboratories Corporation, seeking approval
of a temporary cardiac assist device to address this market. Approval by the
FDA of products that compete directly with the BVS would increase competitive
pricing and other pressures and could have a material adverse effect on the
Company's business, financial condition and results of operations.

The Company'sour customers frequentlyoften have
limited budgets. As a result, the
Company'sConsequently, our products compete against thea broad range of
medical devices and therapies for these limited funds. The Company's success will depend in large part upon its
ability to enhance its existing products and to develop new products to meet
regulatory and customer requirements and to achieve market acceptance. The
Company believesWe cannot be sure that important competitive factors with respect to the
development and commercialization of its products include the relative speed
with which it can develop products, establish clinical utility, complete
clinical testing and regulatory approval processes, obtain reimbursement and
supply commercial quantities of the product to the market. There can be no
assurance that the Companywe
will be able to compete effectively and successfully in the markets in which we
participate.

WE OWN PATENTS, TRADEMARKS, TRADE SECRETS, COPYRIGHTS AND OTHER INTELLECTUAL
PROPERTY AND KNOW-HOW THAT WE BELIEVE GIVES US A COMPETITIVE ADVANTAGE. IF WE
CANNOT PROTECT OUR INTELLECTUAL PROPERTY, COMPETITION COULD FORCE US TO LOWER
OUR PRICES, WHICH COULD HURT OUR PROFITABILITY.

Our intellectual property rights are and will continue to be a critical
component of our success. A substantial portion of our intellectual property
rights relating to the AbioCor and BVS is in the form of trade secrets, rather
than patents. In order to preserve certain proprietary information as trade
secrets, we are required to restrict disclosure of information intended to
constitute trade secrets to third parties. We protect our trade secrets and
proprietary knowledge in part through confidentiality agreements with employees,
consultants and other parties. Certain of our consultants and third parties with
whom we have business relationships may also provide services to other parties
in the medical device industry, including companies, universities and research
organizations that are developing competing products. In addition, some of our
former employees may seek employment with, and become employed by, our
competitors. We cannot assure that confidentiality agreements with our
employees, consultants and third parties will not be breached, that we will have
adequate remedies for any such breach, or that competitionour trade secrets will not become
known to or be independently developed by our competitors. The loss of trade
secret protection for technologies or know-how relating to the AbioCor or the
BVS could adversely affect our business prospects.

Our business position will also depend in part on our ability to defend our
existing and future patents and rights and conduct our business activities free
of infringement claims by third parties. We intend to seek additional patents,
but our pending and future patent applications may not be approved, may not give
us a competitive advantage, and could be challenged by others. Patent
proceedings in the U.S. and in other countries may be expensive and time
consuming. In addition, patents issued by foreign countries may afford less
protection than is available under U.S. patent law, and may not

adequately protect our proprietary information. Our competitors may
independently develop proprietary technologies and processes which are the same
as or substantially equivalent to ours, or design around our patents.

Companies in the medical device industry typically obtain patents and
frequently engage in substantial intellectual property litigation. Our products
and technologies could infringe on the rights of others. If a third party
successfully asserts a claim for infringement against us, we may be liable for
substantial damages, unable to sell products using that technology, or would
have to seek a license or redesign the related product. These alternatives may
be uneconomical or impossible. Patent litigation could be costly, result in
product development delays, and divert the efforts and attention of management
from our business.

We are currently defending a lawsuit that relates to a portion of the energy
transmission technology used in the AbioCor. World Heart Corporation and Ottawa
Heart Institute Research Corporation filed suit against us in Delaware in
January 1998, seeking damages and injunctive relief because they contend that a
component of the AbioCor infringes their intellectual property rights. We
believe we do not violate any intellectual property rights of the plaintiffs and
that we have a material adverse effectstrong defense against this lawsuit, but if we are not successful
in the action, we may be required to use or develop alternate energy
transmission technology, seek a license from a third party, or modify the design
of the AbioCor. We may not be able to develop a reasonable alternative design on
a timely, cost effective basis and we may not be able to obtain a license at
reasonable cost or on a timely basis. In either case, our failure to win the
lawsuit could hurt our ability to develop or market the AbioCor, which would
adversely affect our business prospects.

IF WE CANNOT ATTRACT AND RETAIN THE MANAGEMENT, SALES AND OTHER PERSONNEL WE
NEED, WE WILL NOT BE SUCCESSFUL.

We depend heavily on the Company's business,
financial condition and results of operations. See "Business--Competition."

GOVERNMENT REGULATION

Clinical testing, manufacture and salecontributions of the Company's productsprincipal members of our
technical, sales and support, regulatory and clinical, operating and
administrative management and staff, many of whom would be difficult to replace.
Competition for skilled and experienced management, scientific personnel and
sales personnel in the medical devices industry is intense. If we lose the
services of any of the principal members of our management and staff, or if we
are unable to attract and retain qualified personnel in the future, especially
scientific and sales personnel, our business could be adversely affected.

We expect to grow rapidly if the AbioCor and our other products under
development includingadvance through the BVSapproval process. The expansion of personnel and
facilities will strain our management and our financial and other resources. If
we cannot manage this growth successfully, our business will likely suffer.

PRODUCT LIABILITY CLAIMS COULD DAMAGE OUR REPUTATION AND HURT OUR FINANCIAL
RESULTS.

The clinical use of medical products, even after regulatory approval, pose
an inherent risk of product liability. We maintain limited product liability
insurance coverage, subject to deductibles and exclusions. We cannot be sure
that product liability insurance will be available in the TAH, arefuture or will be
subjectavailable on acceptable terms or at reasonable costs, or that such insurance
will provide us with adequate coverage against potential liabilities. Claims
against us, regardless of their merit or potential outcome, may also hurt our
ability to regulation byobtain physician endorsement of our products or expand our business.

Many patients using the FDA and corresponding state and foreign
regulatory agencies. Noncompliance with applicable requirements canBVS do not survive. There are many factors beyond
our control that could result in among other things, fines, injunctions, civil penalties, recall or seizurepatient death, including the condition of products, total or partial suspensionthe
patient prior to use of production,the product, the skill and reliability of physicians and
hospital personnel using and monitoring the product, and product

maintenance by customers. However, the failure of the governmentBVS or other life support
products we distribute for clinical test or sale could give rise to grant pre-market clearanceproduct
liability claims and negative publicity.

The risk of product liability claims could increase as we introduce new
products like the AbioCor that are intended to support a patient until the end
of life. The AbioCor will have a finite life and could cause unintended
complications to other organs and may not be able to successfully support all
patients. Its malfunction could give rise to product liability claims whether or
pre-market approval for devices, withdrawal
of marketing approvals and criminal prosecution. The FDA alsonot it has extended or improved the authority to request repair, replacement or refundquality of the cost of any device
manufactured or distributed by the Company.

Any devices, includingpatient's life. We cannot be
sure that we can obtain liability insurance to cover the BVS, that are manufacturedthe AbioCor or
distributed by the
Company pursuant to FDA clearances or approvals are subject to pervasive and
continuing regulation by the FDA and certain state agencies. Manufacturers of
medical devices for marketing in the United States are required to adhere to
the FDA's Quality System Regulation and must also comply with Medical Devices
Reporting requirements that a firm report to the FDA any incident in which its
product may have caused or contributed to a death or serious injury, or in
which its product malfunctioned and, if the malfunction were to recur, it
would be likely to cause or contribute to a death or serious injury. Labeling
and promotional activities are subject to scrutiny by the FDA and, in certain
circumstances, by the Federal Trade Commission. Current FDA enforcement policy
prohibits the marketing of approved medical devices for unapproved uses. The
Company is subject to routine inspection by the FDA and certain state agencies
for compliance with the Quality System Regulation and Medical Device Reporting
requirements, as well as other applicable regulations.

In addition, the FDA requires that manufacturers of certain devices,
including the BVS, conduct postmarket surveillance studies after receiving
approval of a Pre-Market Approval ("PMA") application. The primary purpose of
required postmarket surveillance is to provide an early warning system to
alert the health care community to any potential problems with a device withinnew products at a reasonable timecost. If we have to pay product liability
claims in excess of the initial marketing of the device. Postmarket
surveillance provides clinical monitoring of the early experiences with the
device once it is distributed in the general population under actual
conditions of use.

The Company is also subject to regulation in each of the foreign countries
in which it sells its products. Many of the regulations applicable to the
Company's products in these counties are similar to those of the FDA. The
Company believes that foreign regulations relating to the manufacture and sale
of medical devices are becoming more stringent. The European Union has adopted
regulations requiring that medical devices comply with the Medical Device
Directive by June 15, 1998, which includes ISO-9001 and CE certification. The
Company's BVS currently has German MedGV approval but is not yet certified for
ISO-9001 compliance. The Company is working to obtain ISO-9001 and independent
CE certification for its BVS facility. There can be no assurance that the
Company will obtain such certification in a timely manner, if at all. Unless
ISO and CE certification are obtained, the Company's sale of the BVS into the
European Union may be restricted. Many manufacturers of medical devices,
including the Company, have often relied on foreign markets for the initial
commercial introduction of their products. The more stringent foreign
regulatory environment could make it more difficult, costly and time consuming
for the Company to pursue this strategy for new products.

Any FDA, foreign or state regulatory approvals or clearances, once obtained,
can be withdrawn or modified. Delay in the Company obtaining, or inability of
the Company to obtain and maintain, any necessary United States or foreign
clearances or approvals for new or existing products or product enhancements,
or cost overruns resulting from these regulatory requirements, would have a
material adverse effect on the Company's business,our insurance coverage, our financial condition and
results of operations. See "Business--Government Regulation."

RELIANCEwill be
adversely affected.

WE HAVE DEPENDED ON GOVERNMENT CONTRACTS The CompanyTO SUPPORT A SIGNIFICANT PORTION OF
OUR BASIC RESEARCH AND DEVELOPMENT. THIS FUNDING MAY NOT CONTINUE.

We generally reliesrely on external funding for itsa significant portion of our basic
product research and development, primarily throughdevelopment. The primary source of this external funding is
government research contracts and grants. SuchWe have obtained this type of funding has been obtained
for the initial development of most of the Company'sour current products and products under
development. In particular, in September
1996, the Company wasNational Heart, Lung and Blood Institute, or
NHLBI, awarded by the NHLBIus a four-year, $8.5 million extension to its TAH Contract, andour AbioCor development
contract in September 1995 the Company was awarded1996, and a five-year, $4.3 million contract from the NHLBI for the
development of the Company's
Heart Booster.AbioBooster in September 1995. As of September 30, 1997, the Company's total backlog of
government contracts and grants was $8.7 million. Such contracts and grants
are not expected to be sufficient to commercialize the underlying products,
and for certain products, including the TAH, the cost of product development
in excess1999, we
had recognized all of the revenue under the AbioCor development contract value is expected toand all
but $1.1 million of the revenue under the AbioBooster contract. We have not
determined whether we will seek additional government funding for the AbioCor or
the AbioBooster, or new government funding for our other products under
development. We cannot assure that any such funding will be significant. The Company's
strategy is to continueavailable, if we
decide to seek government contracts and grants to support
development efforts.it.

Funding for the Company'sall our government research and development contracts is subject
to government appropriation, and all of these contracts contain provisions which
make them terminable at the convenience of the government. There can be no assurance that theThe government will notcould
terminate or reduce or delay the funding for any of our contracts at any time.
In the Company'sevent that we are not successful in obtaining any new government
contracts or further extensions to existing research and development contracts,
our financial results could be adversely affected.

OUR RIGHTS DISTRIBUTION, CERTIFICATE OF INCORPORATION AND DELAWARE LAW COULD
MAKE IT MORE DIFFICULT FOR A THIRD PARTY TO ACQUIRE US AND MAY PREVENT OUR
STOCKHOLDERS FROM REALIZING A PREMIUM ON OUR STOCK.

Our rights distribution and provisions of our certificate of incorporation
and of the Delaware General Corporation Law may make it more difficult for a
third party to acquire us, even if doing so would allow our stockholders to
receive a premium over the prevailing market price of our stock. Our rights
distribution and those provisions of our certificate of incorporation and
Delaware law are intended to encourage potential acquirors to negotiate with us
and allow our board of directors the opportunity to consider alternative
proposals in the interest of maximizing stockholder value. However, such
provisions may also discourage acquisition proposals or delay or prevent a
change in control, which could negatively affect our stock price.

THE MARKET VALUE OF OUR COMMON STOCK COULD VARY SIGNIFICANTLY, BASED ON
MARKET PERCEPTIONS OF THE STATUS OF OUR DEVELOPMENT EFFORTS.

The perception of securities analysts regarding our product development
efforts could significantly affect our stock price. As a result, the market
price of our common stock could change substantially when we or our competitors
make product announcements, particularly announcements relating to the

AbioCor or competing products. Many factors affecting our stock price are
industry related and beyond our control.

IF WE MAKE ACQUISITIONS, WE COULD ENCOUNTER DIFFICULTIES THAT HARM OUR
BUSINESS.

We may acquire companies, products or technologies that we believe to be
complementary to our business. If we do so, we may have difficulty integrating
the acquired personnel, operations, products or technologies. These difficulties
may disrupt our ongoing business, distract our management and employees and
increase our expenses, which could hurt our business.

FUTURE SALES OF OUR COMMON STOCK COULD ADVERSELY AFFECT OUR STOCK PRICE.

Future sales of substantial amounts of our common stock in the public
market, including the shares covered by this prospectus, or the perception that
these sales could occur, could adversely affect the market price of our common
stock. As of December 1, 1999, we had outstanding 8,669,867 shares of common
stock, plus 1,345,110 shares of common stock reserved for issuance upon exercise
of outstanding options. All of the outstanding shares of our common stock are
freely saleable except shares held by our affiliates, which are subject to
certain limitations on sales.

OUR MANAGEMENT WILL HAVE BROAD DISCRETION AS TO THE USE OF PROCEEDS OF THIS
OFFERING.

Our management will have broad discretion as to how the net proceeds of this
offering will be used. Investors will be relying on the judgment of management
regarding the application of the proceeds of this offering. The results and
effectiveness of the application of the proceeds are uncertain.

USE OF PROCEEDS

We estimate that the net proceeds to us from the sale of the 1,500,000
shares of common stock we are offering with this prospectus will be
approximately $68.4 million, assuming a public offering price of $48.875 per
share and after deduction of the estimated underwriting discounts and
commissions and estimated offering expenses paid by us. See "Underwriting."

We expect to use the net proceeds from this offering for funding of clinical
trials for the AbioCor, continued research and development, expansion of our
manufacturing capabilities, international sales and marketing and other general
corporate purposes, including possible strategic acquisitions of businesses,
products or technologies complementary to our business. We do not have any
commitments to make any such acquisitions and have not allocated a specific
amount of the net proceeds for this purpose. Pending such uses, we plan to
invest the net proceeds of the offering in short-term, interest-bearing
investment-grade securities.

DIVIDEND POLICY

We have never declared or paid cash dividends on our capital stock and do
not plan to pay any cash dividends in the foreseeable future. Our current policy
is to retain all of our earnings to finance future growth.

PRICE RANGE OF COMMON STOCK

Our common stock is traded on the Nasdaq National Market under the symbol
"ABMD." The following table sets forth, for the periods indicated, the high and
low sales prices per share of common stock, as reported by the Nasdaq National
Market.

High Low
Fiscal Year Ended March 31, 1998 ---------- ----------

First Quarter........................................... $16 $ 9 1/2
Second Quarter.......................................... 19 13 1/2
Third Quarter........................................... 23 1/2 15 1/2
Fourth Quarter.......................................... 17 5/8 12 7/8

Fiscal Year Ended March 31, 1999

First Quarter........................................... $17 1/2 $13 3/16
Second Quarter.......................................... 15 1/2 8 1/4
Third Quarter........................................... 11 3/8 7
Fourth Quarter.......................................... 13 3/8 8 1/4

Fiscal Year Ended March 31, 2000

First Quarter........................................... $18 $11 7/8
Second Quarter.......................................... 16 3/4 13
Third Quarter (through December 16, 1999)............... 59 3/8 15 1/4

The last reported sale price of the common stock on the Nasdaq National
Market on December 16, 1999 was $48.875 per share. As of December 1, 1999, there
were approximately 404 holders of record of our common stock, including multiple
beneficial holders at depositories, banks and brokers listed as a single holder
in the "street" name of each respective depository, bank or broker.

CAPITALIZATION

The following table sets forth our capitalization as of September 30, 1999,
on an actual basis, and on an as adjusted basis to reflect the receipt of the
estimated net proceeds from the sale of 1,500,000 shares of common stock being
offered under this prospectus at an assumed public offering price of $48.875 per
share, after deducting estimated fees of the underwriters and estimated offering
expenses that we will pay.

The number of shares issued and outstanding shown in the table below
excludes 1,361,385 shares of common stock reserved for issuance upon the
exercise of stock options outstanding as of September 30, 1999 at a weighted
average exercise price of $11.95 per share. See Note 7 to Consolidated Financial
Statements.

AS OF SEPTEMBER 30, 1999
------------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)

Long-term liabilities....................................... $ 159 $ 159
Stockholders' equity:
Class B Preferred Stock, $.01 par value, 1,000,000 shares
authorized; no shares issued and outstanding............ -- --
Common Stock, $.01 par value, 25,000,000 shares
authorized; 8,657,742 shares issued and outstanding and
10,157,742 shares issued and outstanding as adjusted.... 87 102
Additional paid-in capital................................ 58,288 126,687
Accumulated deficit....................................... (35,042) (35,042)
-------- --------
Total stockholders' equity.............................. 23,333 91,747
-------- --------
Total capitalization.................................. $ 23,492 $ 91,906
======== ========

SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

We derived the consolidated statements of operations data for the fiscal
years ended March 31, 1997, 1998 and 1999, and the consolidated balance sheet
data as of March 31, 1998 and 1999, from the audited financial statements in
this prospectus. Those financial statements were audited by Arthur Andersen LLP,
independent public accountants. We derived the consolidated statement of
operations data for the fiscal years ended March 31, 1995 and 1996, and the
consolidated balance sheet data as of March 31, 1995, 1996 and 1997 from audited
financial statements that are not included in this prospectus. We derived the
consolidated statement of operations data for the six months ended
September 30, 1998 and 1999, and the consolidated balance sheet data as of
September 30, 1999 from unaudited financial statements included in this
prospectus. These unaudited financial statements have been prepared on the same
basis as the audited financial statements and, in our opinion, include all
adjustments and reclassifications (consisting only of normal recurring
adjustments and reclassifications) necessary to present fairly the financial
condition and results of operations for the periods presented. The results for
the six months ended September 30, 1999 are not necessarily indicative of the
results that may be expected for the full year. You should read this data in
conjunction with the financial statements and accompanying notes and with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing elsewhere in this prospectus.

SIX MONTHS ENDED
FISCAL YEAR ENDED MARCH 31, SEPTEMBER 30,
---------------------------------------------------- -------------------
1995 1996 1997 1998 1999 1998 1999
-------- -------- -------- -------- -------- -------- --------

STATEMENT OF OPERATIONS DATA:
Revenues:
Products................................... $6,392 $8,483 $10,872 $17,261 $18,079 $ 7,877 $ 7,615
Contracts.................................. 2,337 3,118 4,151 5,185 4,011 2,893 2,905
------ ------ ------- ------- ------- ------- -------
Total revenues......................... 8,729 11,601 15,023 22,446 22,090 10,770 10,520
------ ------ ------- ------- ------- ------- -------
Costs and expenses:
Cost of product revenues................... 2,881 3,234 4,427 6,502 6,772 3,000 2,472
Research and development................... 2,464 3,178 3,773 9,091 13,450 6,984 6,842
Selling, general and administrative........ 3,831 5,051 6,082 9,054 9,772 4,538 5,410
------ ------ ------- ------- ------- ------- -------
Total costs and expenses............... 9,176 11,463 14,282 24,647 29,994 14,522 14,724
------ ------ ------- ------- ------- ------- -------
Income (loss) from operations................ (447) 138 741 (2,201) (7,904) (3,752) (4,204)
Interest and other income, net............... 449 528 535 1,206 1,192 727 397
------ ------ ------- ------- ------- ------- -------
Income (loss) from continuing operations..... $ 2 $ 666 $ 1,276 $ (995) $(6,712) $(3,025) $(3,807)
Loss from discontinued operations............ (354) (175) (541) (1,513) -- -- --
------ ------ ------- ------- ------- ------- -------
Net income (loss)............................ $ (352) $ 491 $ 735 $(2,508) $(6,712) $(3,025) $(3,807)
====== ====== ======= ======= ======= ======= =======
Income (loss) from continuing operations per
diluted share.............................. $ 0.00 $ 0.10 $ 0.18 $ (0.12) $ (0.78) $ (0.35) $ (0.44)
Loss from discontinued operations per
diluted share.............................. (0.05) (0.03) (0.08) (0.19) -- -- --
------ ------ ------- ------- ------- ------- -------
Net income (loss) per diluted share.......... $(0.05) $ 0.07 $ 0.10 $ (0.31) $ (0.78) $ (0.35) $ (0.44)
====== ====== ======= ======= ======= ======= =======
Weighted average diluted shares
outstanding................................ 6,512 6,995 7,162 8,074 8,619 8,599 8,653
====== ====== ======= ======= ======= ======= =======

AS OF MARCH 31, AS OF SEPTEMBER 30,
---------------------------------------------------- -------------------
1995 1996 1997 1998 1999 1999
-------- -------- -------- -------- -------- -------------------

BALANCE SHEET DATA:
Cash, cash equivalents and marketable
securities................................. $ 4,491 $10,647 $ 9,361 $26,398 $18,181 $13,661
Working capital.............................. 6,341 12,745 12,858 29,284 22,144 18,547
Long-term investments........................ 6,533 -- -- -- -- --
Total assets................................. 14,631 16,066 18,373 38,755 32,982 29,659
Long-term liabilities........................ -- -- -- 64 205 159
Stockholders' equity......................... 13,305 13,945 15,225 33,018 27,072 23,333

For an explanation of the determination of the number of shares outstanding
and per share data, see Note 1(h) to Consolidated Financial Statements. We did
not declare or pay any cash dividends on our common stock during any of the
periods presented.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

ALL STATEMENTS, TREND ANALYSIS AND OTHER INFORMATION CONTAINED IN THE
FOLLOWING DISCUSSION RELATIVE TO MARKETS FOR OUR PRODUCTS AND TRENDS IN SALES,
GROSS PROFIT AND ANTICIPATED EXPENSE LEVELS, AS WELL AS OTHER STATEMENTS,
INCLUDING WORDS SUCH AS "MAY," "ANTICIPATE," "BELIEVE," "PLAN," "ESTIMATE,"
"EXPECT," AND "INTEND" AND OTHER SIMILAR EXPRESSIONS CONSTITUTE FORWARD-LOOKING
STATEMENTS. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO BUSINESS AND
ECONOMIC RISKS AND UNCERTAINTIES, AND OUR ACTUAL RESULTS OF OPERATIONS MAY
DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS.
FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT
LIMITED TO, THOSE DISCUSSED IN "RISK FACTORS" AS WELL AS OTHER RISKS AND
UNCERTAINTIES REFERENCED IN THIS PROSPECTUS.

OVERVIEW

We are a leading developer, manufacturer and marketer of medical products
designed to safely and effectively assist or replace the pumping function of the
failing heart. We have been developing the AbioCor, a totally implantable,
battery-powered, replacement heart which we believe will be the first such
device for end-stage heart failure patients. We currently manufacture and sell
the BVS, a temporary heart assist device which is the only device approved by
the FDA as a bridge-to-recovery device for temporary treatment of all patients
with failing but potentially recoverable hearts. Our operating results reflect
the dual activities of commercial operations and investments in the research and
development of new technologies.

The BVS is a temporary heart assist device designed to assume the full
pumping function of a patient's failing heart while allowing the heart to rest,
heal and recover its function. The BVS consists of a pneumatic drive and control
console, single-use external blood pumps and cannulae. All of our product
revenues are currently derived from the BVS product line. BVS revenues are split
between sales to new customers and reorders from existing customers. Following
commercial introduction of the BVS in the U.S., our focus was on obtaining
market share beginning with the largest medical centers. As of September 30,
1999, approximately 435 medical centers in the U.S. had purchased the BVS,
including over 80% of all major medical centers that perform more than 500 heart
surgeries annually. While continuing to seek additional new customers for the
BVS, we have shifted our focus to emphasize increasing usage and product
reorders by existing customers. Product reorders currently represent
approximately half of BVS product revenues. During fiscal 1999 and the six
months ended September 30, 1999, no single customer represented more than 5% of
product revenues.

Research and development is a significant portion of our operations. Our
research and development efforts are focused on the development of new products,
primarily related to heart assist and heart replacement, and the continued
enhancement of the BVS and related technologies. Government contracts and grants
have supported a portion of our research and development expenses in recent
years. Our government-sponsored research and development contracts and grants
generally provide for payment on a cost-plus-fixed-fee basis. We account for
revenue under these contracts and grants as work is performed, provided the
government has appropriated sufficient funds for the work. Revenues from
contract research and development have fluctuated over the last three years and
are dependent upon the availability of government contracts and grants to
support our research and development efforts, the annual amount of funds that
have been appropriated by the government, and the amount of work performed by
us. At any time, the government can terminate, reduce or delay the funding for
any of our contracts. In addition, we may not be successful in obtaining any new
government contracts or further extensions to existing contracts.

In fiscal 1998, we began using our own resources to fund the further
development of the AbioCor in amounts significantly in excess of the funding
provided under the $8.5 million, four-year, AbioCor development contract awarded
to us from the NHLBI in 1996. We estimate that the development of

the AbioCor, including conducting pre-clinical and clinical trials and obtaining
regulatory approvals, will require us to provide substantial additional funding.
In fiscal 1999, we incurred $9.7 million in total research and development
spending directed at the AbioCor, including $7.7 million, or $0.89 per share, in
excess of the amount appropriated under our AbioCor development contract.
Excluding these research and development expenses, our income from continuing
operations for fiscal 1999 would have been approximately $1.0 million or $0.11
per share.

RESULTS OF OPERATIONS

The following table shows our statement of operations data expressed as a
percentage of total revenues for the periods indicated:

FISCAL YEAR SIX MONTHS
ENDED MARCH 31, ENDED SEPTEMBER 30,
-------------------------------- --------------------
1997 1998 1999 1998 1999
-------- -------- -------- -------- --------

Revenues:
Products................................... 72.4% 76.9% 81.8% 73.1% 72.4%
Contracts.................................. 27.6 23.1 18.2 26.9 27.6
----- ----- ----- ----- -----
Total revenues........................... 100.0 100.0 100.0 100.0 100.0
----- ----- ----- ----- -----
Costs and expenses:
Cost of product revenues................... 29.5 29.0 30.7 27.9 23.5
Research and development................... 25.1 40.5 60.9 64.8 65.1
Selling, general and administrative........ 40.5 40.3 44.2 42.1 51.4
----- ----- ----- ----- -----
Total costs and expenses................. 95.1 109.8 135.8 134.8 140.0
----- ----- ----- ----- -----
Income (loss) from operations................ 4.9 (9.8) (35.8) (34.8) (40.0)
Interest and other income, net............... 3.6 5.4 5.4 6.7 3.8
----- ----- ----- ----- -----
Income (loss) from continuing operations..... 8.5% (4.4)% (30.4)% (28.1)% (36.2)%
Loss from discontinued operations............ (3.6) (6.7) -- -- --
----- ----- ----- ----- -----
Net income (loss)............................ 4.9% (11.2)% (30.4)% (28.1)% (36.2)%
===== ===== ===== ===== =====

SIX MONTHS ENDED SEPTEMBER 30, 1999 AND SEPTEMBER 30, 1998

PRODUCT REVENUES. Product revenues decreased by $0.3 million, or 3%, to
$7.6 million in the six months ended September 30, 1999 from $7.9 million in the
six months ended September 30, 1998. The decline in product revenues is
primarily attributable to a reduction in unit sales of BVS systems sold to new
customers partially offset by increased unit sales and increased average selling
prices of BVS disposable blood pumps reordered by and sold to existing
customers. We believe that the decline in sales to new customers was largely a
result of a decision we made at the beginning of the current fiscal year to
shift the focus of certain of our sales representatives from sales to new
customers to increased support of existing customers in an effort to increase
reorders of higher margin BVS blood pumps. Reorders of BVS blood pumps increased
by 11% during the six months ended September 30, 1999 as compared to the same
period of the prior year. Domestic sales accounted for 97% of total product
revenues during the six months ended September 30, 1999, compared to 96% for the
same period a year earlier.

CONTRACT REVENUES. Contract revenues were $2.9 million during both the six
months ended September 30, 1999 and September 30, 1998. Approximately
$1.8 million of the contract revenues recognized in both periods was derived
from our AbioCor government contract. The remaining $1.1 million in contract
revenues recorded during the six months ended September 30, 1999 and
September 30, 1998 was primarily derived from our AbioBooster contract and other
government grants.

We account for contract revenues under our government contracts and grants as
work is performed, provided that the government has appropriated sufficient
funds for the work. Through September 30, 1999, the government has appropriated
all of the $8.5 million AbioCor contract amount, including the $1.8 million
appropriated and recognized as contract revenues during the quarter ended
June 30, 1999. No amount remains to be recognized under the AbioCor government
contract as of September 30, 1999.

As of September 30, 1999, our total backlog of research and development
contracts and grants was $2.7 million, including $1.1 million for AbioBooster
research and development. Funding for our government research and development
contracts is subject to government appropriation, and all of these contracts
contain provisions that make them terminable at the convenience of the
government. ABIOMED retains rights to all technological discoveries and products
resulting from these efforts. Due to the nature of our research and development
projects and the timing of government appropriations, we believe that we will
continue to experience significant quarterly fluctuations in contract revenues.

COST OF PRODUCT REVENUES. Cost of product revenues as a percentage of
product revenues decreased to 32% in the six months ended September 30, 1999
from 38% in the six months ended September 30, 1998. The majority of this
decrease in cost of products sold as a percentage of product revenues was
attributable to higher average selling prices for BVS blood pumps during the six
months ended September 30, 1999 as compared to the same period of the prior year
and to an increase in the proportion of higher margin BVS blood pumps sold
relative to lower margin BVS console sales.

RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
decreased by $0.1 million, or 2%, to $6.8 million in the six months ended
September 30, 1999, from $7.0 million in the six months ended September 30,
1998. Expenditures remained consistent at 65% of total revenues for each interim
six month period. During the six months ended September 30, 1999, lower spending
for the development of the AbioCor was offset by increased spending on new
products and enhancements to the BVS. Research and development expenses during
the six months ended September 30, 1999 included $4.7 million of expenses
incurred in connection with our development activities for the AbioCor, as
compared to $5.2 million for the same period of the prior year. We anticipate
that AbioCor expenses will increase in coming fiscal quarters as materials are
scheduled to be received in order for us to manufacture AbioCor systems for
various testing purposes.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by $0.9 million, or 19%, to $5.4 million in
the six months ended September 30, 1999, from $4.5 million in the six months
ended September 30, 1998. Expenditures increased to 51% of total revenues from
42% of total revenues in the same period a year earlier. This increase is
primarily attributed to increased selling and marketing expenditures as a result
of our implementing new programs designed to improve sales of our disposable
blood pumps, and increased legal expenses.

INTEREST AND OTHER INCOME. Interest and other income consists primarily of
interest earned on our investment balances, net of interest and other expenses.
Interest and other income decreased by $0.3 million, or 45%, in the six months
ended September 30, 1999 from $0.7 million in the six months ended
September 30, 1998. This decrease was primarily attributed to lower average
funds available for investment.

NET LOSS. Net loss for the six months ended September 30, 1999 was
approximately $3.8 million, or $0.44 per diluted share. This compares to a net
loss of approximately $3.0 million, or $0.35 per diluted share, for the six
months ended September 30, 1998. The losses for both six month periods are
primarily attributable to development and pre-clinical testing costs associated
with the AbioCor implantable replacement heart.

FISCAL YEARS ENDED MARCH 31, 1999 AND MARCH 31, 1998

PRODUCT REVENUES. Product revenues increased by $0.8 million, or 5%, to
$18.1 million in fiscal 1999 from $17.3 million in fiscal 1998. This increase in
product revenues in fiscal 1999 was primarily attributable to a $1.2 million, or
8%, increase in domestic product revenues. This was derived primarily from
increased average selling prices of BVS disposable blood pumps offset by a
decrease in international product revenues of $0.4 million. Sales of blood pumps
in fiscal 1998 included approximately $1.0 million of reorder pump revenues
shipped from backlog. We generally operate with only a limited backlog. Without
the effect of the shipment from backlog in 1998, our domestic product revenues
increased by $1.8 million, or 16%, in fiscal 1999. Domestic unit sales of BVS
blood pumps decreased in fiscal 1999 compared to fiscal 1998 without adjustment
for the effect of this backlog but increased if the effect of the backlog is
considered. Domestic product revenues included approximately $2.7 million from
sales-type leases in fiscal 1999 and $1.3 million in fiscal 1998. International
revenues represented 3% of product revenues in fiscal 1999 and 6% in fiscal
1998.

CONTRACT REVENUES. Contract revenues decreased by $1.2 million, or 23%, to
$4.0 million in fiscal 1999 from $5.2 million in fiscal 1998. This decrease in
contract revenues in fiscal 1999 was primarily attributable to the level of
government appropriation and work performed by us on Phase II of the AbioCor
government contract. We account for contract revenues under our government
contracts and grants as work is performed, provided that the government has
appropriated sufficient funds for the work. Through March 31, 1999, the
government had appropriated $6.7 million of the $8.5 million Phase II AbioCor
development contract amount. During fiscal 1999, our expenditures under the
AbioCor development contract exceeded the appropriated amount. As a result, in
fiscal 1999, we recognized as contract revenues all of the remaining
$1.8 million of the $6.7 million appropriated under the AbioCor development
contract and used $7.7 million of our own resources to fund AbioCor development.

COST OF PRODUCT REVENUES. Cost of product revenues as a percentage of
product revenues decreased to 37% in fiscal 1999 from 38% in fiscal 1998. The
changes in cost of product revenues as a percentage of product revenues were
primarily attributable to increased average selling prices and the mix of
products sold.

RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
increased by $4.4 million, or 48%, to $13.5 million in fiscal 1999 from
$9.1 million in fiscal 1998. This increase is primarily the result of increased
expenditures for labor, materials, and professional services related to
development and testing of the AbioCor and enhancements to the BVS. We
anticipate that our research and development expenses will continue to be
significant and may increase as a result of our plans to further develop and
test the AbioCor, enhancements to the BVS and other potential new products.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by $0.7 million, or 8%, to $9.8 million in
fiscal 1999 from $9.1 million in fiscal 1998. The increase primarily reflected
increased sales expenses, particularly increased personnel and sales
commissions, related to the increase in product revenues, as well as additional
administrative personnel and legal expenses.

INTEREST AND OTHER INCOME. Interest and other income remained consistent at
$1.2 million in both fiscal 1999 and fiscal 1998.

DISCONTINUED OPERATIONS. Discontinued operations consist of the net
revenues, costs and expenses of our dental subsidiary, ABIODENT. In fiscal 1998,
we made the decision to shift all of our focus to our core cardiovascular
business and to discontinue our dental business. The $1.5 million loss from
discontinued operations for the year ended March 31, 1998 represents a loss from
dental operations of $0.5 million, or $0.07 per diluted share, and an estimated
loss on the disposal of the business, its assets

and extinguishment of liabilities of $1.0 million, or $0.12 per diluted share.
In fiscal 1999, we incurred costs associated with the discontinuance of
operations of $0.4 million, and wrote off remaining net assets totaling
$0.3 million. As of March 31, 1999, a reserve of approximately $0.2 million
remains as a contingency against additional costs associated with the
discontinuation of the dental business.

NET LOSS. Net loss for fiscal 1999 was approximately $6.7 million, or $0.78
per diluted share. This compares to a net loss of approximately $2.5 million, or
$0.31 per diluted share, for fiscal 1998. The losses for both years are
primarily attributable to development and pre-clinical testing costs associated
with the AbioCor implantable replacement heart.

FISCAL YEARS ENDED MARCH 31, 1998 AND MARCH 31, 1997

PRODUCT REVENUES. Product revenues increased by $6.4 million, or 59%, to
$17.3 million in fiscal 1998 from $10.9 million in fiscal 1997. This increase in
product revenues in fiscal 1998 was primarily attributable to growing U.S. unit
sales of BVS single-use products, including increased blood pump reorders,
growing U.S. unit sales of BVS consoles and to increased average selling prices
of the BVS single-use products and BVS consoles. The majority of our product
revenues in fiscal 1998 and 1997 has been to U.S. customers. International
product revenues represented 6% of total product revenues in fiscal 1998 and 7%
in fiscal 1997.

CONTRACT REVENUES. Contract revenues increased by $1.0 million, or 25%, to
$5.2 million in fiscal 1998 from $4.2 million in fiscal 1997. This increase in
contract revenues in fiscal 1998 primarily reflected increased activity under
the AbioCor government contract. Through March 31, 1998, the government had
appropriated $4.9 million of the $8.5 million Phase II AbioCor contract amount.
During fiscal 1998, our expenditures under the AbioCor contract exceeded the
appropriated amount. As a result, in fiscal 1998, we recognized as contract
revenues all of the remaining $3.2 million of the $4.9 million appropriated
under the AbioCor contract and used $4.3 million of our own resources to fund
AbioCor development.

COST OF PRODUCT REVENUES. Cost of product revenues as a percentage of
product revenues decreased to 38% in fiscal 1998 from 41% in fiscal 1997. The
changes in cost of product revenues as a percentage of product revenues were
primarily attributable to the mix of products sold with a higher proportion of
product revenues derived from BVS blood pumps in fiscal 1998 as compared to
fiscal 1997. The higher fiscal 1997 cost of product revenues as a percentage of
product revenues also included costs related to the Company's voluntary recall
in fiscal 1997 of certain production lots of disposable BVS blood pumps.

RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
increased by $5.3 million, or 141%, to $9.1 million in fiscal 1998 from
$3.8 million in fiscal 1997. This increase primarily reflected a higher level of
development activity related to the AbioCor.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by $3.0 million, or 49%, to $9.1 million in
fiscal 1998 from $6.1 million in fiscal 1997. This increase primarily reflected
increased sales expenses, particularly increased personnel and sales
commissions, related to the increase in product revenues, as well as additional
administrative personnel and legal expenses.

INTEREST AND OTHER INCOME. Interest and other income increased by
$0.7 million, or 125%, to $1.2 million in fiscal 1998 from $0.5 million in
fiscal 1997. This increase primarily reflects the Company's higher average
investment balances.

NET LOSS. Net loss for fiscal 1998 was approximately $2.5 million, or $0.31
per diluted share. This compares to net income of approximately $0.7 million, or
$0.10 per diluted share, for fiscal 1997. The

loss for fiscal 1998 was primarily attributable to research and development
costs associated with the AbioCor implantable replacement heart.

LIQUIDITY AND CAPITAL RESOURCES

We have supported our operations with net revenues from sales of our BVS
product line, government contracts and proceeds from our equity financings. As
of September 30, 1999, our cash, cash equivalents and short-term marketable
securities total $13.7 million. We also have a $3 million line of credit from a
bank that expires on October 13, 2000, which bears interest at the bank's prime
rate (8.25% at September 30, 1999), and a term loan facility from the same bank,
which also bears interest at the bank's prime rate, that permits us to borrow up
to $1.2 million through March 31, 2000 for the acquisition of manufacturing
equipment and leasehold improvements. Both the line of credit and the term loan
facility were entirely available as of September 30, 1999.

During the six months ended September 30, 1999, operating activities used
$3.4 million of cash. Net cash used by operating activities during this period
resulted from a net loss of $3.8 million and increases in accounts receivable,
inventory, and prepaid expenses of $0.5 million, $0.7 million and $0.2 million,
respectively. It also resulted from decreases in accrued expenses of
$0.4 million. These uses of cash were partially offset by increases in accounts
payable of $0.9 million and noncash charges for depreciation and amortization of
$1.3 million included in the net loss. The increase in inventory is primarily
attributable to lower than planned product sales.

During fiscal 1999, operating activities used $7.4 million of cash. Net cash
used by operating activities in fiscal 1999 reflected a net loss of
$6.7 million, including depreciation and amortization expense of $1.4 million,
an increase in accounts receivable of approximately $1.1 million, increases in
inventory, prepaid expenses and other current assets of approximately
$0.6 million each, and a decrease in accounts payable of approximately
$1.2 million. These uses of cash were partially offset by an increase in accrued
expenses of approximately $1.9 million. The increase in accounts receivable was
primarily attributable to increased revenues and extended collection periods for
certain accounts. The increase in inventory reflects increased production levels
and our decision to increase inventory levels for certain products and component
parts. The decrease in accounts payable is primarily attributed to the timing of
purchases of direct material and capital equipment for manufacturing, research
and development. The increase in accrued expenses reflects timing of payments
and increased operating activity throughout ABIOMED, including increased size of
payroll and payroll related costs.

During the six months ended September 30, 1999, investing activities used
$0.8 million of cash. Cash used in these activities included purchases of
capital equipment and expenditures for leasehold improvements of $1.2 million.
In January 1999, we entered into an operating lease for approximately 80,000
square feet of space in a building addition currently under construction within
the same industrial park as our current facilities. We began occupying this
facility in fiscal 2000, and we expect to complete our phased move into this
facility in fiscal 2001. We plan to use this new facility to expand our
headquarters, manufacturing and research and development. In particular, we
intend to move all of the manufacturing of our current products to the new
facility. We anticipate that we will incur additional costs of approximately
$1.0 million for improvements to this new facility, including costs to construct
and qualify manufacturing clean rooms and costs for internal information and
telephone systems and furniture. These capital expenditures were partially
offset by $0.4 million of cash provided from the sale of short-term marketable
securities, net of purchases of similar securities.

During fiscal 1999, investing activities provided $13.3 million of cash. Net
cash provided by investing activities included $14.8 million of sales of
short-term marketable securities, net of short-term marketable securities
purchased during the year, and $1.6 million of purchases and improvements of
property and equipment.

During the six months ended September 30, 1999 and during fiscal 1999,
financing activities provided $0.1 million and $0.8 million of cash,
respectively, related to the exercise of stock options and stock issued under
the employee stock purchase plan.

Income taxes incurred during each of the periods presented were not
material, and we continue to have significant net tax operating loss and tax
credit carryforwards.

We believe that the net proceeds of this offering, together with our
existing resources and our revenue from government contracts and product sales,
will be sufficient to fund our planned operations, including the planned
increases in our internally funded AbioCor and new BVS development and product
extension efforts, for the foreseeable future. However, we may require
significant additional funds in order to complete the development, conduct
clinical trials, and achieve regulatory approvals of the AbioCor and other
products under development over the next several years. We may also need
additional funds for possible future strategic acquisitions of businesses,
products or technologies complementary to our business. If additional funds are
required we may raise such funds from time to time through public or private
sales of equity or from borrowings.

YEAR 2000 READINESS DISCLOSURE

As the year 2000 approaches, it is generally anticipated that computers,
software and other equipment utilizing microprocessors may be unable to function
properly. We have evaluated this potential issue with respect to our products,
our financial and management information systems and our suppliers. With respect
to our products, the software controlling the BVS drive console includes
internal counters, but the BVS operation is not related in any way to a specific
calendar date. Accordingly, we believe that the BVS will not need any repair or
modification with regard to the year 2000 issue.

With respect to our financial and management information systems, we
successfully installed and tested a year 2000 upgrade to our primary system and
have completed an assessment of all personal computers and installed
applications. All significant systems have been upgraded or replaced where
necessary. Expenditures for new personal computers, software applications, and
operating systems under our year 2000 plan have amounted to less than $100,000,
with no significant costs remaining. We sought assurances of year 2000
compliance from key suppliers and we have increased safety stocks of materials
inventory where a prolonged loss of material deliveries would have an adverse
impact on our business, financial condition and results of operations. We have
also made inquiries to assess key service providers such as financial
institutions, our payroll service provider, and our retirement plan
administrator as to their year 2000 readiness and have received assurances that
the vendors' critical systems have been updated, tested, and found to be
compliant.

Although we do not expect year 2000 issues to have a material impact on our
business or future results of operations, there can be no assurance that there
will not be interruptions of operations or other limitations of system
functionality or that we may incur significant costs to avoid such interruptions
or limitations. To the Companyextent that we can not eliminate all year 2000 issues,
the most reasonably likely worst case year 2000 scenario is systemic failures
beyond our control, such as a prolonged telecommunications or electrical
failure, or a general disruption in supplies and services provided to us which
could have a material adverse effect on our business, results of operations and
financial condition.

BUSINESS

OVERVIEW

ABIOMED is a leading developer, manufacturer and marketer of medical
products designed to safely and effectively assist or replace the pumping
function of the failing heart. Based on technology that has been developed and
refined over a period of approximately three decades, we have been developing
and are preparing to enter human clinical trials for the AbioCor Implantable
Replacement Heart, a battery-powered totally implantable replacement heart
system, which we believe will be the first such device for end-stage heart
failure patients. We currently manufacture and sell the BVS-5000, a temporary
heart assist device, which is the only device approved by the U.S. Food and Drug
Administration, known as the FDA, for the temporary treatment of all patients
with failing but potentially recoverable hearts. We are also engaged in research
and development relating to other devices to support the pumping function of the
heart.

The AbioCor is intended as a replacement device that will replace a
patient's diseased heart and take over its blood pumping function. It is
designed for use by patients with irreparably damaged hearts who are at risk of
imminent death due to heart disease, but whose other vital organs remain viable.
We believe the AbioCor will provide a much-needed treatment option for
approximately 125,000 patients per year in the U.S. for whom there is currently
no effective therapy available. The AbioCor has reached an advanced stage of
pre-clinical testing, including substantial laboratory and animal testing. We
have selected surgical teams from five leading U.S. medical centers to perform
initial human clinical trials. Subject to completing final testing and securing
regulatory approvals, we expect to commence clinical trials for the AbioCor for
certain patient populations by the end of the year 2000. We anticipate that we
will sell AbioCor systems, if and when approved by applicable U.S. and
international regulatory authorities, for approximately $75,000 to $100,000
each, subject to the establishment of reimbursement levels by third-party
payors.

We are committed to the clinical introduction of the AbioCor and, to date,
we have invested more than $40 million in its development, including over
$20 million in funding from the National Heart, Lung and Blood Institute. In
1997, we decided that the design of the AbioCor demonstrated sufficient
functionality and operational performance, through laboratory and animal
studies, to warrant accelerated development efforts to bring the product to
market.

The BVS is a "bridge-to-recovery" device that can temporarily assume the
full pumping function of the heart for patients with potentially reversible
heart failure. In 1992, the BVS became the first heart assist device capable of
providing full circulatory support to be approved by the FDA. The BVS is the
most widely used FDA-approved temporary heart assist device, and to date has
been used to support over 3,000 patients at over 500 medical centers worldwide.
The BVS, which consists of a console and single-use external blood pumps, has
been a profitable product line since fiscal 1995. We are pursuing several
strategies to continue the growth of the BVS product line, including
implementing new market strategies, developing new products and seeking to
expand the indications for which the BVS may be used. We believe our experience
in developing, manufacturing and selling the BVS will provide us with a
competitive advantage in commercializing the AbioCor, as well as other future
products.

Our focused research and development related to the AbioCor and the BVS has
provided us with the proprietary technology, know-how and experience to develop
additional products. We believe we are the only company in the world with
expertise in the full range of technology to support the pumping function of the
heart. We believe that there are many opportunities to apply our expertise to
address the needs of heart failure patients. We seek to be first to market with
high-quality, easy-to-use and cost-effective technologies for heart failure
patients who currently lack adequate therapies.

INDUSTRY OVERVIEW

THE HUMAN HEART

The following diagram illustrates the general structure of the human heart:

[DIAGRAM OF THE HUMAN HEART APPEARS HERE, DEPICTING THE LEFT AND RIGHT ATRIA
AND THE LEFT AND RIGHT VENTRICLES, THE CORONARY ARTERIES AND THE VALVES OF THE
HEART.]

The human heart is the central pump for the circulatory system. The heart
has four chambers: the left and the right atria and the left and the right
ventricles. The two atria serve as the inflow chambers of the heart, collecting
blood for delivery to the ventricles. The ventricles are the pumping chambers of
the heart, pumping blood to the lungs and the rest of the body.

The right ventricle of the heart pumps oxygen-depleted blood returning from
the body to the lungs where it is re-oxygenated. The left ventricle receives
oxygen-rich blood returning from the lungs and pumps it back to the rest of the
body. The chambers of the heart are formed of muscle tissue known as myocardium.
The coronary arteries, a specialized network of blood vessels within the heart,
provide oxygen and other nutrients to the heart itself.

The human heart has four valves that help ensure that blood flows in the
proper direction into and out of the ventricles as they are repeatedly filled
and then discharged with the pumping of blood. The timing and rate at which the
heart beats, referred to as its rhythm, is controlled by electrical impulses in
the conduction system of the heart.

HEART DISEASE

Heart disease is the number one cause of death in the U.S., responsible for
more deaths than all forms of cancer combined. In 1996, approximately
20 million people in the U.S. were afflicted with heart disease, resulting in
over 700,000 deaths. Illnesses and deaths from heart disease create an immense
burden to many individuals and their families. Patients frequently experience
extended suffering, and the economic cost is substantial. While a number of
therapies exist for the treatment of patients in early stages of heart disease,
limited therapies exist today for most patients with severe heart failure.

The majority of deaths from heart disease can be attributed to coronary
heart disease, or CHD, and congestive heart failure, or CHF. Other types of
heart disease include rhythm disorders and diseases of the valves.

CHD is a disease of the coronary arteries which affects blood flow to the
heart. CHD can lead to a heart attack, technically known as an acute myocardial
infarction, caused by insufficient blood flow to the heart and oxygen
deprivation, resulting in permanent damage to the heart muscle and, in many
cases, death. When CHD leads to a severe heart attack, some patients experience
cardiac arrest, which is an acute stoppage of the heart, and sudden death. For
other patients, medical personnel typically have a period of hours in which to
intervene effectively. Once stabilized by early intervention, a significant
number of these patients experience progressive deterioration of heart function,
eventually leading to death over a period of days or weeks.

CHF is a condition in which the patient's heart cannot provide adequate
blood and oxygen flow to meet the needs of the body. CHF develops over time
primarily due to excess demand on the heart muscle, and may be caused by a
variety of factors, including high blood pressure, problems with the valves of
the heart, CHD, infections of the heart muscle or the valves and heart problems
present at birth. A progressive deterioration of heart function generally
accompanies CHF as the heart becomes swollen and less effective at pumping
blood. For most patients with CHF, medical interventions take place over periods
of months or years.

Medical conditions associated with both CHD and CHF can lead to cardiac
arrest. Cardiac arrest is often a result of abnormalities in the heart's
electrical conduction system. These abnormalities, known as rhythm disorders,
can lead to complications, ranging from unsynchronized contractions and
irregular heartbeats to cardiac arrest. Patients who experience cardiac arrest
and die are referred to as sudden deaths. Most cardiac arrests that occur
outside the hospital result in sudden death. Patients experiencing cardiac
arrest generally require initial medical intervention, such as cardiopulmonary
resuscitation, commonly known as CPR, and advanced life support, within minutes.

In general, heart failure is progressive. While approximately half of all
heart failure patients experience sudden death as a result of cardiac arrest,
the remaining patients who die from heart failure typically do so in hospitals
or long-term care facilities.

PREVALENCE AND MORTALITY

The number of patients both suffering and dying from heart disease has been
rising on an annual basis. In 1996 there were approximately 12 million people
with CHD and 4.6 million people with CHF in the U.S., with at least the same
incidence outside the U.S.

Heart disease resulted in over 700,000 deaths in 1996 in the U.S.
Approximately half of all deaths from heart disease were sudden deaths. Of the
deaths that did not occur suddenly, approximately 230,000 were associated with
CHD and 25,000 with CHF. Current therapies to support these patients are
inadequate because they cannot stop the progression of the disease. We believe
that a significant number of such CHD and CHF patients could benefit from the
AbioCor Implantable Replacement Heart.

During 1997 in the U.S., the cost associated with CHD patients was
approximately $100 billion and the cost associated with CHF patients was
approximately $21 billion. Patients who suffer from heart disease often receive
medical treatment for a number of years prior to their deaths. Many late-stage
heart failure patients are confined to hospital beds, at a cost that is often
greater than $2,000 per day.

THERAPIES FOR HEART DISEASE

Patients with early- or mid-stage heart disease typically receive treatments
such as drug therapies, cardiological interventions, including closed chest
procedures and rhythm management therapies, or surgical corrections, such as
coronary bypass surgery and valve replacement. For patients with mid-stage and
particularly end-stage heart disease, however, these treatments are typically
inadequate. Patients with severe heart disease frequently are in need of heart
replacement. Because the supply of available donor hearts is limited, with only
approximately 2,000 per year available in the U.S., mechanical treatments have
been and continue to be developed to extend and improve the lives of these
patients.

MECHANICAL HEART TREATMENTS

Mechanical heart treatments can be divided into two groups of devices:
destination therapies, including heart replacement and permanent heart assist,
and temporary heart assist. The following table summarizes the principal
mechanical heart treatments that are currently in various stages of
commercialization or development.

INTENDED
PRIMARY PATIENT DURATION OF
POPULATIONS SUPPORT CLINICAL STATUS
----------------------- ----------- -----------------------

DESTINATION THERAPY
- -----------------------

HEART REPLACEMENT
Replacement of End-stage CHD and CHF For life In pre-clinical testing
Ventricular Function patients
PERMANENT HEART ASSIST
Quality of Life Mid-stage CHF patients For life Various stages--none
Support not at risk of imminent approved
death
Ventricular Assist End-stage CHF patients For life In clinical
whose diseased hearts trials--none approved
can benefit from a
ventricular assist
device

TEMPORARY HEART ASSIST
- ------------------------------------------------
BRIDGE-TO-RECOVERY
Surgical Origination Patients with Days/Weeks In market
complications in
connection with heart
surgery
Cardiology Referrals Patients experiencing Days/Weeks In market
viral infections of the
heart, or certain heart
attacks

BRIDGE-TO-TRANSPLANT End-stage heart failure Months In market
patients who are
candidates for a donor
heart
STAGING Patients being Days/Weeks Limited market
evaluated for use pending
longer-term device development of
support and patients in destination
need of heart support therapies
while other therapies
are applied

DESTINATION THERAPY. Devices intended to remain in patients for their
remaining lives are classified as destination therapies. Destination therapy
devices consist of replacement hearts and permanent assist devices, including
quality-of-life support devices that provide partial support to the heart.

Heart Replacement. The goal of heart replacement, whether with a donor
heart or a mechanical device, is to replace the failing human heart with a
viable alternative. Patients with irreparably damaged hearts who are facing
imminent death due to CHD or severe CHF are potential candidates for heart
replacement provided that their other vital organs remain viable. The supply of
human donor hearts is currently inadequate to meet the needs of these patients
and no mechanical treatment is yet approved for these patients.

In the U.S., we believe that approximately 125,000 patients per year might
benefit from an implantable replacement heart with an approximately equal number
of patients outside the U.S. who might also benefit from an implantable
replacement heart. Patients who are likely candidates for an implantable
replacement heart are end-stage CHD and CHF patients. In the U.S. in 1996,
approximately 470,000 people died of CHD and approximately 44,000 people died of
CHF. Because approximately half of these CHD and CHF patients suffered sudden
death, which frequently occurs out of the hospital and before medical care can
be received, the primary potentially addressable market for a replacement heart
in the U.S. consists of approximately 250,000 patients per year. Some of these
patients may have other conditions likely to lead to death within a relatively
short period of time, or may be of an age at which major surgery is deemed
inadvisable, making them unsuitable candidates for a replacement heart.
Excluding such patients, we believe that approximately 125,000 CHD and CHF
patients per year could benefit from a replacement heart in the U.S. Currently,
no life-sustaining treatment is available for these patients except for a
limited supply of qualified donor hearts for transplantation, consisting of
approximately 2,000 hearts per year in the U.S. In addition, many recipients of
heart transplants eventually reject the donor heart and have no other currently
available long-term treatment options.

In addition to the scarcity of donor hearts, there are various other
limitations associated with human heart transplantation. These limitations
include incompatibility between recipient patients and their donor hearts and
the need for patients to take immuno-suppressant drugs for the remaining term of
their lives. Immuno-suppressant drugs are expensive and can increase the
patient's exposure to illness. Patients may also require costly care and
experience extended periods of illness with impaired quality of life while
waiting for a suitable donor heart. As the health of a patient typically
deteriorates over a number of hours, days or weeks, many patients will die while
waiting for a suitable donor heart. In addition, patients who are awaiting a
donor heart generally require extensive tests and hospital time, which result in
substantial expense.

We believe that a mechanical replacement heart would increase the number of
lives saved by mitigating the consequences of the scarcity of available donor
hearts. In addition, a significant portion of heart transplant patients must
endure a long waiting period before a suitable donor heart is identified, if at
all. The development of an implantable mechanical heart could help alleviate
this long and difficult wait.

Permanent Heart Assist. Permanent assist devices are being developed to
supplement the function of the diseased heart or to stop or slow the progression
of the disease, while leaving the diseased heart in place. These devices
contrast with replacement hearts, which are intended to replace a severely and
irreversibly damaged heart. No permanent heart assist device is yet approved by
the FDA, but a number of companies are developing permanent heart assist
devices, some of which are in clinical trials. Permanent assist devices under
development can be grouped into two categories: those that pump blood directly,
known as ventricular assist devices or VADs, and less invasive devices that are
intended to provide patients with an improved quality of life. The less
invasive, quality-of-life devices include those that wrap around the heart,
either to help the heart pump blood or to inhibit deterioration of the heart by
preventing its further enlargement, and those that attempt to synchronize the
actions of the heart ventricles with electrical impulses. We believe that all
types of permanent heart assist devices potentially may be used to treat certain
CHF patients who are near death as well as those patients who are not at
imminent risk of death but whose daily activities are significantly restricted
due to their weakened hearts.

VADs, the more invasive of the two categories, may prove the most
appropriate permanent heart assist devices for certain end-stage CHF patients.
Implantable VADs are intended primarily for patients with severe left
ventricular failure. We believe that VADs are being primarily developed for CHF
patients and that VADs would not be appropriate for long-term support of the
majority of heart failure patients, such as those with massive heart damage,
severe rhythm disorders, blood clots in the

ventricles, severe lung disease, ventricular rupture, chronic right ventricle
failure or heart transplant rejection.

Heart wrap devices as well as electrical stimulation devices may prove more
appropriate than VADs for the larger number of patients with early and mid-stage
CHF because they are expected to be less invasive and pose fewer risks. These
devices can be referred to as "quality-of-life support devices." We estimate
that approximately 200,000 patients per year who are suffering from CHF but who
are not at imminent risk of death might benefit from quality-of-life support
devices.

TEMPORARY HEART ASSIST. Candidates for temporary heart assist devices
include patients with severe but potentially reversible heart failure and
patients whose hearts need help pumping blood while they await transplantation
or other therapies. Temporary heart assist devices typically consist of a
specialized pump that is attached to a patient's heart and driven by a console
or external battery pack. Such devices are intended to be removed from a
patient's body once the patient's heart has had the opportunity to recover its
normal function or the heart is replaced. Temporary heart assist devices can be
grouped into three categories:

Bridge-to-recovery. Bridge-to-recovery devices are used to support the
recovery of patients with reversibly failing hearts. These devices are most
frequently used to support patients whose hearts do not fully restart following
open heart surgery, and who cannot be weaned off the heart-lung machine. Of the
patients who experience such complications, approximately 12,000 die each year
despite available therapies. Bridge-to-recovery devices temporarily assume the
pumping function of the heart, while allowing the heart to rest, heal and
recover its normal function. These devices can also be used for patients who
have not undergone surgery but whose lives are threatened by viral infections
that attack the heart muscle. In addition, bridge-to-recovery devices may prove
beneficial to certain patients who have suffered from a recent heart attack.

Bridge-to-transplant. Bridge-to-transplant devices are used to support
patients who have experienced heart disease and are awaiting heart
transplantation. We believe that the market for this category of device may be
limited by the availability of qualified donor hearts.

Staging. Staging devices are used to support patients before or during
application of other therapies and to support patients with failing hearts being
transported to other facilities. At present, for reasons of specialized care,
patients are transported between medical centers with the assistance of such
devices under practice of medicine guidelines. In the future, staging devices
may be used to support heart failure patients prior to implantation of a
permanent heart assist device or a heart replacement. These devices could help
stabilize the patient and provide the medical team with time to better assess
the patient's condition before selecting an appropriate therapy. In addition,
while bridge-to-recovery devices are approved and used today to assist heart
transplant patients when rejection occurs, in the future staging devices may be
used with transplant patients who have rejected their donor heart and need life
support before receiving a mechanical heart replacement.

ABIOMED OVERVIEW

ABIOMED is a leading developer, manufacturer and marketer of medical
products designed to safely and effectively assist or replace the pumping
function of the failing heart. Based on technology that has been developed and
refined over a period of approximately three decades, we have been developing
and are preparing to enter human clinical trials for the AbioCor Implantable
Replacement Heart, a battery-powered totally implantable replacement heart
system, which we believe will be the first such device for end-stage heart
failure patients. We currently manufacture and sell the BVS-5000, a temporary
heart assist device. The BVS is the only device approved by the FDA through its
pre-market approval process for the temporary treatment of all patients with
failing but potentially recoverable hearts and the most widely used FDA-approved
temporary heart assist device. We are also engaged in research and development
relating to other devices to support the pumping function of the heart.

ABIOMED'S STRATEGY

Our goal is to be a leading worldwide provider of medical products that
address the needs of a wide range of patients suffering from heart failure and
other heart disorders. Our principal emphasis is on the heart assist and heart
replacement markets. The following are key elements of our strategy:

PERFORM CLINICAL TRIALS AND OBTAIN REGULATORY APPROVAL FOR THE ABIOCOR. We
are planning to conduct phased human clinical trials for the AbioCor tailored to
patient populations with different life expectancies, beginning with patients
with the most severe medical needs and at risk of imminent death. We believe
that the nature of the AbioCor and the patient populations that we plan to
address initially will allow us to pursue an expedited regulatory review. We are
currently performing reliability tests and animal tests of the AbioCor, and we
have begun to submit materials to regulatory authorities in support of our plans
for clinical trials. Subject to successful completion of final testing and
securing regulatory approvals, we anticipate that by the end of 2000 the AbioCor
will become the first totally implantable replacement heart to commence human
clinical trials.

COMMERCIALIZE FIRST TOTALLY IMPLANTABLE REPLACEMENT HEART. We are
developing the AbioCor with the goal of providing a treatment option for
thousands of patients with irreparable heart damage whose lives cannot be saved
with existing medical technology. Our goal is to introduce the AbioCor as soon
as possible and to use our clinical experience to regularly improve the product
and expand the categories of patients who might benefit from this new
technology. We believe that, as the technology matures, permanent heart
replacement, and not heart assist devices, will be the preferred therapy for
long-term support of the majority of end-stage heart failure patients, who
currently have no long-term treatment available if they do not receive one of
the limited number of qualified donor hearts available for transplantation. We
believe the AbioCor has the potential to provide a cost-effective means of
extending the lives of many of these patients and providing them with an
improved quality of life.

LEVERAGE OUR EXPERIENCE AND INFRASTRUCTURE TO COMMERCIALIZE THE ABIOCOR. In
developing, manufacturing and marketing the BVS, we have accumulated significant
experience and established an infrastructure that we intend to utilize in
obtaining the necessary regulatory approvals and to support the
commercialization of the AbioCor. We have experience working with regulatory
authorities and leading medical centers and physicians throughout the world to
perform clinical trials and obtain regulatory approvals. We have over 10 years
of manufacturing experience, and we have obtained ISO 9001 certification for our
BVS manufacturing facility. Our sales, clinical support, marketing and field
service teams consist of 38 full-time employees, who currently work with over
500 customers worldwide. We believe that our experience and infrastructure
position us well to commercialize the AbioCor, as well as other future products
and product enhancements.

EXPAND MARKETS AND PENETRATION FOR EXISTING BVS PRODUCT LINE. The BVS was
the first temporary heart assist device capable of assuming the full pumping
function of the heart to be approved by the FDA. The BVS is the most widely used
FDA-approved temporary heart assist device. We are pursuing several strategies
to continue the growth of the BVS product line, including implementing new
market strategies, developing new BVS products and seeking to expand the
indications for which the BVS may be used. While we continue our efforts to add
new customers, we have increased our marketing focus on expanding BVS usage by
existing customers and increasing customer reorders of disposable blood pumps.
We are also seeking to expand our international presence and are recruiting
direct sales and support teams for selected countries in Europe while pursuing
regulatory approval in Japan through a third-party distributor. We are currently
developing a number of new devices for the BVS product line, which we expect to
introduce over the next several years. Since initial FDA approval, the BVS has
twice received approvals for expanded indications for its use, and we are
continuing to evaluate additional potential uses of the device to save patients'
lives.

DEVELOP OR ACQUIRE COMPLEMENTARY PRODUCTS. We believe that we are well
positioned to develop new products that are complementary to the AbioCor and
BVS. We employ over 100 engineers, physicians, scientists and technicians who
are experienced in the development of new products and have a broad range of
expertise. We have also developed substantial proprietary technology and
know-how as a pioneer in heart assist and heart replacement technology and have
been granted a number of patents. This technology and know-how spans a broad
range of topics, including expertise in the safe and effective pumping of blood.
We believe there is no other company in the world with as much expertise in the
full range of technology to support the pumping function of the heart. We also
plan to evaluate opportunities to acquire complementary products from third
parties, and to license or sell technologies that we are not commercializing. We
intend to acquire or develop high quality products which address markets which
are complementary to those being targeted by the AbioCor and BVS, products which
are best of class and, where possible, products which can be first to market for
particular patient needs.

PREPAREDNESS FOR INITIAL HUMAN CLINICAL TRIALS

Development of the technological foundation for the AbioCor has been a
significant focus of ABIOMED since we were founded in 1981. Development and
testing of the core technology for the AbioCor was underway prior to our
founding. Beginning in 1997, we substantially increased our research and
development activities for the AbioCor with the goal of accelerating its
development in order to enter clinical trials as early as possible. We decided
to significantly increase our investment in the AbioCor after determining that
the AbioCor prototypes then produced had shown sufficient functionality through
laboratory and animal tests to warrant an accelerated product development
effort. The increased spending has been used to build a pilot-scale
manufacturing facility, to develop the product from a research-based prototype
status to a manufacturable clinical design, to increase system safety and
efficacy by making engineering improvements and refinements, to increase
operational performance, durability and reliability, to substantially expand
laboratory and animal testing of the system, and to begin training of surgical
and clinical support teams in selected medical centers for the initial clinical
trials. In addition, in late 1996 we began to increase our interaction with
regulatory authorities by presenting to them different portions of our
developmental status and testing plans. To accomplish these tasks, we have
significantly increased the team of engineers, scientists, physicians and
technicians working full time on the AbioCor program to more than 70 full-time
employees.

Our goal is to initiate human clinical trials of the first generation of
clinical AbioCor systems by the end of the year 2000. Subject to regulatory
approval, we plan to begin initial clinical trials with patients who, despite
all available therapies, have extremely high probability of death in the near
term due to acute heart failure. Examples of such patients include heart
transplant recipients who are rejecting their donor hearts, surgical patients
placed on bi-ventricular cardiac assist but whose hearts fail to recover, and
hospitalized patients who are facing imminent death following massive heart
attacks. We believe that by initially selecting those patients who have no other
treatment alternative, we will have the opportunity to obtain regulatory
approval to conduct clinical trials based upon the successful completion of
ongoing and planned laboratory and animals tests. As we gain clinical experience
with the most seriously ill patients and demonstrate clinical efficacy and
safety, we expect to continuously enhance the performance range, durability and
reliability of AbioCor systems and plan to seek regulatory approval for
subsequent generations of the AbioCor for use in increasingly broad patient
populations. This regulatory plan is consistent with our experience with the BVS
system. Our BVS product, which has now supported thousands of patients, was
originally approved by the FDA for post-cardiotomy support on the basis of data
from less than half of the approximately 75 patients who were enrolled in the
clinical trials and who were suffering life-threatening conditions for which no
alternative treatment existed. Our plan for AbioCor clinical trials draws upon
our experience with the BVS.

STEPS TO INITIAL CLINICAL TRIALS. Prior to the commencement of initial
clinical trials for the AbioCor, we must successfully complete the following
tasks:

MANUFACTURING QUANTITIES OF CLINICAL-CONFIGURED SYSTEMS FOR PRE-CLINICAL
TESTING AND FOR CLINICAL TRIALS. Since our pilot AbioCor manufacturing facility
became operational in 1997, we have produced more than 100 AbioCor systems and
many more individual critical components such as valves and pumping membranes,
which have been used for performance evaluation, developmental activities,
laboratory reliability testing, and animal implantation tests. We are currently
manufacturing more than 50 systems in the configuration intended for use in
pre-clinical tests and, subject to regulatory approvals, initial clinical
trials. While we plan to continue to produce sufficient quantities of AbioCor
systems in our existing facilities to meet our needs for the year 2000,
including those needed for initial clinical trials, we are currently building
new expanded facilities in anticipation of increased demand.

ADDITIONAL PRE-CLINICAL AND ANIMAL TESTS TO DEMONSTRATE DEVICE PREPAREDNESS
FOR CLINICAL TRIALS. We have performed component and limited system-level
testing of the AbioCor to evaluate operational performance and durability.
During 1998, we began formal pre-clinical durability and reliability growth
testing of the AbioCor system, consistent with protocols that we believe will be
required by regulatory authorities for approval to conduct initial clinical
trials. We have also conducted and have continued extensive accelerated testing
of the valves and flexing membranes that are critical components of the AbioCor
ventricles. Additional tests that remain include completing laboratory
performance tests similar to those already conducted using larger numbers of
clinical-configured systems for increasing duration.

We have conducted approximately 100 animal tests at various stages of
development of the AbioCor technology. Approximately half of these were research
studies of various configurations and at various stages of development. In the
past two years we have implanted AbioCor systems in approximately 40 calves. The
most recent series of implants included more than 10 routine tests of the full
system as a trial run at one medical center in preparation for similar
implantations that we believe will need to be repeated for the same duration but
under more formal test protocols consistent with regulatory requirements. The
results of these studies in calves have shown that all implanted components are
well tolerated and the AbioCor is capable of effectively replacing the heart of
a calf. Following AbioCor heart replacement, the calves typically grow normally
and perform normal physical functions, including treadmill exercises. Vital
physiological parameters typically return to normal pre-operative levels within
one week after the implantation.

READINESS TRAINING OF THE SELECTED INITIAL MEDICAL CENTERS TO DEMONSTRATE
TEAM PREPAREDNESS. In preparation for initial clinical trials, we have selected
five U.S. medical centers as initial test sites. Surgical teams from two of
these centers have already substantially demonstrated readiness, a third is
currently undergoing training, and we plan to schedule the training of the
remaining two during the early part of the year 2000. We have also received
significant interest from international centers that wish to begin clinical
trials. We are in discussions with a number of international centers for this
purpose.

SUBMISSION OF APPLICATIONS TO THE APPROPRIATE REGULATORY AUTHORITIES. At
the end of 1996, we commenced our regulatory interaction process for the AbioCor
under the pre-IDE process. We have presented to the FDA key elements of our
proposed initial clinical plan, laboratory test protocols, process protocols and
materials compatibility evaluation. We expect that this information will become
part of the IDE submittal. In addition, we expect that we may be able to use
much of the data developed for our IDE application in our corresponding
international applications.

ABIOMED PRODUCTS AND PRODUCTS UNDER DEVELOPMENT

Our current principal products and products under development are the
AbioCor, a heart replacement device, the BVS, a temporary heart assist device,
and the AbioBooster and AbioVest, which are both permanent heart assist devices.

THE ABIOCOR IMPLANTABLE REPLACEMENT HEART.

The AbioCor is a battery-powered totally implantable replacement heart
system, which we expect will be the first such device to begin human clinical
trials. The AbioCor is referred to as totally implantable because it has been
designed to operate alternately on internal battery power or portable external
battery power, in both cases without wires or any other material penetrating the
patient's skin. The AbioCor is referred to as a replacement heart because it has
been designed for implantation in the space vacated by the removal of a
patient's diseased ventricles, where it will take over the full pumping function
of the heart. The AbioCor is intended for use as destination therapy by patients
with irreparably damaged hearts who are at risk of imminent death due to CHD or
severe CHF but whose other vital organs remain viable. We believe that
approximately 125,000 CHD and CHF patients per year could benefit from a
replacement heart in the U.S., and an approximately equal number of patients
could benefit from a replacement heart each year outside of the U.S.

In 1988, we began to receive funding for AbioCor development from the
National Heart, Lung and Blood Institute, known as the NHLBI, to support our
development, testing and validation of the AbioCor. We have maintained this
support by achieving various designated milestones. To date, the NHLBI has
provided over $20 million of the more than $40 million that we have invested to
date for the development of the AbioCor.

DESIGN OF THE ABIOCOR. The following diagram illustrates the principal
components of the AbioCor.

[DIAGRAM OF THE ABIOCOR SYSTEM IN A PATIENT APPEARS HERE, DEPICTING THORACIC
UNIT, RECHARGEABLE IMPLANTABLE BATTERY, IMPLANTABLE CONTROL AND MONITORING
DEVICE, TRANSCUTANEOUS ENERGY TRANSFER SYSTEM AND EXTERNAL BATTERY PACK AND
MONITORING SYSTEM.]

The AbioCor system consists of the following principal components:

- A thoracic unit, or "replacement heart," which includes two artificial
ventricles with their associated valves and a hydraulic pumping system.
The unit weighs approximately two pounds and provides complete blood
circulation to the lungs and the rest of the body. The ventricles and
their associated valves contain seamless surfaces made of our proprietary
blood-contacting material, Angioflex, and specialized geometries which
result in flow patterns designed to reduce the risk of blood cell damage
and blood clots. Our current configuration of the thoracic unit is sized
for patients with relatively large chest cavities. If our testing of this
configuration is successful, we plan to develop thoracic units of
different sizes to fit other patients.

- A rechargeable implantable battery, which allows the AbioCor to operate
without any external power supply for limited periods of time. The battery
technology in the AbioCor is lithium-based and designed by a third party
that has expertise in batteries for medical devices. We have developed a
recharging circuit that we believe is considerably more reliable than the
recharging circuit employed in most consumer electronics today.

- A microprocessor-based implantable electronic device that controls and
monitors the thoracic unit and provides radio communication with an
external monitor affording patients and caregivers the opportunity for
real-time information on its operating status.

- An across-the-skin, or transcutaneous, energy transmission system, which
eliminates the need for wires penetrating the patient's skin and the
inherent associated risks of infection. It transfers the power to operate
the AbioCor system and to recharge the implantable battery without
tethering the patient to an external drive console.

- An external rechargeable battery pack and monitor designed to be worn by
the patient. These components supply primary power to the system, allow
patient mobility, provide system diagnostic information, and recharge the
implanted back-up battery as needed. We anticipate that in the first
clinical trials of the AbioCor, the patient may remain under sustained
medical supervision and a portable monitoring device will be used in place
of the patient-worn external battery pack and monitor.

Our AbioCor design is intended both to extend life and to provide patients
with a good and productive quality of life. Among the quality-of-life features
of AbioCor design are quiet heart valves, elimination of all post-surgical
penetration of the skin, elimination of the need for the patient to be tethered
to a large external drive console, and expected minimal need for
anti-coagulation treatments and immuno-suppression therapies. The AbioCor system
is designed for both low maintenance and low patient involvement.

We have also created tools and methods intended to make the AbioCor system
as easy to implant as possible. These tools include quick-connectors for
relatively easy attachment of the AbioCor to the human anatomy and a virtual
surgery software tool to allow for the simulated implant of the AbioCor into a
three-dimensional software model of the anatomy of a particular patient prior to
opening that patient's chest.

EVOLUTION OF HEART REPLACEMENT TECHNOLOGY. The development of the AbioCor
has included extensive work in the areas of blood compatible surfaces, blood
compatible flow, fabrication techniques for seamless blood pumps and valves,
advanced pumping mechanisms, physiological control, energy transfer, anatomical
fit and surgical techniques. As such, the AbioCor incorporates technology
designed to address the clinical limitations experienced by earlier mechanical
replacement hearts. One earlier attempt was the Jarvik-7 heart from
Symbion, Inc., which was implanted in a small number of patients beginning in
1982. Although much was learned from these pioneering efforts, the technology
available at that time would not support a totally implanted system. The Symbion
heart required a tube

penetrating the skin and a large external console that severely restricted
patient mobility. When initially used in patients, there were complications
relating to infection, stroke and anatomical fit.

In recent years, CardioWest Technologies, Inc. introduced an improved
version of the Symbion heart into clinical trials as a bridge-to-transplant
device. In the most recently published results, 91 patients had received this
mechanical replacement heart worldwide. The majority of these patients have been
successfully supported on this device until transplant. The longest implant
duration was approximately six months, with an average bridge duration of
approximately one month. While the CardioWest device is limited to
bridge-to-transplant trials in a hospital setting because it tethers the
patients to a large external console, it does provide further evidence that a
mechanical heart can be successfully used to replace the human heart in order to
extend life.

We believe that advances in medical knowledge and technology have permitted
us to design the AbioCor to avoid some of the problems that caused earlier
replacement hearts to fail. In addition, the miniaturization of electronics and
advances in the reliability of electronic systems allow for device controls to
be fully implanted today, which eliminates the need for tethering patients to
large external control devices. Computer-aided design and virtual surgery tools
have allowed us to adapt the design of the AbioCor for human fit and evaluate
that fit prior to implantation.

PREPARATION FOR CLINICAL TRIALS. In preparation for initial AbioCor
clinical trials, we selected the following leading U.S. medical centers as test
sites for initial clinical trials:

- Brigham and Women's Hospital and the Massachusetts General Hospital,
Boston

- Hahnemann University Hospital, Philadelphia

- Jewish Heart Hospital, Louisville

- Texas Heart Institute, Houston

- UCLA Medical Center, Los Angeles

We have worked with each of these centers for many years in connection with the
BVS and believe that each of the centers is well positioned to contribute to the
AbioCor clinical trials. We are also in discussions with selected centers
outside the U.S. that have expressed interest in participating in international
clinical trials.

Our goal is to initiate clinical trials of the AbioCor by the end of the
year 2000. To achieve this goal, the AbioCor system and its components continue
to be tested through a variety of laboratory and animal tests. We are investing
significant resources to demonstrate the performance, durability and reliability
levels necessary to conduct initial clinical trials. A significant portion of
AbioCor testing that we believe is required for initial clinical trials has been
completed, however, certain of these tests must be repeated under formal
protocols prior to seeking approval to enter clinical trials. In addition, we
continue to consult with regulatory authorities, leading medical centers and
physicians to define protocols and patient populations for these trials.

COMPETITIVE POSITION. We believe that the investment we have made in
AbioCor development, including building manufacturing facilities, extensive
device testing and regulatory preparations, positions us well to be first to
enter clinical trials for, as well as to commercialize, a totally implantable
heart replacement device. No such device is clinically or commercially available
today. We believe that our closest competitor with an advanced design of a heart
replacement device is Pennsylvania State University, in collaboration with third
party manufacturers. Pennsylvania State University was the only applicant other
than ABIOMED to qualify for the last round of funding from the NHLBI, which was
awarded in 1996. To qualify for such funding, both ABIOMED and Pennsylvania
State University demonstrated to the satisfaction of NHLBI that the basic design
of its system functioned adequately in laboratory and animal models.

We will not be able to evaluate fully the competitiveness of the AbioCor
with other replacement hearts unless and until each of the products is
commercially available. However, we believe that the AbioCor will compete based
on clinical outcomes, the quality of life it provides, cost effectiveness,
clinical support and customer relationships. For example, we may compete
favorably on the basis of cost because we manufacture the valves for the AbioCor
at a cost which we believe is considerably below the cost of purchasing the
valves from third parties, and because we manufacture all of the
blood-contacting surfaces and valves out of our proprietary blood-contacting
material, Angioflex. In addition, we believe our design will result in the need
for less frequent invasive maintenance than other approaches, resulting in an
improved quality of life. We also believe that our experience in regulatory
affairs, manufacturing, and the marketing of devices to cardiac surgeons will
aid us competitively.

We believe there are significant differences that distinguish an implantable
replacement heart from a VAD, and that a need exists for both types of devices.
We believe that devices being developed for destination therapy must be
implantable rather than external to the body in order to address patients'
quality-of-life needs. Implantable VADs, referred to as left ventricular assist
devices or LVADs, are being developed to attach to a patient's diseased heart
and provide pumping support to the left ventricle only. By contrast, the AbioCor
will replace the diseased ventricles of the heart and take over the pumping
functions of both ventricles. Patients for whom we believe a replacement heart
would be preferable to a VAD include those with massive heart damage, severe
rhythm disorders, blood clots in the ventricles, severe lung disease,
ventricular rupture, chronic right ventricle failure or heart transplant
rejection. We also believe that cardiac surgeons will adopt replacement hearts
as the preferred technology over LVADs once the reliability of both devices is
clinically demonstrated for multiple-year durations.

COST EFFECTIVENESS. We believe there is a significant need for
cost-effective therapies for heart disease. In the U.S., approximately
$100 billion was associated with CHD patients and approximately $21 billion was
associated with CHF patients in 1997. A significant proportion of these costs
was attributed to hospital support. Patients who suffer from heart disease often
receive medical treatment, either in a hospital or at home, for a number of
years prior to their deaths. As the lives of these patients are often restricted
as a result of their conditions and treatment, they often suffer from a reduced
quality of life, including shortness of breath and inability to work. Prior to
death, many heart failure patients are confined to bed and require monitoring
and other expensive forms of support. Approximately 35% of patients who have CHF
are hospitalized one or more times per year. The average length of stay for each
hospitalization for a CHF patient is seven to nine days, with cost that often
exceeds $2,000 per day.

We are developing the AbioCor with the intent to offer a cost-effective
treatment for end-stage heart failure patients. In addition, the AbioCor has the
potential to allow patients an opportunity to return to productive lives. This
would allow the medical system to save money by discharging the patient from the
hospital and allowing the person to become productive and lead a reasonably
normal life.

If the reliability of the AbioCor is clinically demonstrated for
multiple-year durations, it has the potential to be considerably less expensive
than heart transplantation over a five year period. One reason for this reduced
cost is that recipients of a mechanical replacement heart are not expected to
need immuno-suppression drugs. The blood and tissue contacting portions of the
AbioCor are constructed of inert and biocompatible materials, which typically do
not stimulate a patient's immune system. Other cost savings could result because
the patient can receive a replacement heart sooner and does not require
extensive tests for donor heart compatibility. While recipients of the AbioCor
will likely need to purchase new batteries periodically, we anticipate that the
annual cost of battery purchases will be significantly less than the cost of
immuno-suppression drugs for donor heart recipients.

The following table summarizes the approximate average costs incurred by a
heart transplant patient over a five-year period, based on data compiled in
1995:

AVERAGE 5-YEAR PER-PATIENT COST OF HEART TRANSPLANTATION

TRANSPLANT
WITHOUT TRANSPLANT AFTER
COST TYPE BRIDGE DEVICE BRIDGE DEVICE
- --------- ------------- ----------------

Drugs....................................................... $150,000 $150,000
Hospital, Professional and Laboratory Testing Fees.......... 97,000 242,000
Surgical Operation.......................................... 18,000 41,000
Organ Retrieval and Device Cost............................. 20,000 50,000
-------- --------
TOTAL................................................... $285,000 $483,000

The average cost of a heart transplant over a period of five years is
approximately $285,000 without the use of a bridge-to-transplant device and is
approximately $483,000 if a bridge-to-transplant device is used. Included in
these costs is approximately $150,000 for immuno-suppression drugs and
anti-rejection management. These amounts also include hospital, professional and
laboratory testing costs of approximately $97,000 for heart transplantation
without a bridge-to-transplant device and approximately $285,000 with such a
device. These costs reflect extended hospital stays and testing of heart
transplant patients required both before and after surgery while waiting for a
suitable donor heart and recovering from the transplant surgery. We believe that
the costs listed above may have increased in recent years due to increases in
the pricing of bridge-to-transplant devices. We also believe that the costs
listed above would be reduced if concerns related to recipient compatibility and
availability of donor heart supply are mitigated with a mechanical replacement
heart.

While developing the AbioCor, we introduced the BVS, a temporary
heart-assist device, which is currently being sold in the U.S. and international
markets. Certain key elements of the technology developed for the AbioCor, such
as Angioflex and our tri-leaflet heart valves, have been clinically tested in
the BVS and are currently in commercial use. In addition, the BVS has enabled us
to develop significant experience in areas such as research and development,
manufacturing, regulatory compliance, sales and marketing, and clinical support.
We believe our experience with the BVS in these areas will provide us with a
competitive advantage in commercializing the AbioCor.

THE BVS-5000 TEMPORARY HEART ASSIST DEVICE.

The BVS was the first heart assist device capable of assuming the full
pumping function of the heart to be approved by the FDA, and is the most widely
used heart assist device today, with over 3,000 patients supported to date. It
is a bridge-to-recovery device designed to provide a patient's failing heart
with full circulatory assistance while allowing the heart to rest, heal and
recover its function. The BVS can support the left, right or both ventricles of
the heart. The average age of patients supported with the BVS is 52, however the
BVS has been used to support patients as young as 9 and as old as 85.

The BVS is the only device that the FDA has approved for the temporary
treatment of all categories of patients with failing but potentially recoverable
hearts. The BVS is most frequently used in patients whose hearts fail to recover
function immediately following heart surgery. The FDA approved the BVS through
its rigorous pre-market approval process for use with these post-surgical
patients in November 1992. In 1996, the FDA approved use of the BVS for all
other categories of post-surgical patients with potentially reversible heart
failure. In 1997, the FDA approved use of the BVS with patients who had not just
undergone surgery, such as patients referred by a cardiologist as a result of
viral infections of the heart or certain heart attacks, expanding its use to the
temporary treatment of all patients with potentially reversible heart failure.

The following diagram illustrates the principal components of the BVS.

[DIAGRAM OF BVS ATTACHED TO A PATIENT APPEARS HERE, DEPICTING DRIVE AND
CONTROL CONSOLE, EXTERNAL BLOOD PUMPS AND CANNULAE.]

The BVS system consists of the following components:

- A computer-controlled pneumatic drive and control console, which
automatically adjusts the pumping rate, similar to the natural heart;

- Single-use external blood pumps, which provide pumping of blood for the
left, right or both sides of a patient's heart and are designed to emulate
the function of the natural heart; and

- Cannulae, which are specially designed tubes used to connect the blood
pumps to a patient's heart.

The integration of the cannulae, blood pumps and console creates an "external
heart" system with the ability to reduce the load on the heart, provide
pulsatile blood flow to vital organs and allow the heart muscles time to rest
and recover. The BVS is designed to be easy to use and does not require a
specially trained technician constantly to monitor or adjust the pumping
parameters.

The goal of the BVS is to facilitate the recovery of patients' hearts as
quickly as possible. Patients who recover under BVS support typically stabilize
in a period of less than one week. It generally takes three to five days for the
heart muscle to recover its biological energy in a post-cardiotomy patient, and
the partial healing of tissue damage frequently associated with post-cardiotomy
shock occurs over several days in cases in which the heart is not irreversibly
damaged. The BVS, although it is a VAD,

serves a different function than bridge-to-transplant devices, which are
intended for long-term use by patients awaiting a heart transplant.

The BVS is most frequently used to support patients who have undergone
open-heart surgery, when the heart cannot be successfully restarted and weaned
off the heart-lung machine used in surgery. The BVS can assume the full pumping
function of the heart for these patients while reducing certain risks associated
with extended support on the heart-lung machine, including bleeding, strokes and
blood cell damage. The traditional therapy for these patients has been the
combined use of drugs and intra-aortic balloon pumps. Intra-aortic balloon pumps
are capable of providing only a small enhancement to the pumping function of a
failing heart. Despite the availability of such therapy, approximately 12,000 of
these patients die each year, approximately half of whom are over the age of 75.
The health of many of the patients who die in this manner deteriorates over a
period of weeks with the patient either dying after incurring significant
expense, or running the risk of permanent damage to their other organs due to
inadequate blood flow.

Other categories of patients who can be supported by the BVS include those
suffering from viral myocarditis, a viral infection of the heart. For these
patients, the BVS assumes the full pumping function of the heart, allowing the
patient's immune system to defend against the virus. Other uses of the BVS
include supporting patients following failed heart transplants and supporting
the right ventricle of a patient's heart in conjunction with the implantation of
a device to assist the left ventricle. The BVS is typically used when the
patient's chances for survival are small. We are also exploring other potential
applications of the BVS, including its use in certain patients who have suffered
from a recent heart attack and its use as a staging device to support heart
failure patients prior to a permanent heart assist device or heart replacement.

Any hospital performing open-chest heart surgery may use the BVS. There are
approximately 900 of these hospitals in the U.S. and more than 1,000 such
hospitals outside the U.S. Since FDA approval of the BVS, we have primarily
focused on sales of the BVS to the largest heart surgery medical centers in the
U.S. As of September 30, 1999, approximately 435 medical centers in the U.S. had
purchased the BVS, including over 80% of the major U.S. centers that perform
more than 500 heart surgeries annually. In marketing the BVS, we are focusing on
selling additional consoles and disposable blood pumps to existing customers
with significant but less emphasis on adding new customers. Over half of current
BVS revenues are derived from sales of BVS single-use blood pumps to existing
customers after those customers have used the BVS to support patients. Our U.S.
list prices for the BVS system are $64,500 for a BVS console and $12,400 for a
BVS single-use blood pump and cannulae set. We are currently seeking to expand
our international sales of the BVS and are recruiting direct sales and support
teams for selected countries in Europe, while working with a third-party
distributor to pursue regulatory approval in Japan.

Since the BVS received FDA approval, we have made various improvements to
the BVS system, primarily to make it easier to use. We continue to enhance the
BVS product line and are developing improved blood pumps, cannulae and consoles.
We believe that some of these improvements may permit use of the BVS for
additional patient conditions.

THE ABIOBOOSTER AND THE ABIOVEST.

The AbioBooster is intended as a permanent heart-assist device that will
wrap around the heart without direct blood contact and actively help squeeze the
heart. We are designing the AbioBooster as a quality-of-life device for use in
patients with CHF who are not at imminent risk of death, but whose daily
activities are generally restricted due to their weakened hearts. The
AbioBooster consists of a flexible artificial plastic "muscle" that can be
wrapped around the heart to assist its contraction, thereby increasing blood
flow in order to restore quality of life to the patient. The AbioBooster is in
research and development, with prototype designs being evaluated and tested in
our laboratories and in animals.

The AbioVest, which is in an early stage of research, is intended as a
permanent implantable device to wrap around the hearts of certain patients with
CHF without creating the inherent risks of contacting the patient's flowing
blood. The intent of the AbioVest design is to help the heart passively by
preventing progressive heart enlargement.

OTHER PRODUCTS AND TECHNOLOGIES UNDER DEVELOPMENT.

We are using the technology and know-how that we have generated in
developing the AbioCor and the BVS to research and develop additional potential
cardiovascular products and related technologies. These new products and
technologies are in various stages of research and development, and include a
variety of specialized implantable and external rotary pumps. We are also
developing devices for use in minimally invasive surgery applications such as
tissue welding and vascular welding for the repair of small arteries. In
addition, research and development activities under our product development
programs incorporate certain technologies that have potential as separate
spin-off products. Examples include new implantable heart valves, implantable
energy transmission systems, implantable monitoring systems for remote
transmission and archival of physiological data, diagnostic software for virtual
surgery, advanced implantable instrumentation and electronics, and external
monitoring systems.

MEDICAL AND ETHICAL ADVISORY BOARDS

We maintain independent advisory boards for medical and ethical issues,
which we consult on a periodic basis. These advisory boards provide guidance to
help us develop products that address patient needs and are acceptable to
society. Our medical advisory board currently consists of ten physicians,
primarily leading cardiac surgeons and cardiologists, who are independent of
ABIOMED and are in addition to the physicians being trained at the selected
initial clinical sites for the AbioCor. Together, these physicians have a broad
range of experience in fields relevant to our products and products under
development.

We consult with leading experts in the field of medical ethics, and we are
in the process of establishing an independent advisory board for ethical issues.
We anticipate that our ethics advisory board will consist of five members
representing different backgrounds and interests. We expect that this board will
be an advocate for patients' interests and will assist us with a number of
matters in connection with clinical trials of the AbioCor. For example, we
anticipate that the board will participate in the evaluation of patients for
inclusion in the initial clinical trials and advise us regarding the bioethical
aspects of our regulatory protocols and public disclosures. The board is also
expected to interact with the internal review boards of medical centers in
conjunction with initial clinical trials and assist us in the review of clinical
trial data. We expect that our ethical advisory board will operate under
principles and procedures that conform to FDA and European Union requirements.

We believe that these advisory boards, together with our own internal
resources and the support of leading medical centers and physicians and other
third parties with which we collaborate, will continue to assist us in advancing
our current products and introducing new products that satisfy patient needs.

RESEARCH AND PRODUCT DEVELOPMENT

As of December 1, 1999, our research and development staff consisted of 103
professional and technical personnel, including 12 with PhDs or MD/PhDs and 35
engineers, many with advanced degrees, covering disciplines such as electronics,
software, reliability testing, fluid mechanics, physics and physiology. Our
research and development efforts are focused on the development of new products,
primarily related to mechanical heart assist and heart replacement, and the
continued enhancement of the BVS and related technologies. Our research and
development personnel are also involved in establishing protocols and monitoring
test data submissions to the FDA and corresponding foreign regulatory agencies
to obtain the necessary clearances and approvals for our products. We are

using sophisticated tools, such as three-dimensional computer-aided design
systems, and procedures in an effort to permit smooth transition of new products
from research to product development to manufacturing. We have substantial
expertise in electro-mechanical systems, cardiac physiology and experimental
surgery, blood-material interactions, fluid mechanics and hemodynamics, internal
and external electronic hardware, software, plastics processing, lasers, and
optical physics. We have applied this expertise to address challenges associated
with the safe and effective pumping of blood.

In 1997, we decided that the design of the AbioCor demonstrated sufficient
functionality and operational performance through laboratory and animal studies
to warrant accelerated product development efforts to bring the product to
clinical use. We expended $13.4 million on research and development during the
fiscal year ended March 31, 1999, $9.1 million during the fiscal year ended
March 31, 1998 and $3.8 million during the fiscal year ended March 31, 1997.
These amounts included $9.7 million in fiscal 1999, $8.5 million in fiscal 1998
and $1.6 million in fiscal 1997 for AbioCor development. Government contracts
and grants funded a substantial portion of these expenses, however we have used
our own resources to fund research and development expenses not covered by
government contracts and grants. Since our inception, U.S. government agencies,
particularly the NHLBI, have provided significant support to our product
development efforts. The most significant current funding comes from the NHLBI,
which supports our development of the AbioCor and AbioBooster. In May 1999, the
U.S. government appropriated the final $1.8 million under our current
$8.5 million AbioCor development contract. As of September 30, 1999, the backlog
of all government contracts and grants was $2.7 million, including $1.1 million
related to the AbioBooster. All of our government contracts and grants contain
provisions making them terminable for the convenience of the government and are
subject to government appropriations. We cannot assure that the government will
not terminate, reduce or delay the funding for any of our contracts. In
addition, we cannot assure that we will be successful in obtaining any new
government contracts or further extensions to existing contracts.

ASALES, CLINICAL SUPPORT, MARKETING AND FIELD SERVICE

We believe that the sales, clinical support, marketing and field service
teams that we have established for the BVS product line and the relationships
that we have developed with existing customers will be instrumental not only in
continuing to expand BVS usage and sales, but also in launching new products
such as the AbioCor.

We sell the BVS in the U.S. through direct sales and clinical support teams.
As of December 1, 1999, our BVS sales, clinical support, marketing and field
service teams in the U.S. included 38 full-time employees. Our sales force
focuses on BVS sales to new customers, upgrades of existing customers, and
increasingly, expansion of usage by existing customers. Our clinical support
group focuses on training and educating new and existing customers in order to
improve clinical outcomes and increase BVS blood pump usage. We believe that the
efforts of our clinical support group contribute significantly to the number of
lives saved by physicians using the BVS as well as usage and reorders of BVS
single-use blood pumps. We are increasingly focusing our sales and customer
support efforts on increasing BVS usage by existing customers with significant
delay or reductionbut less emphasis on adding new customers. Over half of fundingcurrent BVS revenues are
derived from sales of BVS single-use blood pumps to existing customers. We
believe that our sales and support teams and the reputation and relationships
they have helped us develop with our customers will be key assets for the
introduction of potential future products such as the AbioCor, BVS product
extensions and other products under development.

Building on our experience in the Company's
government contracts couldU.S., we are working to expand our
international sales efforts, both for the BVS and in preparation for the
AbioCor. We are working to accomplish this through distributors, including a
collaborative arrangement for distribution in Japan, and by selling directly in
selected European markets.

MANUFACTURING

We have over 10 years of experience in the manufacture of the BVS console,
BVS blood pumps, certain cannulae and related accessories. As of December 1,
1999, our manufacturing staff consisted of 30 people and our quality assurance
staff consisted of 14 people. The manufacture of our BVS blood pumps and
consoles includes assembly, testing and quality control. We manufacture key
blood-contacting components for the BVS blood pumps, including valves and
bladders, from our proprietary Angioflex polymer. We purchase a material adverse effect onmajority of the
Company's
business, financial conditionraw materials, parts and results of operations. See "Management's
Discussion and Analysis of Financial Conditions and Results of Operations" and
"Business--ABIOMED Products and Products under Development" and "--Strategic
Relationships."

DEPENDENCE ON LIMITED SOURCES OF SUPPLY

The Company relies on outside vendors to supply certainperipheral components used in the BVS consoles. We both
purchase and in its products under development. Certainmanufacture cannulae depending on the size and design of the
componentscannulae. Prior to 1999, we purchased all of the cannulae which were used with
the BVS. In 1999, we developed the know-how to manufacture our own cannulae
using materials purchased from others. Our BVS are supplied by sole source vendors or are custom made formanufacturing facility is
ISO-9001 certified and operates under the Company. From time to time, suppliers of certain componentsFDA's current Quality Systems
Regulations and Good Manufacturing Practices, known as QSR/GMP.

The manufacture of the AbioCor is based on processes that are similar to
many of the processes used with the BVS. Prior to 1997, we manufactured AbioCor
units one at a time in our research and development facility. In 1997, we
constructed a pilot manufacturing facility, which became fully operational in
1998 and has produced all of the more than 100 AbioCor systems manufactured and
tested since that time.

In October 1999, we commenced construction of new and larger manufacturing
facilities for both the AbioCor and the BVS. These new facilities are located in
the same approximately 80,000 square foot space that the Company's research and
development, sales and marketing and general and administrative group began
occupying in 1999 and is in the same industrial park as our current
manufacturing facilities. We are scheduled to occupy the new manufacturing areas
in 2000, at which time the majority of our operations will be consolidated in
one building. We believe that our current manufacturing facilities will permit
us to produce sufficient quantities of AbioCor and BVS products until the new
facilities are available, including sufficient quantities of the AbioCor for
clinical trials.

PROPRIETARY RIGHTS, PATENTS AND KNOW-HOW

We have indicated that they intenddeveloped significant know-how and proprietary technology, upon
which our business depends. To protect our know-how and proprietary technology,
we rely on trade secret laws, patents, copyrights, trademarks, and
confidentiality agreements and contracts. However, these methods afford only
limited protection. Others may independently develop substantially equivalent
proprietary information, gain access to discontinue,our trade secrets or have discontinued, makingdisclose such
components. In addition, certaintechnology without our approval.

A substantial portion of these components are supplied from single
sources due to quality considerations, costs or constraints imposed by
regulatory authorities. There are relatively few additional sources of supply
for such components and establishing additional or replacement suppliers for
such components cannot be accomplished quickly and may require FDA approval.
In the past, certain suppliers have announced that, due to government
regulation or in an effort to reduce potential product liability exposure,
they intend to limit or terminate sales of certain productsour intellectual property rights relating to the
AbioCor and the BVS is in the form of trade secrets, rather than patents. We
protect our trade secrets and proprietary knowledge in part through
confidentiality agreements with employees, consultants and other parties. We
cannot assure that our trade secrets will not become known to or be
independently developed by our competitors.

Of our 24 U.S. patents as of December 1, 1999, 4 relate to the AbioCor and 2
relate to the BVS. Of our 21 pending U.S. patent applications as of December 1,
1999, 11 relate to the AbioCor and 1 relates to the BVS. We also own a number of
corresponding patents and patent applications in a limited number of foreign
countries. Our patents may not provide us with competitive advantages. They may
also be challenged by third parties. Our pending or future patent applications
may not be approved. The patents of others may render our patents obsolete or
otherwise have an adverse effect on our ability to conduct business. Because
foreign patents may afford less protection than U.S. patents, they may not
adequately protect our proprietary information.

The medical industry. There can be no assurance that, if such an interruption weredevice industry is characterized by a large number of patents
and by frequent and substantial intellectual property litigation. Our products
and technologies could infringe on the

proprietary rights of third parties. We are currently involved in litigation
relating to occur,technology used in a component of the Company wouldAbioCor. See "--Legal
Proceedings." If third parties successfully assert infringement or other claims
against us, we may not be able to find suitable alternative supplies at
reasonable pricessell our products. In addition, patent or
wouldintellectual property disputes or litigation may be ablecostly, result in product
development delays, or divert the efforts and attention of our management and
technical personnel. If any such disputes or litigation arise, we may seek to
obtain requisite regulatory approvals inenter into a timely manner,royalty or licensing arrangement. However, such an arrangement may
not be available on commercially acceptable terms, if at all. Similarly,We may decide, in
the alternative, to litigate the claims or to design around the patented or
otherwise proprietary technology.

Some of our products have been developed in part under government contracts
that require us to manufacture a substantial portion of the products in the
U.S.. The government may obtain certain rights to use or disclose technical data
developed under those contracts. We retain the right to obtain patents on any
inventions developed under those contracts (subject to a non-exclusive,
non-transferable, royalty-free license to the government), provided we follow
prescribed procedures.

COMPETITION

Competition in the heart assist and heart replacement markets is intense and
subject to rapid technological change and evolving industry requirements and
standards. Many of the companies developing or marketing heart assist products
have substantially greater financial, product development, sales and marketing
resources and experience than ABIOMED. These competitors may develop superior
products or products of similar quality at the same or lower prices. Moreover,
improvements in current or new technologies may make them technically equivalent
or superior to our products in addition to providing cost or other advantages.
Other advances in medical technology, biotechnology and pharmaceuticals may
reduce the size of the potential markets for our products or render those
products obsolete.

No totally implantable replacement heart is commercially or clinically
available today. We are aware of other heart replacement device development
efforts in the U.S., Canada, Europe and Japan. We believe that our closest
competitor with respect to having an advanced design of a heart replacement
device is Pennsylvania State University, in collaboration with third party
manufacturers. We believe that if and when both the AbioCor and if the Company reachesPennsylvania
State University replacement heart are commercially available, the AbioCor will
compete based on the quality-of-life it provides, cost effectiveness, clinical
testing stagesupport and customer relationships.

In addition to the developers of itsimplantable replacement hearts, there are a
number of companies, including Thermo Cardiosystems, Inc., Novacor, a division
of Baxter International, Inc., and Arrow International, Inc. which are
developing permanent heart assist products, under development, itincluding implantable LVADs and
miniaturized rotary ventricular assist devices, that may findaddress markets that
overlap with certain components become more difficult to source from outside vendorssegments of the markets targeted by AbioCor. AbioCor may
compete with those devices for some patient groups, notably patients with severe
CHF due to predominant left ventricular heart failure. Thermo
Cardiosystems, Inc. has commenced clinical trials under an IDE for PMA approval
of LVADs for permanent heart assist. We believe that the product liability risk perceived by those vendors. The Company's inabilityAbioCor, LVADs and
other VADs, if developed and proven effective for destination therapy, will
generally be used to obtain acceptable components in a timely manner or to find suitable
replacements ataddress the needs of different patient populations, with an
acceptable cost would have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Business--Manufacturing."

FUTURE CAPITAL NEEDS AND UNCERTAINTY OF ADDITIONAL FUNDING

The Company is working on the research and development of several long-term
projects and is placing increased emphasis on developmentoverlap for certain segments of the TAH,heart failure population. We believe that
there is a need for both implantable LVADs and implantable replacement hearts as
destination therapies, and that when both technologies demonstrate the required
durability, surgeons will favor replacement hearts.

In addition to devices being developed for patients in need of heart
replacement, several companies and institutions are investigating
xenotransplantation, the transplantation of a heart from another species, as a
potential therapy. Most notably, some developers are investigating the use of
genetically engineered pig hearts as an alternative source of donor hearts. This
technology is still in its

formative stage and subject to a number of significant scientific challenges,
including controlling elevated immunologic reactions leading to heightened
rejection problems between cross-species grafting and concerns for cross-species
disease transmission to the recipient and the public at large. We believe that
this technology will not achieve practical application for decades, if ever.

The BVS is a device that can assume the full pumping function of the heart.
The FDA has approved the BVS as a bridge-to-recovery device for the treatment of
all patients with potentially reversible heart failure. In May 1998, Thoratec
Laboratories Corporation received FDA approval to market their device for
postcardiotomy recovery of the natural heart, which will result in significantly increased internally funded researchis one of the primary
patient categories addressed by the BVS. The Thoratec device was originally
approved for bridge-to-transplant and development expenditures. These costs include costsbridge-to-transplant continues to be the
primary use of pre-clinical trials and
regulatory approvals. The Company estimatesthe device. We are not aware of any other company that has
applied for FDA approval of a device that is directly competitive with the costBVS.
Approval by the FDA of developingproducts that compete directly with the TAHBVS could
increase competitive pricing and other pressures. We believe that we can compete
with such products based on cost, clinical utility and customer relations.

Our customers frequently have limited budgets. As a result, our products
compete against a broad range of medical devices and other therapies for these
limited funds. Our success will be significant. These costs maydepend in large part upon our ability to enhance
our existing products, to develop new products to meet regulatory and customer
requirements, and to achieve market acceptance. We believe that important
competitive factors with respect to the development and commercialization of our
products include costs
related to pre-clinical andthe relative speed with which we can develop products,
establish clinical utility, complete clinical trials and regulatory approvals. The
Company estimates that it will require significant additional funds in order
to complete the developmentapproval
processes, obtain reimbursement, and achieve regulatory approvalssupply commercial quantities of the TAHproduct
to the market.

THIRD-PARTY REIMBURSEMENT

We sell our BVS product and otherintend to sell most of our potential products
under development. Generally, estimates of long-term project
costs are extremely imprecise and cost overruns are common. As a result, there
can be no assurance that the Company will not require significantly more
resources to complete the development of the TAH and its other products. The
Company plans to fund this effort through a combination of the TAH Contract,
proceeds from the offering, existing resources, the possible sales of
additional securities and cash flow from sales of its existing products. Even
if the Company does not experience cost overruns, there can be no assurance
that the Company will be able to obtain sufficient funds to complete the
development of the TAH and other products. Moreover, the Company may require
additional funds to commence the manufacture and marketing of the TAH or any
of the Company's other products under development in commercial quantities, if
and when approved or cleared by the regulatory authorities. Failure of the
Company to obtain any required additional funding could delay product
development and otherwise materially and adversely affect the business of the
Company. There can be no assurance that the Company will be able to obtain
additional funding on favorable terms, if at all. See "Use of Proceeds" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

DEPENDENCE ON THIRD-PARTY REIMBURSEMENT

The Company's BVS product is, and most of its products under development are
intended to be, sold to medical institutions. Medical institutions and their
physicians typically seek reimbursement for the use of these products from
third-party payors, including Medicare, Medicaid, and private health insurers
and managed care organizations. As a result, market acceptance of the Company'sour current
and proposed products may depend in large part on the extent to which
reimbursement is available to medical institutions and their physicians for use of the Company'sour
products.

TheCoverage and the level of reimbursementpayment provided by United StatesU.S. and foreign third-party
payors varies according to a number of factors, including the medical procedure,
category, payor, location, outcome and cost. In the 12

United States,U.S., many private health care
insurance carriers follow the recommendations of the Health Care FinanceFinancing
Administration, ("HCFA"),or HCFA, which establishes guidelines for the reimbursementcoverage of
procedures, services and medical equipment and the payment of health care
providers treating Medicare and Medicaid patients. Internationally, medicalhealthcare reimbursement
systems vary significantly. In certain countries, medical center budgets are
fixed regardless of levels of patient treatment. In other countries, such as
Japan, reimbursement from government or third party payors must be applied for
and approved. As of the date of this Prospectus, under HCFA guidelines,prospectus, the amount that Medicare
reimbursesgenerally pays a medical institutionsinstitution for in-patient care of Medicare patients is
based on a number of considerations, including a patient's diagnosis regardless
of the category of
surgical procedures in which the BVS is used and incrementally reimburses
physiciansservices that are provided. Physicians however bill separately for the
use of the BVS.procedures that they perform. Medicare does not however, currently reimburse medical
institutions for the incremental cost of using the BVS above
the amount allowed for the reimbursement category of the surgical procedure.BVS. Certain private health
insurers and managed care providers provide incremental reimbursement to both
the medical institutions and their physicians.

The
Company is currently petitioning HCFA to assign a higher paying reimbursement
category whenever the BVS is used. In October 1995, HCFA established a special
"ICD-9" code for the BVS in an effort to more clearly track and evaluate
hospital and physician costs associated specifically with the BVS compared to
current reimbursement levels, so that HCFA can determine the appropriate
category and level of reimbursement. There can be no assurance that HCFA will
reassign the BVS to a higher paying category in a timely manner, if at all.47

No reimbursement levels have been established for the Company'sour products under
development, including the TAH.AbioCor. Prior to approving coverage for new medical
devices, most third-party payors require evidence that the product has received
FDA approval, European Union approval, or clearance for marketing, is safe and
effective and not experimental or investigational, and is medically necessary
and appropriate for the specific patient for whom the product is being used.
Increasing numbers of third-party payors require evidence that the procedures in
which the products are used, as well as the products themselves, are
cost-effective. There can be no assuranceHeart transplantation currently qualifies for reimbursement as
does bridge-to-transplant treatment with implantable VADs. Comparatively, we
believe that when the AbioCor product reaches maturity, it should cost less over
a five-year period than heart transplantation today and provide more ventricular
support than VADs. We believe that these factors should benefit the AbioCor when
we begin to seek reimbursement for it from third-party payors. However, we
cannot assure that the Company'sAbioCor or our other products under development will meet
thesethe criteria for coverage and reimbursement or that third-party payors will
reimburse physicians and medical institutions for the use of the products or that the level of
reimbursement will beat levels sufficient to supportencourage
the widespread use of the products. Furthermore, there can be no assurance that third-party payors will
continueBecause the AbioCor is an implantable
product designed to provideassist patients outside of the hospital environment, the
reimbursement for the use of BVSstandards or that such payors will
not reduce the current level of reimbursement support for the product. Failure to
achieve adequate reimbursement for its current or proposed products would have
a material adverse effect on the Company's business, financial condition and
results of operations.

POTENTIAL INADEQUACY OF PRODUCT LIABILITY INSURANCE

The Company's business involves the risk of product liability claims
inherent in the manufacture and marketing of life support systems. There are
many factors beyond the control of the Company that could result in the
failure of the BVS to sustain the life of a patient, the most important of
which is the condition of the patient prior to the use of the product. As a
result, many of the patients using the BVS do not survive. In addition, the
effectiveness of the Company's products could be adversely affected by the
reliability of the physicians, nurses and technicians using and monitoring the
use of the product, and the maintenance of the product by the Company's
customers. The failure of the BVS or any other life support system under
development by the Company to save a life could give rise to product liability
claims and result in negative publicity that could have a material adverse
effect on the Company's business, financial condition and results of
operations. The Company currently maintains product liability insurance,
subject to certain deductibles and exclusions. There can be no assurance that
this insurance will be sufficient to protect the CompanyAbioCor may
differ from product
liability claims, or that product liability insurance will continue to be
available to the Company at a reasonable cost, if at all.

The risk of product liability claims against the Company may increase as the
Company introduces new products under development, particularly products such
as the TAH intended for permanent life support. The TAH will have a finite
life and could cause unintended complications to other organs. The eventual
failure of the TAH could give rise to product liability claims, regardless of
whether the TAH has extended or improved the quality of the patient's life
beyond that expected without the use of the TAH. As a result of the additional

product liability risks that will be associated with the TAH and other
products under development by the Company, there can be no assurance that the
Company will be able to secure product liability insurance for these products,
when and if developed, or that such insurance will be sufficient to protect
the Company at an acceptable cost. The failure of the Company to be able to
obtain adequate product liability insurance, if any, for these products could
have a material adverse effect on its business, financial condition and
results of operations.

DEPENDENCE ON PATENTS AND PROPRIETARY RIGHTS

The Company's business depends significantly upon its proprietary
technology. The Company relies on a combination of trade secret laws, patents,
copyrights, trademarks and confidentiality agreements and other contractual
provisions to establish, maintain and protect its proprietary rights, all of
which afford only limited protection. There can be no assurance that others
will not independently develop substantially equivalent proprietary
information and techniques or otherwise gain access to the Company's trade
secrets or disclose such technology or that the Company can meaningfully
protect its trade secrets.

The Company has been issued or allowed 22 patents and has pending three
patent applications in the United States. The Company has obtained or applied
for corresponding patents for certain of these patents and patent applications
in a limited number of foreign countries. These patents relate to the BVS and
certain of its products under development including the TAH. The Company's
United States patents expire at various times from 2003 to 2016. There can be
no assurance that the Company's pending patent applications or any future
applications will be approved, that any patents will provide the Company with
competitive advantages or will not be challenged by third parties, or that the
patents of others will not render the Company's patents obsolete or otherwise
have an adverse effect on the Company's ability to conduct business. Because
foreign patents may afford less protection under foreign law than is available
under United States patent law, there can be no assurance that any such
patents issued to the Company will adequately protect the Company's
proprietary information. Others may have filed and may file patent
applications in the future that are similar or identical to those of the
Company. To determine the priority of inventions, the Company may have to
participate in interference proceedings declared by the United States Patent
and Trademark Office or opposition proceedings before a foreign patent office
that could result in substantial cost to the Company. No assurance can be
given that any such interfering patent or patent application will not have
priority over patent applications filed on behalf of the Company or that the
Company will prevail in any opposition proceeding.

The medical device industry is characterized by a large number of patents
and by frequent and substantial intellectual property litigation. There can be
no assurance that the Company's products and technologies do not infringe any
patents or proprietary rights of third parties. The Company has in the past
and may in the future be notified that it may be infringing intellectual
property rights possessed by others. Any intellectual property litigation
would be costly and could divert the efforts and attention of the Company's
management and technical personnel, which could have a material adverse effect
on the Company's business, financial condition and results of operations.
There can be no assurance that infringement claims will not be asserted in the
future or such assertions, if proven to be true, will not prevent the Company
from selling its products or materially and adversely affect the Company's
business, financial condition and results of operations. If any such claims
are asserted against the Company's intellectual property rights, it may seek
to enter into a royalty or licensing arrangement. There can be no assurance,
however, that a license will be available on reasonable terms, or at all. The
Company could decide, in the alternative, to resort to litigation to challenge
such claims or to design around the patented technology. Such actions could be
costly and would divert the efforts and attention of the Company's management
and technical personnel, which would materially and adversely affect the
Company's business, financial condition and results of operations.

property rights of this third party. There can be no assurance that the
Company would prevail in the defense of an infringement claim, if made. If
infringement of the proprietary rights of the third party were determined to
exist, the Company would either be required to use or develop alternative
technology or to seek a license of the technology. There can be no assurance
that the Company could obtain a license of this technology on a timely basis
or on reasonable terms, if at all. In addition, there can be no assurance that
the Company could develop or license alternative technology on a timely basis,
if at all. As a result, a determination of infringement could have a material
adverse affect on the Company's development of the TAH and on its business,
financial condition and results of operations. Any patent or intellectual
property dispute or litigation could result in product development delays,
would be costly, could divert the efforts and attention of the Company's
management and technical personnel and could have a material adverse effect on
the Company's business, financial condition and results of operations. See
"Business--Patents and Proprietary Rights."

CONTROL BY MANAGEMENT

Upon completion of this offering, the Company's directors, officers and
their affiliates will beneficially own approximately 27.2% of the outstanding
Common Stock of the Company (as determined in accordance with the rules of the
Securities and Exchange Commission). As a result, these stockholders will be
able to exert substantial influence over actions requiring stockholder
approval, including the election of directors, amendments to the Company's
Restated Certificate of Incorporation, mergers, sales of assets or other
business acquisitions or dispositions. See "Principal and Selling
Stockholders."

ANTI-TAKEOVER PROVISIONS; RIGHTS AGREEMENT; ISSUANCE OF PREFERRED STOCK

The Company's Restated Certificate of Incorporation ("Certificate of
Incorporation") and Amended and Restated By-laws ("By-laws") contain certain
provisions that could have the effect of deterring certain mergers, tender
offers, proxy contests or other future takeover attempts which holders of some
or even a majority of the outstanding stock believe to be in their best
interest, and may make removal of management more difficult even if such
removal would be deemed to be beneficial to stockholders generally. These
provisions could limit the price that certain investors might be willing to
pay in the future for shares of the Company's Common Stock. In addition, the
Company has adopted a Rights Agreement, pursuant to which the Company has
distributed to its stockholders rights to purchase shares of junior
participating preferred stock ("Rights Agreement"). Upon certain triggering
events, such rights become exercisable to purchase the Company's Common Stock
at a price substantially discounted from the then applicable market price of
the Company's Common Stock. The Rights Agreement could generally discourage a
merger or tender offer involving the securities of the Company that is not
approved by the Company's Board of Directors by increasing the cost of
effecting any such transaction and, accordingly, could have an adverse impact
on stockholders who might want to vote in favor of such merger or participate
in such tender offer. In addition, shares of the Company's Class B Preferred
Stock ("Preferred Stock") may be issued in the future without further
stockholder approval and upon such terms and conditions, and having such
rights, privileges and preferences, as the Board of Directors may determine.
The rights of the holders of Common Stock will be subject to, and may be
adversely affected by, the rights of any holders of Preferred Stock that may
be issued in the future. The issuance of Preferred Stock, while providing
desirable flexibility in connection with possible acquisitions and other
corporate purposes, could have the effect of making it more difficult for a
third party to acquire, or of discouraging a third party from acquiring, a
majority of the outstanding voting stock of the Company. The Company has no
present plans to issue any shares of Preferred Stock. The Certificate of
Incorporation and By-laws impose various procedural and other requirements
that could make it more difficult for stockholders to effect certain corporate
actions. See "Description of Capital Stock--Anti-takeover Effect of Provisions
of the Certificate of Incorporation and By-laws, Rights Distribution and
Delaware Law."

POSSIBLE VOLATILITY OF SHARE PRICE

There has been a history of significant volatility in the market price for
shares of the Common Stock and shares of other companies in the medical
products and biomedical technology fields. Factors such as the announcement of
new products and the achievement of developmental and regulatory milestones by
the

Company or its competitors have caused and could cause the price of the Common
Stock to fluctuate significantly. Moreover, although there has been a public
trading market for the Common Stock since 1987, there have been periods of
limited trading activity resulting in further volatility of the stock price.
Additionally, the spread between the ask and bid prices for the Common Stock on
the Nasdaq National Market System has been relatively wide, potentially
discouraging investor trades in the Common Stock. Further, in the event that in
some future fiscal quarter the Company's revenues were below the expectations
of public market analysts and investors, the price of the Common Stock could be
materially adversely affected. In addition, stock markets have experienced
extreme price and volume trading volatility in recent years. This volatility
has had a substantial effect on market prices of securities of many medical
technology companies for reasons frequently unrelated or disproportionate to
the operating performance of the specific companies. These broad market
fluctuations may adversely affect the market price of the Common Stock. See
"Price Range of Common Stock."

SHARES ELIGIBLE FOR FUTURE SALE

Sales of a substantial number of shares of Common Stock in the public market
following this offering (pursuant to Rule 144 or otherwise), as well as sales
of shares issued upon exercise of employee stock options, could adversely
affect the prevailing market price of the Common Stock and impair the Company's
ability to raise additional capital through the sale of equity securities. Of
the approximately 8,264,556 shares of Common Stock outstanding at September 30,
1997, approximately 5,391,682 shares are eligible for resale in the public
market without restriction and approximately 1,474,318 shares are eligible for
resale subject to the provisions of Rule 144. The remaining 1,398,556 shares of
Common Stock are "restricted securities"devices used solely within the meaning of Rule 144, of
which 2,000 shares and 1,396,556 shares will not be eligible for resale until
January and July 1998, respectively, the expiration of the one-year holding
period under Rule 144, and then only in accordance therewith. In addition,
there are 964,410 shares subject to outstanding options, which shares have been
registered on Form S-8 and will therefore be subject to resale in the public
market either without restriction or subject to the provisions of Rule 144. The
holders of 1,396,556 shares of Common Stock have certain registration rights,
commencing on July 14, 1998. The Company's executive officers, directors,
Genzyme Corporation ("Genzyme") and each of the Selling Stockholders who, in
the aggregate hold approximately 2,872,874 shares of Common Stock (2,722,874
shares of Common Stock after the sale of shares of Common Stock by the Selling
Stockholders in the offering) have agreed that, for a period of 90 days from
the date of this Prospectus, subject to certain limited exceptions, they will
not, directly or indirectly, without the prior written consent of BancAmerica
Robertson Stephens, sell, offer, contract to sell, pledge, grant any option to
purchase or otherwise dispose of any shares of Common Stock or any securities
convertible into or exchangeable for, or any rights to purchase or acquire,
Common Stock held by them, thereafter acquired by them or which may be deemed
to be beneficially owned by them. See "Certain Transactions" and
"Underwriting."

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 2,250,000 shares of
Common Stock offered by the Company hereby are estimated to be $46.7 million
($54.2 million if the Underwriters' over-allotment option is exercised in
full), assuming an offering price of $22.125 per share and after deducting
estimated underwriting discounts and commissions and offering expenses payable
by the Company. The Company will not receive any proceeds from the sale of
shares of Common Stock by the Selling Stockholders.

The Company expects to use the net proceeds from this offering for research
and development, expansion of its manufacturing capabilities and other general
corporate purposes. In particular, the Company expects that a substantial
portion of the net proceeds will be used to support the TAH and other
development efforts, although there can be no assurance that the net proceeds
will be so used. The Company may also use a portion of the net proceeds for
strategic acquisitions of businesses, products or technologies complementary
to the Company's business. The Company does not have any commitments to make
any such acquisitions and has not allocated a specific amount of the net
proceeds for this purpose. Pending such uses, the Company plans to invest the
net proceeds of the offering in short-term, interest-bearing investment-grade
securities.

DIVIDEND POLICY

The Company has never declared or paid cash dividends on its capital stock
and does not plan to pay any cash dividends in the foreseeable future. The
Company's current policy is to retain all of its earnings to finance future
growth.

PRICE RANGE OF COMMON STOCK

The Company's Common Stock is traded on the Nasdaq National Market under the
symbol "ABMD." The following table sets forth, for the periods indicated, the
high and low sales prices per share of Common Stock, as reported by the Nasdaq
National Market.

HIGH LOW
------- -------

FISCAL YEAR ENDED MARCH 31, 1996
First Quarter................................................... $ 9 $ 6
Second Quarter.................................................. 13 1/4 6 7/8
Third Quarter................................................... 16 8 3/4
Fourth Quarter.................................................. 15 1/4 11 1/2
FISCAL YEAR ENDED MARCH 31, 1997
First Quarter................................................... 18 12 1/2
Second Quarter.................................................. 18 1/4 10 1/8
Third Quarter................................................... 18 1/4 11 1/2
Fourth Quarter.................................................. 13 1/4 9 1/2
FISCAL YEAR ENDING MARCH 31, 1998
First Quarter................................................... 16 9 1/2
Second Quarter.................................................. 19 13 1/2
Third Quarter (through October 9, 1997)......................... 23 1/8 16 3/4

The last reported sale price of the Common Stock on the Nasdaq National
Market on October 9, 1997 was $22.125 per share. As of September 30, 1997,
there were approximately 337 holders of record of the Company's Common Stock,
including multiple beneficial holders at depositories, banks and brokers
listed as a single holder in the street name of each respective depository,
bank or broker.

CAPITALIZATION

The following table sets forth as of September 30, 1997 the unaudited actual
capitalization of the Company, and such capitalization as adjusted to reflect
the receipt of the estimated net proceeds from the sale of 2,250,000 shares of
Common Stock being offered by the Company hereby at an assumed offering price
of $22.125 per share and after deducting estimated underwriting discounts and
commissions and offering expenses payable by the Company.

SEPTEMBER 30, 1997
------------------------
ACTUAL AS ADJUSTED
------------ -----------
(in thousands)

Long-term debt....................................... $ -- $ --
------------ -----------
Stockholders' investment (1):
Class B Preferred Stock, $0.01 par value, 1,000,000
shares authorized; no shares issued and
outstanding; ..................................... -- --
Common Stock, $.01 par value, 25,000,000 shares
authorized; 8,264,556 shares issued and
outstanding and 10,514,556 shares issued and
outstanding as adjusted........................... 82,646 105,146
Additional paid-in capital......................... 53,221,747 99,867,419
Accumulated deficit................................ (20,655,947) (20,655,947)
------------ -----------
Total stockholders' investment................... 32,648,446 79,316,618
------------ -----------
Total capitalization........................... $ 32,648,446 $79,316,618
============ ===========

- --------

(1) Based on the number of shares outstanding as of September 30, 1997.
Excludes 964,410 shares of Common Stock reserved for issuance upon the
exercise of stock options outstanding as of September 30, 1997 at a
weighted average exercise price of $10.81 per share. See Note 6 to
Consolidated Financial Statements.

SELECTED CONSOLIDATED FINANCIAL DATA

The following table contains certain selected consolidated financial data of
the Company and is qualified in its entirety by the more detailed Consolidated
Financial Statements included elsewhere in this Prospectus. The consolidated
statements of operations data for the fiscal years ended March 31, 1995, 1996
and 1997, and the consolidated balance sheet data as of March 31, 1996 and
1997, have been derived from the Consolidated Financial Statements, which
statements have been audited by Arthur Andersen LLP, independent public
accountants, and are included elsewhere in this Prospectus. The consolidated
statement of operations data for the fiscal years ended March 31, 1993 and
1994, and the consolidated balance sheet data as of March 31, 1993, 1994 and
1995 have been derived from the Company's consolidated financial statements,
which statements have been audited by Arthur Andersen LLP and are not included
in this Prospectus. The consolidated statement of operations data for the six
months ended September 30, 1996 and 1997, and the consolidated balance sheet
data as of September 30, 1997 have been derived from unaudited Consolidated
Financial Statements included elsewhere in this Prospectus. These unaudited
financial statements have been prepared on the same basis as the audited
financial statements and, in the opinion of management, include all
adjustments and reclassifications (consisting only of normal recurring
adjustments and reclassifications) necessary to present fairly the financial
condition and results of operations for the periods presented. The results for
the six months ended September 30, 1997 are not necessarily indicative of the
results that may be expected for the full year. This data should be read in
conjunction with the Consolidated Financial Statements and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
appearing elsewhere herein.

SIX MONTHS
ENDED
YEAR ENDED MARCH 31, SEPTEMBER 30,
------------------------------------------- -------------
1993 1994 1995 1996 1997 1996 1997
------- ------- ------- ------- ------- ------ ------
(in thousands, except per share data)

STATEMENT OF OPERATIONS
DATA:
Revenues:
Products.............. $ 1,709 $ 4,648 $ 6,893 $ 9,725 $12,311 $5,760 $9,324
Contracts............. 1,736 2,027 2,337 3,118 4,151 1,754 3,680
------- ------- ------- ------- ------- ------ ------
Total revenues...... 3,445 6,675 9,230 12,843 16,462 7,514 13,004
Costs and expenses:
Cost of products...... 2,042 2,211 3,289 3,921 5,361 2,123 3,438
Research and
development (1)...... 2,097 2,431 2,464 3,218 3,833 1,781 3,654
Selling, general and
administrative....... 3,803 4,553 4,278 5,741 7,068 3,229 4,970
------- ------- ------- ------- ------- ------ ------
Total costs and
expenses........... 7,942 9,195 10,031 12,880 16,262 7,133 12,062
------- ------- ------- ------- ------- ------ ------
Income (loss) from
operations............. (4,497) (2,520) (801) (37) 200 381 942
Interest and other
income................. 604 537 449 528 535 256 417
------- ------- ------- ------- ------- ------ ------
Net income (loss)....... $(3,893) $(1,983) $ (352) $ 491 $ 735 $ 637 $1,359
======= ======= ======= ======= ======= ====== ======
Net income (loss) per
common and common
equivalent share....... $ (0.60) $ (0.31) $ (0.05) $ 0.07 $ 0.10 $ 0.09 $ 0.17
======= ======= ======= ======= ======= ====== ======
Weighted average number
of common and common
equivalent shares
outstanding............ 6,441 6,461 6,512 6,995 7,162 7,196 7,869

MARCH 31,
--------------------------------------- SEPTEMBER 30,
1993 1994 1995 1996 1997 1997
------- ------- ------- ------- ------- -------------
(in thousands)

BALANCE SHEET DATA:
Cash, cash equivalents
and short-term
marketable securities.. $ 9,486 $ 3,067 $ 4,491 $10,647 $ 9,361 $24,312
Working capital......... 10,727 6,043 6,304 12,735 12,850 29,109
Long-term investments... 4,307 7,219 6,533 -- -- --
Total assets............ 17,504 15,426 14,730 16,209 18,547 36,348
Long-term debt.......... 3,820 3,773 -- -- -- --
Total stockholders'
investment (2)......... 12,460 10,589 13,305 13,945 15,225 32,648

- -------
(1) Research and development expenses include certain contract costs. See Note
1(e) to Consolidated Financial Statements.

(2) No cash dividends on Common Stock were declared or paid during any of the
periods presented.

MANAGEMENT'S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF
OPERATIONS

The following Management's Discussion and Analysis of Financial Condition and
Results of Operations contains forward-looking statements which involve risks
and uncertainties. The Company's actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including those set forth under "Risk Factors" and elsewhere in this
Prospectus.

OVERVIEW

The Company is a leader in the research and development of cardiac assist and
heart replacement technology. The Company developed, manufactures and sells the
BVS, a temporary cardiac assist device, and is developing a totally implantable
artificial heart. The Company's operating results reflect the dual activities
of commercial operations and investments in the research and development of new
technologies.

The BVS is a temporary cardiac assist device designed to provide a patient's
failing heart with full circulatory assistance while allowing the heart to
rest, heal and recover its function. The BVS is the only device that can
provide full circulatory assistance approved by the FDA as a bridge-to-recovery
device for the treatment of patients with reversible heart failure. Since
fiscal 1994, the first full year of marketing the BVS in the United States,
increasing new orders and reorders of the BVS have made product revenues the
largest contributor to the Company's revenues. The Company has focused its
initial selling efforts of the BVS on the approximately 300 medical centers
that perform the most heart surgery procedures, teaching centers and transplant
centers. As of September 30, 1997, the BVS had been purchased by over 275
medical centers in the United States, many of which are within the group of
medical centers initially targeted. The BVS is comprised of a pneumatic drive
and control console, single-use external blood pumps and cannulae. During the
six months ended September 30, 1997 and fiscal 1997, revenues from BVS sales
represented greater than 90% of the Company's total product revenues with no
single customer representing more than 5% of product revenues.

Research and development is a significant portion of the Company's
operations. The Company's research and development efforts are focused on the
development of new products, primarily related to cardiac assist and heart
replacement, and the continued enhancement of the BVS and related technologies.
The Company's research and development expenses have been primarily
attributable to research and development under the Company's government
contracts and grants. Revenues from contract research and development and total
research and development costs have increased in each of the past three years.
The Company's government-sponsored research and development contracts generally
provide for payment on a cost-plus-fixed-fee basis. The Company accounts for
revenue under these contracts and grants as work is performed, provided that
the government has appropriated sufficient funds for the work. There can be no
assurance that the government will not terminate, reduce or delay the funding
for any of the Company's contracts. In addition, there can be no assurance that
the Company will be successful in obtaining any new government contracts or
further extensions to existing contracts.

The Company plans to use its own resources to fund the further development of
the TAH in amounts significantly in excess of the funding provided under the
Company's TAH Contract. The Company estimates that the development of the TAH,
including conducting pre-clinical and clinical studies and obtaining regulatory
approvals, will require substantial funds. As a result, the Company believes
that it is likely that the Company will incur losses, potentially as soon as
the quarter ending December 31, 1997. There can be no assurance that the
Company will be able to develop the TAH, or receive the required regulatory
approvals to commence clinical trials on a timely basis or within budget, if at
all.

The Company has significant net tax operating loss carryforwards and tax
credit carryforwards. As a result, income tax expense incurred during the
periods presented have not been material. See Note 4 to Consolidated Financial
Statements.

RESULTS OF OPERATIONS

The following table sets forth certain consolidated statements of operations
data for the periods indicated as a percentage of total revenues:

SIX MONTHS
ENDED
YEAR ENDED MARCH 31, SEPTEMBER 30,
----------------------- --------------
1995 1996 1997 1996 1997
------ ------ ------ ------ ------

Revenues:
Products.................. 74.7% 75.7% 74.8% 76.7% 71.7%
Contracts................. 25.3 24.3 25.2 23.3 28.3
------ ------ ------ ------ ------
Total revenues.......... 100.0 100.0 100.0 100.0 100.0
Costs and expenses:
Cost of products.......... 35.6 30.5 32.6 28.2 26.5
Research and development.. 26.7 25.1 23.3 23.7 28.1
Selling, general and
administrative........... 46.4 44.7 42.9 43.0 38.2
------ ------ ------ ------ ------
Total costs and
expenses............... 108.7 100.3 98.8 94.9 92.8
------ ------ ------ ------ ------
Income (loss) from
operations................. (8.7) (0.3) 1.2 5.1 7.2
Interest and other income... 4.9 4.1 3.2 3.4 3.2
------ ------ ------ ------ ------
Net income (loss)........... (3.8)% 3.8% 4.4% 8.5% 10.4%
====== ====== ====== ====== ======

Six Months Ended September 30, 1997 and 1996

Revenues. Total revenues, excluding interest income, increased by 73% to
$13.0 million in the six months ended September 30, 1997 from $7.5 million in
the six months ended September 30, 1996. This increase was attributable to an
increase in both product and contract revenues.

Product revenues increased by 62% to $9.3 million in the six months ended
September 30, 1997 from $5.8 million in the six months ended September 30,
1996. This increase was primarily attributable to increased unit sales of BVS
blood pumps, consoles and related accessories. Product revenues during the six
months ended September 30, 1997 included a $640,000 reduction in the Company's
backlog for BVS blood pumps. This backlog had primarily resulted from the
Company's voluntary recall of certain production lots of single-use BVS blood
pumps during the quarter ended December 31, 1996. As of September 30, 1997,
the Company's backlog of unshipped customer orders was $370,000. More than 90%
of total product revenues in the six months ended September 30, 1997 were
derived from domestic sources.

Contract revenues increased by 110% to $3.7 million in the six months ended
September 30, 1997 from $1.8 million in the six months ended September 30,
1996. This increase primarily reflected increased activity under the Company's
TAH Contract. The Company accounts for revenue under its government contracts
and grants as work is performed, provided that the government has appropriated
sufficient funds for the work. Through September 30, 1997, the government had
appropriated $4.9 million of the $8.5 million Phase II TAH Contract amount.
The original government appropriation schedule calls for no further
appropriation for the TAH Contract until October 1998. This schedule is
subject to change at the discretion of the government. During the six months
ended September 30, 1997, the Company's expenditures under the TAH Contract
exceeded the appropriated amount, resulting in the Company recognizing as
revenue all of the remaining $3.2 million balance of the $4.9 million
appropriated under the TAH Contract.

While the Company currently plans to further increase its expenditures in
connection with the development of the TAH, the Company will not recognize any
further contract revenues under the TAH Contract until such time as additional
funds are appropriated under the TAH Contract, if ever. The Company believes
that certain of its costs incurred prior to further appropriations may be
reimbursable under the TAH

Contract, if and when additional appropriation under the TAH Contract is made.
Due to the Company's accelerated TAH development activity and the timing of
government appropriations, the Company believes that it will experience
significant quarterly fluctuations in contract revenues. The Company also
believes that its total expenses to complete the development of the TAH will
significantly exceed the remaining $3.6 million TAH Contract amount. As a
result, the Company believes that it is likely that the Company will again
incur losses, potentially as soon as the quarter ending December 31, 1997.

As of September 30, 1997, the Company's total backlog of research and
development contracts and grants was $8.7 million, including the remaining
$3.6 million under the TAH Contract and $3.0 million for Heart Booster
research and development. Funding for the Company's government research and
development contracts is subject to government appropriation, and all of these
contracts contain provisions which make them terminable at the convenience of
the government.

Cost of Products. Cost of products sold as a percentage of product revenues
remained unchanged at 36.9% for the six months ended September 30, 1997 and
1996.

Research and Development Expenses. Research and development expenses
increased by 105% to $3.7 million, 28% of total revenues, for the six months
ended September 30, 1997, from $1.8 million, 24% of total revenues, for the
six months ended September 30, 1996. This increase primarily reflected a
higher level of activity under the Company's cost-plus-fixed-fee research and
development contracts and grants, particularly the TAH Contract. Research and
development expenses during the six months ended September 30, 1997 also
included $230,000 of expenses incurred in connection with the Company's
development activities for the TAH in excess of the appropriated amounts under
the TAH Contract. The Company anticipates that its research and development
expenses will increase significantly as a result of its plans to increase its
internally funded research and development efforts for TAH.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by 54% to $5.0 million, 38% of total
revenues, for the six months ended September 30, 1997 from $3.2 million, 43%
of total revenues, for the six months ended September 30, 1996. The increase
in absolute dollars primarily reflected increased sales and marketing
expenses, particularly increased personnel and sales commissions, related to
the increase in product revenues, as well as additional administrative
personnel. The decrease in selling, general and administrative expenses as a
percentage of total revenues reflected the Company's higher revenue base to
support these increased costs.

Interest and Other Income. Interest and other income consists primarily of
interest on the Company's investment balances, net of interest and other
expenses. Interest income increased by 62% to $417,000, 3% of total revenues,
for the six months ended September 30, 1997, from $257,000, 3% of total
revenues, for the six months ended September 30, 1996. This increase primarily
reflected the interest earned on the Company's higher average investment
balances.

Fiscal Years Ended March 31, 1997, 1996 and 1995

Revenues. Total revenues, excluding interest income, for fiscal 1997
increased to $16.5 million as compared to $12.8 million in fiscal 1996 and
$9.2 million in fiscal 1995, representing increases of 28% and 39% in fiscal
1997 and 1996, respectively.

Product revenues increased to $12.3 million in fiscal 1997 from $9.7 million
in fiscal 1996, and $6.9 million in fiscal 1995, representing increases of 27%
and 41% in fiscal 1997 and fiscal 1996, respectively. These increases were
primarily attributable to growing United States unit sales of the BVS consoles
and single-use products, including increased blood pump reorders, and to
increased average selling prices of BVS consoles and single-use products. The
majority of the Company's product revenues in the last three years have been
to United States customers. International revenues represented 7%, 9% and 13%
of total product revenues in fiscal 1997, 1996 and 1995 respectively. The
Company's product revenues from its dental business, ABIODENT, increased in
fiscal 1997 but were less than 10% of total product revenues.

Contract revenues increased to $4.2 million in fiscal 1997 from $3.1 million
in fiscal 1996 and $2.3 million in fiscal 1995, representing increases of 33%
in both fiscal 1997 and 1996. These increases are reflective of the increased
level of the Company's research and development activities under its
government cost reimbursement contracts in each year. The majority of the
Company's contract revenues, approximately 59% in fiscal 1997, were recognized
in connection with the research and development under the TAH Contract,
including amounts paid under Phase I of that contract.

Cost of Products. Cost of products represented approximately 44%, 40% and
48% of product revenues for fiscal 1997, 1996 and 1995, respectively. The
decrease in gross product margins experienced in fiscal 1997 as compared to
fiscal 1996 is primarily attributable to the mix of products sold. The Company
generally receives higher margins on the sale of single-use blood pumps than
on the sale of consoles. A higher proportion of the Company's revenues was
derived from the sale of BVS consoles in fiscal 1997 as compared to fiscal
1996. In addition, the Company's margins in fiscal 1997 were affected by
increased costs of production of the single-use blood pumps, including
approximately $200,000 in costs related to the Company's voluntary recall
during the third quarter of fiscal 1997 of certain production lots of single-
use BVS blood pumps. During that quarter, the Company became aware of certain
isolated cases where components of its BVS blood pumps exhibited certain
abnormalities. In response the Company commenced a product recall for and
removed from inventory all blood pumps from the affected production lots.

Research and Development Expenses. Cost of research and development
increased to approximately $3.8 million, 23.3% of total revenues, in fiscal
1997 compared to $3.2 million, 25.1% of total revenues, and $2.5 million,
26.7% of total revenues, in fiscal 1996 and 1995, respectively. These
increases reflect increased activity under research and development contracts
and grants, which are billed on a cost-plus-fixed-fee basis. Costs of internal
research and development primarily relate to continued engineering support and
improvement of existing products as well as regulatory support for all
products.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased to $7.1 million, 42.9% of total revenues, in
fiscal 1997 from $5.7 million, 44.7% of total revenues, and $4.3 million,
46.4% of total revenues, in fiscal 1996 and fiscal 1995, respectively. These
increases primarily reflect increased costs associated with higher product
revenues, including the expansion of the United States based sales team and
clinical post-sales support personnel. The decreases in selling, general and
administrative expenses as a percentage of total revenues in fiscal 1996 and
1997 primarily reflect the Company's higher revenue base to support these
increased costs.

Interest and Other Income. Interest and other income totaled $540,000,
$530,000, and $450,000, for fiscal 1997, 1996 and 1995, respectively. This
income primarily represents income earned on short-term investments.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 1997, the Company had $24.3 million in cash and short-
term marketable securities. The Company also has a $3.0 million line of credit
from a bank that expires in September 1998, and which was entirely available
at September 30, 1997.

During the six months ended September 30, 1997, operating activities
provided $2,000 of cash. Net cash provided by operating activities during the
six months ended September 30, 1997 reflected net income of $1.4 million,
including depreciation and amortization expense of $440,000, and an increase
in accrued expenses of $535,000. These sources of cash were partially offset
by an increase in accounts receivable of $2.0 million, a decrease in accounts
payable of $156,000, and increases in prepaid expenses and inventory of
$220,000 and $30,000, respectively. The increase in the Company's accounts
receivable was primarily attributable to the Company's increased sales,
including an increase in product revenues attributable to sales-type lease
transactions.

During the six months ended September 30, 1997, investing activities used
$17.0 million of cash. Net cash used by investing activities included $15.9
million of purchases of short-term investments and $1.1 million of purchases
and improvements of property and equipment. Although the Company does not
currently have significant capital commitments, the Company believes that it
will continue to make significant investments over the next several years to
support the development and commercialization of its products and the expansion
of its manufacturing facility.

During the six months ended September 30, 1997, financing activities provided
$16.1 million of cash. Net cash provided by financing activities included $16.0
million in net proceeds from the private placement of Common Stock to Genzyme
Corporation and certain of the Company's directors in July 1997.

The Company believes that its revenues and existing resources, together with
the proceeds from the offering, will be sufficient to fund its planned
operations, including the planned increase in its internally funded TAH
development efforts, for at least through the next twelve months.

BUSINESS

The Company is a leader in the research and development of cardiac assist
and heart replacement technology. The Company developed, manufactures and
sells the BVS, a temporary cardiac assist device designed to provide a
patient's failing heart with full circulatory assistance while allowing the
heart to rest, heal and recover its function. The BVS is most frequently used
in patients whose hearts fail to immediately recover function following heart
surgery. The BVS is the only device that can provide full circulatory
assistance approved by the FDA as a bridge-to-recovery device for the
treatment of patients with reversible heart failure.

The Company is developing a battery-powered totally implantable artificial
heart intended as a permanent replacement device to assume the full pumping
function of both the left and right ventricles of the heart. The TAH is
designed for use by patients with irreparably damaged hearts and at risk of
death due to acute myocardial infarction ("AMI"), chronic ischemic disease or
some form of end-stage congestive heart failure, but whose vital organs
otherwise remain viable.

HEART DISEASE

Overview

The human heart consists of four chambers, including a left and right
ventricle. The left ventricle pumps oxygen rich blood throughout the body. The
right ventricle pumps oxygen depleted blood which has been circulated through
the body to the lungs where it is re-oxygenated. The heart muscles of the
ventricles require an uninterrupted supply of oxygenated blood, which is
provided through coronary arteries.

Insufficient blood flow to the muscles of the heart, known as ischemia,
results in oxygen deprivation and leads to various complications. These
complications include reduced cell function and, in more severe cases,
permanent damage to the heart muscle, such as AMI. Diseases to the coronary
arteries which affect blood flow to the heart are generally classified as
coronary heart disease.

Congestive heart failure is a condition manifested clinically by an enlarged
heart. Congestive heart failure develops over time primarily due to excess
demand on the heart muscle caused by a variety of factors, including chronic
hypertension (high blood pressure), incompetent valves, coronary heart
disease, infections of the heart muscle or the valves and congenital heart
problems.

Abnormalities in the electrical conduction system regulating the pumping
function of the heart, known as rhythm disorders, can also lead to
complications. These complications range from ventricular fibrillation
(unsynchronized contractions) and arrhythmia (irregular heartbeats) to cardiac
arrest. Most cardiac arrests result in sudden death.

Prevalence and Mortality

In 1994, there were an estimated 13.7 million people with coronary heart
disease, 4.8 million people with congestive heart failure, 4.0 million people
with rhythm disorders, and 1.4 million people with valvular diseases in the
United States. These diseases and conditions resulted in approximately 750,000
deaths in 1995, of which approximately half were sudden deaths. Of the deaths
that did not occur suddenly, approximately 110,000, 131,000, and 59,000 were
associated with AMI, chronic ischemic disease and congestive heart failure,
respectively.

Circulatory Support Therapies

In general, there are four modalities for the treatment or support of
failing ventricles: pharmaceutical therapies, cardiological interventions,
surgical corrections, and mechanical cardiac interventions. Pharmaceutical
therapies, including diuretics, ACE inhibitors, beta blockers and calcium
channel blockers, are commonly the first treatment option. Cardiological
interventions, including angioplasty and the use of stents, are minimally
invasive procedures that primarily address certain forms of coronary heart
disease. Surgical corrections, including coronary bypass surgery and valve
replacement, while effective, are a viable alternative only for those patients
with enough functional heart muscle to sustain life. Mechanical cardiac

interventions involve the use of devices for those patients whose heart
muscles are unable to sustain life without cardiac assistance.

Mechanical Cardiac Interventions

Mechanical cardiac interventions can be divided into three groups of
devices: temporary cardiac assist, permanent cardiac assist and heart
replacement.

Temporary Cardiac Assist. Patients who are candidates for temporary cardiac
assist consist of those with severely but reversibly failing hearts and those
who need ventricular support to remain alive while they await transplantation.
Temporary cardiac devices which are designed to support the recovery of
patients with reversibly failing hearts are referred to as "bridge-to-
recovery" devices, and those which can support patients awaiting
transplantation are referred to as "bridge-to-transplant" devices.
Approximately 12,000 patients with potentially recoverable hearts die every
year in the United States following heart surgery. Bridge-to-recovery devices
can save the lives of many of these patients by temporarily assuming the
pumping function of the heart, while allowing the heart to rest, heal and
recover its normal function. These devices can also be used for bridge-to-
recovery for nonsurgical patients who would otherwise die as a result of
certain transient viral infections that attack the heart muscle. Bridge-to-
transplant devices are ventricular assist devices ("VADs") used to support a
portion of the patients awaiting heart transplants. There are approximately
2,300 heart transplants performed in the United States annually.

Permanent Cardiac Assist. Patients with life-impairing or life-threatening
heart failure due to permanent muscle damage may require support to either the
left or both ventricles. Depending upon the severity of the damage and the
nature of the heart's condition, these patients may be helped with permanent
assist devices. Permanent assist devices under development can be grouped into
two types, those that pump blood directly, such as VADs, and those that wrap
around and help contract the heart without direct blood contact. Both types
potentially may be used to treat end-stage congestive heart failure patients
as well as those patients who are not at imminent risk of death but whose
daily activities are generally restricted due to their weakened hearts. In
1995, there were approximately 59,000 deaths in the United States attributable
to congestive heart failure.

Heart Replacement. Patients with irreparably damaged hearts and at risk of
death due to AMI, chronic ischemic disease or some form of end-stage
congestive heart failure but whose vital organs otherwise remain viable are
candidates for heart replacement. Included among these patients are those with
massive heart damage or infection, severe rhythm disorders, prosthetic valves,
clots or thrombi in the ventricles, high pulmonary resistance, chronic right
ventricle failure and heart transplant rejection. Among these combined groups,
the Company believes that approximately 60,000 patients per year could benefit
from a heart replacement device. No life-supporting treatment is currently
available for these patients except for the approximately 2,300 who receive
heart transplants annually in the United States. Currently, available donor
hearts are primarily reserved for transplantation of select end-stage
congestive heart failure patients because many of these patients are able to
survive for the long waiting periods required before a suitably matched donor
heart can be found. The Company believes that the development of an artificial
heart would increase the number of lives saved by eliminating the scarcity of,
and waiting period for, available hearts.

ABIOMED PRODUCTS AND PRODUCTS UNDER DEVELOPMENT

The Company markets the BVS, which is a temporary cardiac assist device, and
is developing the TAH and the Heart Booster, which are replacement and
permanent cardiac assist devices, respectively.

The BVS-5000 Bi-Ventricular Assist System. The BVS is a temporary cardiac
assist device designed to provide a patient's failing heart with full
circulatory assistance while allowing the heart to rest, heal and recover its
function. The BVS is most frequently used in patients whose hearts fail to
immediately recover function following heart surgery. In November 1992, the
Company received PMA approval from the FDA for

the BVS for this post-surgery therapy. In 1996 and 1997, the FDA approved the
use of the BVS for additional indications, expanding its use for the treatment
of all patients with reversible heart failure as a bridge-to-recovery device.
The BVS is the only device that can provide full circulatory assistance
approved by the FDA for the treatment of these patients.

The BVS system is comprised of a microprocessor-based pneumatic drive and
control console, single-use external blood pumps and cannulae. The BVS console
incorporates a closed-loop control system that automatically adjusts the
pumping rate, similar to the natural heart. The dual-chamber blood pumps
provide complete or partial pumping of blood for the left, right or both sides
of a patient's heart and are designed to mimic the function of the natural
heart. The BVS blood pumps reduce the risk of damaging blood cells by filling
the ventricles passively and continuously by gravity rather than by suction.
The cannulae are specially designed tubes used to connect the blood pumps to
the heart. The integration of the cannulae, blood pumps and console creates a
system with the ability to reduce the load on the heart, provide pulsatile
blood flow to vital organs and allow the heart muscles time to rest and
recover. Stabilization of patients who recover under BVS support typically
occurs in a period of less than one week. The BVS is designed to be simple and
easy to use and does not require a specially trained technician to constantly
monitor or adjust the pumping parameters, which can reduce hospital operating
costs.

The following diagram illustrates the BVS.

[SCHEMATIC OF PATIENT LYING IN BED ON BVS SUPPORT. COMPONENTS OF THE BVS ARE
IDENTIFIED WITH CAPTIONS.]

The BVS is intended for use in any hospital performing open-chest cardiac
surgery, of which there are more than 900 in the United States. As of
September 30, 1997, the BVS had been purchased by over 275 medical centers in
the United States including many of the largest centers. Typically, medical
centers initially purchase the BVS console, two to four BVS single-use blood
pumps, cannulae, training and related accessories. The BVS is capable of
supporting the left, right or both ventricles of the heart. In the Company's
clinical experience, approximately half of the patients required support to
both ventricles of the heart, and therefore the use of two single-use BVS
blood pumps. The Company's United States list price for a BVS console, and a
blood pump and cannulae set are $59,500 and $6,950, respectively.

The Totally Implantable Artificial Heart (TAH). The Company is developing a
battery-powered totally implantable artificial heart intended as a permanent
replacement device to assume the full pumping function of both the left and
right ventricles of the heart. The TAH is designed for use by patients with
irreparably damaged hearts and at risk of death due to AMI, chronic ischemic
disease or some form of end-stage congestive heart failure but whose vital
organs otherwise remain viable. Included among these patients are those with
massive heart damage or infection, severe rhythm disorders, prosthetic valves,
clots or thrombi in the ventricles, high pulmonary resistance, chronic right
ventricle failure and heart transplant rejection.

The core technology for the TAH has been under development by the Company
since the Company's inception. The Company has completed its feasibility
studies of the TAH system and substantially finalized the design of the TAH.
The system and individual components have been tested through a variety of
laboratory and animal tests. The Company is currently accelerating the
development of the TAH and is devoting significant resources towards improving
the manufacturing process in order to reach consistency and reliability levels
necessary to conduct advanced pre-clinical and clinical trials. The Company's
goal is to initiate clinical trials of the TAH by the end of the year 2000.
There can be no assurance that the Company will be able to successfully
complete pre-clinical testing of the TAH and receive FDA approval to begin
clinical trials of the TAH in a timely manner, if at all. Moreover, pre-
clinical trials may not be predictive of results that will be obtained in
clinical trials. The Company is consulting with regulatory authorities,
leading medical centers and physicians to define protocols and patient
populations for future clinical trials. The Company has built a new
development and pilot-scale manufacturing facility, and has significantly
increased the personnel focused on the manufacturability and testing of the
TAH.

The TAH system is comprised of a thoracic unit, or "replacement heart," a
rechargeable battery, a miniaturized electronics package, a transcutaneous
energy transmission system, and an external belt-worn battery pack. The
thoracic unit includes two artificial ventricles with their associated valves
and a hydraulic pumping system. The unit provides complete pumping of the
blood to the lungs and throughout the body. The ventricles and their
associated valves are being designed and manufactured with seamless surfaces
which reduce the risk of damaging blood cells, or creating clots or thrombi.
The electronics package automatically adjusts the rate and amount of blood
flow to the patient's needs, similar to the natural heart. The implantable
rechargeable battery and the transcutaneous energy transmission system
eliminate the need for wires penetrating the patient's skin and associated
risks of infection. The entire TAH system is being designed to be highly
reliable with minimal maintenance and patient involvement.

The following diagram illustrates the TAH.

[SCHEMATIC OF UPPER TORSO OF PATIENT WITH A TAH IMPLANTED. COMPONENTS OF THE TAH
ARE IDENTIFIED WITH CAPTIONS.]

Much of the development of the TAH has been funded by the NHLBI. Prior to
receiving its most recent $8.5 million TAH Contract extension, the Company
demonstrated to the NHLBI that the basic design of the system functioned in
laboratory and animal models without significant complications. The Company
retains the right to market the resulting TAH without royalty to NHLBI. The
Company is responsible for the complete research and development program and
has collaborated over the past nine years with the Texas Heart Institute for
pre-clinical product testing and evaluation.

The Heart Booster. The Company is developing the Heart Booster as a permanent
cardiac assist device designed to wrap around and help contract the heart
without direct blood contact. The Heart Booster is being designed for use in
patients with congestive heart failure who are not at imminent risk of death,
but whose daily activities are generally restricted due to their weakened
hearts. This device, unlike most devices being developed to pump blood
directly, avoids the potential risks of damage to blood cells and formation of
clots and thrombi. The Heart Booster consists of a pliant and thin artificial
plastic "muscle" that can be wrapped around the heart. This artificial muscle
is being developed to mimic the contraction-relaxation characteristics of the
heart muscle and provide sufficient contractility. The design goal of the Heart
Booster is to restore an acceptable and active quality of life to the patient.
The Heart Booster is in an earlier stage of research and development than the
TAH and is being developed under a five year, $4.3 million contract from the
NHLBI. Columbia Presbyterian Medical Center is collaborating with the Company
on this project for pre-clinical testing and evaluation. There can be no
assurance that the Company will be successful in developing the Heart Booster.

ABIOMED STRATEGY

The Company's goal is to be a leader in the development, manufacture and
marketing of mechanical cardiac assist and replacement devices that address
the varying needs of a wide range of patients.The Company is pursuing the
following strategies to achieve this objective.

Accelerate Development of the TAH. The Company is devoting significant
resources with the goal to be the first to clinically introduce a totally
implantable artificial heart. The Company is consulting with regulatory
authorities, leading medical centers and physicians to define protocols and
patient populations for future clinical trials. The Company has built a new
development and pilot-scale manufacturing facility, and has significantly
increased the personnel focused on the manufacturability and testing of the
TAH.

Increase Market Penetration of BVS. The Company has recently increased the
size of both its domestic sales force and its clinical support group. Its
sales force focuses on BVS sales to new customers, while its clinical support
group focuses on training and educating existing customers in order to improve
clinical outcomes and increase BVS blood pump usage. As of September 30, 1997,
the BVS had been purchased by over 275 medical centers in the United States,
including many of the largest centers. The Company believes that its
relationships with its customers will facilitate the adoption of the BVS by
other medical centers.

Maintain and Enhance Technological Leadership. The Company is a leader in
the research and development of mechanical cardiac assist and replacement
devices. The Company has accumulated substantial proprietary knowledge and has
been granted a number of patents relating to the technologies incorporated in
these devices. The Company intends to continue to enhance and expand upon its
core technical expertise to maintain its leadership and to further develop
advanced mechanical cardiac assist and replacement devices.

Pursue Strategic Relationships to Support Research and Commercialization
Efforts. Many of the Company's products under development, including the TAH,
have been funded using government contracts and grants. The Company seeks
funding from third parties to support its research and development programs
and generally limits the use of its own funds until the scientific risk is
reduced. In addition, the Company intends to pursue collaborative
relationships to develop and commercialize the Company's non-cardiac assist
technologies.

MARKETING AND SALES

Approximately 900 medical centers in the United States perform heart
surgery. The Company has focused its initial BVS selling efforts on teaching
and transplant centers as well as the medical centers that perform the most
heart surgery procedures. As of September 30, 1997, the BVS had been purchased
by over 275 medical centers in the United States, many of which are within the
group of medical centers initially targeted. The Company believes that its
installed base of customers provides an opportunity for reorders of the
single-use BVS blood pumps as well as a reference basehospitals to assist in selling to
new accounts.

The Company sells the BVS in the United States through direct sales and
clinical support teams. As of September 30, 1997, the Company's BVS sales,
clinical support, marketing and field service teams included 35 full-time
employees. Its sales force focuses on BVS sales to new customers. Its clinical
support group focuses on training and educating existing customers in order to
improve clinical outcomes and increase BVS blood pump usage. The Company
believes the efforts of its clinical support group contribute significantly to
increasing the number of lives saved by the BVS and increasing usage and
reorders of BVS blood pumps. The Company also believes that its sales and
support teams will be key assets for the introduction of potential future
products such as the TAH. Building on its experience in the United States, the
Company also is working to expand its international sales efforts both through
distributors, including a recent collaborative arrangement for distribution in
Japan, and by selling directly in select European markets. The Company
believes that sales of its BVS may be somewhat seasonal, with reduced sales in
the summer months, reflecting hospital personnel and physician vacation
schedules.

MANUFACTURING

The Company manufactures the BVS console, BVS blood pumps and related
accessories. The manufacture of BVS consoles consists primarily of assembly,
testing and quality control. The Company purchases the majority of the
materials, parts and peripheral components used in the BVS consoles. The
Company manufactures certain blood contacting components for the BVS blood
pumps, including valves and bladders, from its proprietary Angioflex polymer.

The nature of the Company's products requires high quality manufacturing.
The Company's manufacturing and quality testing processes and procedures are
highly dependent on the diligence and experience of the Company's personnel.
To the extent that the Company's manufacturing volumes expand or the Company
begins the manufacture of new products, this dependence on personnel will
likely increase. In addition, the manufacture of blood contacting surfaces of
the Company's products requires a high degree of precision. These surfaces are
manufactured from polyurethane-based materials. The quality and composition of
polyurethane-based products can vary significantly based on numerous factors
including humidity, temperature, material content and air flow during the
manufacturing process. The Company's products also incorporate plastic
components for non-blood contacting surfaces. The Company relies on third-
party vendors to provide these components to the Company's specifications. The
Company is not able to fully inspect the quality of all vendor supplied
components and, therefore, relies on its vendors with respect to the quality
of these components. Once the plastic-based components of the Company's
products have been assembled, accessibility for inspection is limited. If a
defect is detected in as few as one of the Company's products, or in one
component of a Company product, it can result in the recall or restriction on
sale of products. Once assembled, in most cases, the Company's blood
contacting components cannot be reworked for human use. The manufacturing lead
times for parts and assemblies, particularly the polyurethane-based
components, can take many weeks from the date that all materials and
components are received by the Company. In addition, vendor lead times for
materials and components of the Company's products vary significantly, with
lead times for certain materials and components exceeding six months.

The Company is planning to expand its manufacturing facility for the BVS
during the next twelve months. There can be no assurance that the products
manufactured in the expanded facility will be manufactured at the same cost
and quality as the BVS is currently being manufactured. In addition, to the
extent that the Company's products under development have been manufactured,
they have been manufactured as prototypes with, at most, pilot-scale
production. The Company's products under development are likely to involve
additional manufacturing complexities and high quality requirements. There can
be no assurance that the Company will be able to increase production of the
BVS or manufacture future products, if developed and approved, in commercial
quantities on a consistent and timely basis, with acceptable cost and quality.
The inability to manufacture current and future products in sufficient
quantities in a timely manner, and with acceptable cost and quality, would
have a material adverse effect on the Company's business, financial condition
and results of operations.

The Company relies on outside vendors to supply certain components used in
the BVS and in its products under development. Certain of the components of
the BVS are supplied by sole source vendors or are custom made for the
Company. From time to time, suppliers of certain components of the BVS have
indicated that they intend to discontinue, or have discontinued, making such
components. In addition, certain of these components are supplied from single
sources due to quality considerations, costs or constraints imposed by
regulatory authorities. There are relatively few additional sources of supply
for such components and establishing additional or replacement suppliers for
such components cannot be accomplished quickly and may require FDA approval.
In the past, certain suppliers have announced that, due to government
regulation or in an effort to reduce potential product liability exposure,
they intend to limit or terminate sales of certain products to the medical
industry. There can be no assurance that, if such an interruption were to
occur, the Company would be able to find suitable alternative supplies at
reasonable prices or would be able to obtain requisite regulatory approvals in
a timely manner, if at all. Similarly, when and if the Company reaches the
clinical testing stage of its products under development, it may find that
certain components become more

difficult to source from outside vendors due to the product liability risk
perceived by those vendors. The Company's inability to obtain acceptable
components in a timely manner or to find suitable replacements at an
acceptable cost would have a material adverse effect on the Company's
business, financial condition and results of operations.

RESEARCH AND PRODUCT DEVELOPMENT

The Company has substantial expertise in electro-mechanical systems, cardiac
physiology and experimental surgery, blood-material interactions, fluid
mechanics and hemodynamics, internal and external electronic hardware,
software, plastics processing, lasers and optical physics. The Company's
research and development efforts are focused on the development of new
products, primarily related to mechanical cardiac assist and heart
replacement, and the continued enhancement of the BVS and related
technologies. The Company's research and development personnel also are
involved in establishing protocols, monitoring and submitting test data to the
FDA and corresponding foreign regulatory agencies to obtain the necessary
clearances and approvals for its products. Sophisticated tools, such as 3-
dimensional CAD/CAM, and procedures are used in an effort to ensure smooth
transition of new products from research to product development to
manufacturing.

Cardiac assist products currently under development by the Company include
the TAH, the Heart Booster, and a variety of specialized pumps, such as a
miniaturized rotary blood pump and a magnetically-suspended centrifugal pump.
The Company is also developing devices in the area of minimally invasive
surgery applications, such as tissue welding and vascular welding for the
repair of small arteries.

During the six months ended September 30, 1997 and the fiscal years ended
March 31, 1997, 1996 and 1995, the Company expended $3.7 million, $3.8
million, $3.2 million and $2.5 million, respectively, on research and
development. A substantial portion of these expenses were funded by government
contracts and grants. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business--Strategic Relationships."

STRATEGIC RELATIONSHIPS

Genzyme

In July 1997, the Company sold 1,153,846 shares of Common Stock to Genzyme
Corporation ("Genzyme"). In connection with this sale, the Company and Genzyme
agreed to discuss collaborative arrangements that would allow them to jointly
develop and commercialize products which combine biotechnology and biomedical
engineering, primarily for the surgical market. A potential target for
collaboration is minimally invasive cardiac surgery, an emerging field in
which surgeons use new products and techniques to reduce the trauma, recovery
period, and expense of heart surgery. The Company and Genzyme are engaged in
ongoing discussions regarding this potential collaboration. The Chief
Executive Officer of Genzyme is a member of the Company's board of directors.
There can be no assurance that the Company and Genzyme will agree to jointly
collaborate on any project, that any such project would result in the
development of any product, or that any such product, if developed, would be
commercially successful. See "Certain Transactions."

National Heart, Lung and Blood Institute

Since the Company's inception, United States government agencies,
particularly the NHLBI, have provided significant support to the Company's
product development efforts. The most significant current funding from the
NHLBI supports the Company's development of the TAH and Heart Booster. In
September 1996, the Company received an $8.5 million extension to its TAH
Contract from the NHLBI. In September 1995, the Company received a $4.3
million contract from the NHLBI to develop the Heart Booster. During the six
months ended September 30, 1997 and the fiscal years ended March 31, 1997,
1996 and 1995, the

Company recognized revenues of $3.7 million, $4.2 million, $3.1 million and
$2.3 million, respectively, under United States government contracts and
grants. All of the Company's government contracts and grants contain
provisions making them terminable at the convenience of the government and are
subject to government appropriations. There can be no assurance that the
government will not terminate, reduce or delay the funding for any of the
Company's contracts. In addition, there can be no assurance that the Company
will be successful in obtaining any new government contracts or further
extensions to existing contracts.

COMPETITION

Competition in the cardiac assist market is intense and subject to rapid
technological change and evolving industry requirements and standards. Many of
the companies developing or marketing cardiac assist products have
substantially greater financial, product development, sales and marketing
resources and experience than the Company. These competitors may develop
superior products or products of similar quality at the same or lower prices.
Moreover, there can be no assurance that improvements in current or new
technologies will not make them technically equivalent or superior to the
Company's products in addition to providing cost or other advantages. Other
advances in medical technology, biotechnology and pharmaceuticals may reduce
the size of the potential markets for the Company's products or render those
products obsolete.

The Company is aware of other artificial heart development efforts in the
United States, Canada, Europe and Japan. A team comprised of Pennsylvania
State University and 3M Corporation, Inc. has been developing a heart
replacement device for many years with significant NHLBI support. There are a
number of companies, including Thermo Cardiosystems, Inc. and Novacor, a
division of Baxter International, Inc., which are developing permanent cardiac
assist products, including implantable left ventricular assist devices and
miniaturized rotary ventricular assist devices, that may address markets that
overlap with certain segments of the markets targeted by the Company's TAH.
The Company's TAH may compete with those VADs for some patient groups, notably
patients with severe congestive heart failure due to predominant left
ventricle dysfunction. An implantable VAD supplements the pumping ability of a
failing ventricle. In contrast, the TAH is being designed to replace failing
ventricles. The Company believes that Thermo Cardiosystems, Inc. has commenced
clinical testing for PMA approval of LVADs for permanent cardiac assist. The
Company believes that the TAH, LVADs and other VADs, if developed, will
generally be used to address the needs of different patient populations, with
an overlap for certain segments of the heart failure population. There can be
no assurance that the Company will develop and receive FDA approval to market
its TAH on a timely basis, if at all, or that once developed, the TAH will be
commercially successful.

The Company's customers frequently have limited budgets. As a result, the
Company's products compete against the broad range of medical devices for
these limited funds. The Company's success will depend in large part upon its
ability to enhance its existing products and to develop new products to meet
regulatory and customer requirements and to achieve market acceptance. The
Company believes that important competitive factors with respect to the
development and commercialization of its products include the relative speed
with which it can develop products, establish clinical utility, complete
clinical testing and regulatory approval processes, obtain reimbursement and
supply commercial quantities of the product to the market. There can be no
assurance that the Company will be able to compete successfully or that
competition will not have a material adverse effect on the Company's business,
financial condition and results of operations.

THIRD-PARTY REIMBURSEMENT

The Company's BVS product is, and most of its products under development are
intended to be, sold to medical institutions. Medical institutions and their
physicians typically seek reimbursement for the use of these products from
third-party payors, including Medicare, Medicaid, private health insurers and
managed care organizations. As a result, market acceptance of the Company's
current and proposed products may depend in large part on the extent to which
reimbursement is available to medical institutions and their physicians for
use of the Company's products.

The level of reimbursement provided by United States and foreign third-party
payors varies according to a number of factors, including the medical
procedure category, payor, location, outcome and cost. In the United States,
many private health care insurance carriers follow the recommendations of
HCFA, which establishes guidelines for the reimbursement of health care
providers treating Medicare and Medicaid patients. Internationally, healthcare
reimbursement systems vary significantly. In certain countries, medical center
budgets are fixed regardless of levels of patient treatment. In other
countries, such as Japan, reimbursement from government or third party payors
must be applied for and approved. As of the date of this Prospectus, under
HCFA guidelines, Medicare reimburses medical institutions for Medicare
patients based on the category of surgical procedures in which the BVS is used
and incrementally reimburses physicians for the use of the BVS. Medicare does
not, however, currently reimburse medical institutions for the incremental
cost of using the BVS above the amount allowed for the reimbursement category
of the surgical procedure. Certain private health insurers and managed care
providers provide incremental reimbursement to both the medical institutions
and their physicians. The Company is currently petitioning HCFA to assign a
higher paying reimbursement category whenever the BVS is used. In October
1995, HCFA established a special "ICD-9" code for the BVS in an effort to more
clearly track and evaluate hospital and physician costs associated
specifically with the BVS compared to current reimbursement levels, so that
HCFA can determine the appropriate category and level of reimbursement. There
can be no assurance that HCFA will reassign the BVS to a higher paying
category in a timely manner, if at all.

No reimbursement levels have been established for the Company's products
under development, including the TAH. Prior to approving coverage for new
medical devices, most third-party payors require evidence that the product has
received FDA approval or clearance for marketing, is safe and effective and
not experimental or investigational, and is medically necessary and
appropriate for the specific patient for whom the product is being used.
Increasing numbers of third-party payors require evidence that the procedures
in which the products are used, as well as the products themselves, are cost-
effective. There can be no assurance that the Company's products under
development will meet these criteria, that third-party payors will reimburse
physicians and medical institutions for the use of the products or that the
level of reimbursement will be sufficient to support the widespread use of the
products. Furthermore, there can be no assurance that third-party payors will
continue to provide reimbursement for the use of BVS or that such payors will
not reduce the current level of reimbursement for the product. Failure to
achieve adequate reimbursement for its current or proposed products would have
a material adverse effect on the Company's business, financial condition and
results of operations.

ABIODENT SUBSIDIARY

ABIODENT, Inc. ("ABIODENT"), a wholly owned subsidiary of the Company,
manufactures and markets the PerioTemp periodontal screening system
("PerioTemp") and markets the Halimeter for early detection and assessment of
risk of periodontal disease and other sources of halitosis. ABIODENT is
operated independently from the Company's cardiac assist activities. As of
September 30, 1997, ABIODENT employed eight full-time employees.

The PerioTemp is a tool for use by dentists, periodontists and other dental
specialists to instantly detect sites of gum inflammation. The PerioTemp
patented technology, developed in part through funding from the National
Institute of Dental Research, consists of a book-sized console, containing a
microprocessor that is

connected to a probe, shaped much like a dentist's probe, with a heat-sensing
tip. The device is used in a manner which is consistent with traditional
probing but includes an instantaneous display and record of temperature
deviations from normal inside the pockets between teeth and the surrounding
gum. According to published sources, gum temperature has been shown to be a
reliable indicator of the presence of inflammation, a precursor of periodontal
disease. The PerioTemp also allows the clinician to record gum pocket depth
and bleeding point information.

ABIODENT markets the PerioTemp in conjunction with the Halimeter, to provide
differential evaluation of the sources of halitosis. ABIODENT purchases the
Halimeter from Interscan, Inc. under a distribution arrangement which is
exclusive to ABIODENT if it meets certain defined sales volume levels.

ABIODENT markets its dental products with complementary products of others
used in preventive and cosmetic dental programs. Revenues from this subsidiary
have represented less than ten percent of the Company's total revenues in all
periods presented in this Prospectus. The Company believes that it cannot
alone adequately support the investment that the continued growth of its
dental business requires and is looking for alternative ways to support its
dental business.

PATENTS AND PROPRIETARY RIGHTS

The Company has been issued or allowed 22 patents and has pending three
patent applications in the United States. The Company has obtained or applied
for corresponding patents and patent applications for certain of these patents
and patent applications in a limited number of foreign countries. These
patents relate to the BVS and certain of its products under development
including the TAH. The Company's United States patents expire at various times
from 2003 to 2016. There can be no assurance that the Company's pending patent
applications or any future applications will be approved, that any patents
will provide the Company with competitive advantages or will not be challenged
by third parties, or that the patents of others will not render the Company's
patents obsolete or otherwise have an adverse effect on the Company's ability
to conduct business. Because foreign patents may afford less protection under
foreign law than is available under United States patent law, there can be no
assurance that any such patents issued to the Company will adequately protect
the Company's proprietary information. Others may have filed and may file
patent applications in the future that are similar or identical to those of
the Company. To determine the priority of inventions, the Company may have to
participate in interference proceedings declared by the United States Patent
and Trademark Office or opposition proceedings before a foreign patent office
that could result in substantial cost to the Company. No assurance can be
given that any such interfering patent or patent application will not have
priority over patent applications filed on behalf of the Company or that the
Company will prevail in any opposition proceeding.

operations. If any such claims are asserted against the Company's intellectual
property rights, it may seek to enter into a royalty or licensing arrangement.
There can be no assurance, however, that a license will be available on
reasonable terms, or at all. The Company could decide, in the alternative, to
resort to litigation to challenge such claims or to design around the patented
technology. Such actions could be costly and would divert the efforts and
attention of the Company's management and technical personnel, which would
materially and adversely affect the Company's business, financial condition
and results of operations.

The Company has recently received a letter from a third party alleging that
certain technology incorporated into the transcutaneous energy transmission
system component of the Company's TAH may infringe the patent or other
intellectual property rights of that party. The Company is in the preliminary
stages of assessing the allegations, but does not believe that it is
infringing any patent or other intellectual property rights of this third
party. There can be no assurance that the Company would prevail in the defense
of an infringement claim, if made. If infringement of the proprietary rights
of the third party were determined to exist, the Company would either be
required to use or develop alternative technology or to seek a license of the
technology. There can be no assurance that the Company could obtain a license
of this technology on a timely basis or on reasonable terms, if at all. In
addition, there can be no assurance that the Company could develop or license
alternative technology on a timely basis, if at all. As a result, a
determination of infringement could have a material adverse affect on the
Company's development of the TAH and on its business, financial condition and
results of operations. Any patent or intellectual property dispute or
litigation could result in product development delays, would be costly and
could divert the efforts and attention of the Company's management and
technical personnel, and could have a material adverse effect on the Company's
business, financial condition and results of operations.

Certain of the Company's products have been developed in part under
government contracts pursuant to which the Company may be required to
manufacture a substantial portion of the product in the United States and the
government may obtain certain rights to use or disclose technical data
developed under those contracts. The Company retains the right to obtain
patents on any inventions developed under those contracts (subject to a non-
exclusive, non-transferable, royalty-free license to the government), provided
it follows certain prescribed procedures.

The Company purchased certain of its technology, including technology
incorporated in the BVS, from the Abiomed Limited Partnership (the
"Partnership"), in which the Company has a 61.7% interest. As a result of this
purchase, the Company is required to pay the Partnership a royalty through
August 3, 2000. See Note 7 to the Consolidated Financial Statements.

GOVERNMENT REGULATION

Clinical testing,trials, manufacture and sale of the Company'sour products and products under
development, including the BVS, TAHAbioCor, AbioBooster and Heart Booster and the
Company's dental devices,AbioVest are, or will
be, subject to regulation by the FDA and corresponding state and foreign
regulatory agencies. Noncompliance with applicable regulatory requirements can
result in, among other things, fines, injunctions, civil penalties, recall or
seizure of products, total or partial suspension of production, failurerefusal of the
government to grant pre-market clearance or pre-
marketmarketing approval for devices, withdrawal of marketing
approvals, and criminal prosecution. The FDA also has the authority to request
repair, replacement or refund of the cost of any device manufactured or
distributed by ABIOMED.

U.S. CLINICAL USE REGULATIONS. The BVS is classified as a Class III medical
device under FDA rules, as will be the Company.AbioCor, the AbioBooster and AbioVest. In
the United States,U.S., medical devices are classified into one of three classes (i.e.,
Class I, II or III) based on the basis of the controls deemed necessary by the FDA to
reasonably ensure their safety and effectiveness. Class IIII medical devices are
subject to general controls, such as labeling, pre-market
notification and adherence to the FDA's Current Good Manufacturing Practices
requirements set forth in the Quality System Regulation ("QSR"), which include
testing, control and documentation requirements. Class II devices are subject
to general and special controls, such as performance standards, post-market
surveillance, patient registries and QSR compliance.most rigorous regulation. Class III devices, which are typically
life-sustaining, life-supporting andor implantable devices, or new devices that
have been found not to be substantially equivalent to legally marketed devices,
must generally receive pre-market approval, or PMA, by the FDA to ensure their
safety and effectiveness. Class III devices are also subject to some of the
requirements applicable to Class I and Class II devices, including general
controls, such as labeling, pre-market notification, performance standards,
post-market surveillance, patient registries and must generally also receive pre-market approval by the
FDAadherence to ensure their safetyQSR/GMP
requirements, which include testing, control and effectiveness.

Before introducing a new device into the market, the Company must generally
obtain FDA clearance or approval through either clearance of a 510(k)
notification or receipt of a Pre-Market Approval ("PMA"). A 510(k) clearance
will be granted if the submitted information establishes that the proposed
device is "substantially equivalent" to a legally marketed Class I or Class II
medical device or a Class III medical device for which the FDA has not required
PMAs. The Company has received FDA market clearance under Section 510(k) for
the PerioTemp.documentation requirements.

A PMA application must be filed if a proposed device is not substantially
equivalent to a legally marketed Class I or Class II device, or if it is a Class III device
for which the FDA has required PMAs. A PMA application must be supported by
valid scientific evidence, which typically includes extensive information
including relevant bench tests, laboratory and animal studies and clinical trial
data to demonstrate the safety and effectiveness of the device. The PMA
application also must contain a complete description of the device and its
components, a detailed description of the methods, facilities and controls used
to manufacture the device, and the proposed labeling, advertising literature and
training materials. By regulation, the FDA has 180 days to review the PMA
application, and during that time an advisory committee may evaluate the
application and provide recommendations to the FDA. Advisory Committeecommittee reviews
often occur over a significantly protracted period, and a number of devices for
which FDA approval has been sought have never been cleared for marketing. In
addition,

48
modifications to a device that is the subject of an approved PMA, or to its
labeling or manufacturing process, may require approval by the FDA, including the submission of PMA supplements
or new PMAs.PMAs and approval by the FDA.

If clinical trials of a device are required in order to obtain FDA approval
and the device presents a "significant risk," the sponsor of the trial will have
to file an Investigational Device Exemption ("IDE")IDE application prior to commencing clinical trials. The IDE
application must be supported by data, which typically includes the results of
animal testing performed in conformance with Good Laboratory Practices and
formal laboratory testing.testing and documentation in accordance with appropriate
design controls and scientific justification. If the FDA approves the IDE
application, is approved byand the FDAinstitutional review boards or IRBs at the institutions at
which the clinical trials will be performed approve the clinical protocol and
all of the appropriate Institutional
Review Boards ("IRBs"),related materials, clinical trials may begin at a specific number of
investigational sites with a specific number of patients, as approved by the
FDA. If the device presents a "nonsignificant risk" to the patient, a sponsor
may begin the clinical trial after obtaining approval for the study by one or
more appropriate IRBs without the need for FDA approval. Sponsors of clinical trials are permitted to charge for investigational
devices distributed in the course of the study provided that compensation does
not exceed recovery of the costs of manufacture, research, development and
handling. An IDE supplement must be submitted to and approved by the FDA before
a sponsor or investigator may make a change to the investigational plan that may
affect its scientific soundness or the rights, safety or welfare of human
subjects.

In November 1992, the Company receivedFDA approved our PMA approval from the FDA for the BVS. In 1996 and 1997,
the FDA approved the use of the BVS for additional indications, expanding its
use to the treatment of all patients with potentially reversible heart failure.
In May 1998, we received notice from the FDA that the BVS had successfully
concluded a required post-market surveillance study. The TAH andprimary purpose of this
post-market surveillance study was to provide a warning system to alert the
Heart Boosterhealth care community to any potential problems with a device within a
reasonable time of the initial marketing of the device. Post-market surveillance
provides clinical monitoring of the experiences with a device once it is
distributed in the general population under actual conditions of use.

The AbioCor will be classified as a Class III devicesdevice and therefore will beis
subject to the IDE and PMA processes and QSR/GMP requirements. We have submitted
information pertinent to the QSR.IDE for the AbioCor under the FDA's pre-IDE
process. The pre-IDE process encourages discussion between ABIOMED and the FDA
regarding the content of the regulatory submission throughout the process of
developing and testing the device and provides ABIOMED early guidance on
pre-clinical and clinical testing required for regulatory approvals.

We anticipate seeking initial approval of the AbioCor for a limited category
of indications and patients, and subsequent approval for additional indications
and patient populations. After the initial PMA is approved, we will need to file
supplemental PMAs for the additional indications. If we obtain approval of the
AbioCor in this manner, the FDA may initially impose conditions on use of the
AbioCor. Nevertheless, we believe that this phased approach will permit us to
obtain initial marketing approval for the AbioCor more quickly than if we were
to seek a single, broader approval.

U.S. MANUFACTURING AND SALES REGULATION. Any devices, including the BVS,
that are manufacturedwhich we manufacture or distributed by the
Companydistribute pursuant to FDA clearances or approvals, are
subject to pervasive and continuing regulation by the FDA and certain state agencies.other regulatory
authorities. Manufacturers of medical devices for marketing in the United StatesU.S. are
required to adhere to the QSRQSR/GMP requirements and must also comply with Medical
Devices Reporting, ("MDR")
requirementsor MDR, which requires that a firm report to the FDA any
incident in which its product may have caused or contributed to a death or
serious injury, or in which its product malfunctioned and, if the malfunction
were to recur, it would be likely to cause or contribute to a death or serious
injury. Labeling and promotional activities are subject to scrutiny by the FDA
and, in certain circumstances, by the Federal Trade Commission. Current FDA
enforcement policy prohibits the marketing of approved medical devices for
unapproved uses. The Company isWe are subject to routine inspection by the FDA and certain state agenciesother
regulatory authorities for compliance with the QSRQSR/GMP and MDR requirements, as well
as other applicable regulations.

In addition, the FDA requires that manufacturers of certain devices,
including the BVS, conduct postmarket surveillance studies after receiving
approval of a PMA application. The primary purpose of required postmarket
surveillance is to provide an early warning system to alert the health care
community to

3849

any potential problems with a device within a reasonable time of the initial
marketing of the device. Postmarket surveillance provides clinical monitoring
of the early experiences with the device once it is distributed in the general
population under actual conditions of use.

The Company isINTERNATIONAL REGULATION. We are also subject to regulation in each of the
foreign countries in which it sells itswe sell our products. Many of the regulations
applicable to the
Company'sour products in these counties are similar to those of the FDA. The
Company hasWe
have obtained the requisite foreign regulatory approvals for sale of the BVS in
many foreign countries, including most of Western Europe, and has
recently commenced the regulatory approval process in Japan. The Company
believesEurope. We believe that
foreign regulations relating to the manufacture and sale of medical devices are
becoming more stringent. The European Union has adopted regulations requiring that
medical devices such as the BVS comply with the Medical DeviceDevices Directive, by June 15, 1998, which
includes ISO-9001 and CE certification. The
Company's BVS currently has German MedGV approval but is not yet certified forIn 1998, we received ISO-9001 compliance. The Company is working to obtain ISO-9001 and independent CE
certification for its BVS facility. There can be no assurance that the Company will obtain such certification in a timely manner, if at all. Unless
ISO and CE certification are obtained, the Company's sale of the BVS into the
European Union may be restricted.BVS. Many manufacturers of medical devices, including
the Company,ABIOMED, have often relied on foreign markets for the initial commercial
introduction of their products. The more stringentHowever, an evolving foreign regulatory
environment could make it more difficult, costly and time consuming for the Companyus to
pursue this strategy for new products. Implantable devices such as the AbioCor
must comply with the Active Implantable Medical Devices Directive. We are
working toward ISO-9001 and CE certification of the AbioCor. Any FDA, foreigndelay in
obtaining these certifications for the AbioCor or state regulatory approvals or clearances, once obtained,
can be withdrawn or modified. Delayother products under
development on a timely basis could delay commercial sales of the products in
the Company obtaining, or inability of
the Company to obtain and maintain, any necessary United States or foreign
clearances or approvals for new or existing products or product enhancements,
or cost overruns resulting from these regulatory requirements, would have a
material adverse effect on the Company's business, financial condition and
results of operations.European Union.

EMPLOYEES

As of September 30, 1997, the CompanyDecember 1, 1999, we had 166209 full-time employees. The
Company hasemployees, including

- 103 in research and development,

- 38 in sales, clinical support, marketing and field service, and

- 44 in manufacturing and quality assurance.

Our remaining employees work in a variety of areas, including information
technology, human resources, accounting, facilities, corporate development and
management. We have entered into contractual agreements with all of itsour
employees, which include strict confidentiality and non-competenon-competition commitments by each
employee. None of the Company'sour employees is represented by a union. The Company
considers itsWe consider our
employee relations to be good.

PROPERTIES

The Company leases itsWe lease our headquarters, and research and development and production
facilities in threetwo separate buildings in an industrial office park
covering approximately 55,000 square feet.park. The addresses
of these leased spaces are 3322 Cherry Hill Drive and 2433 Cherry Hill Drive in
Danvers, Massachusetts and
66 Cherry Hill Drive in Beverly, Massachusetts. AllThese facilities are located approximately 22 miles
north of Boston.

Our primary facility consists of approximately 80,000 square feet of space
under an operating lease that expires in 2010. During 1999 we moved our research
and development, sales and marketing and general and administrative departments
into this facility, and it now serves as our headquarters. A significant portion
of this leased space is under construction for an expanded manufacturing area
for the AbioCor and BVS. The leaseslease contains provisions to allow termination by
us, subject to a defined termination fee, in 2005 and contains options to extend
beyond 2010 at the primarymarket rates.

In addition, we lease facilities representingof 23,000 square feet, and 22,000 square feet, respectively, expireexpiring in
April 2000, and 18,000 square feet, expiring in June 2001, respectively. All leasesin the same
industrial park as our primary facility. We have optionsan option to extend the lease
on the 18,000 square foot space at market rates. These facilities contain our
AbioCor and BVS manufacturing areas. It is our intention to move these
manufacturing areas to our new larger facilities that are currently under
construction and consolidate all of our operations in one building. We could
experience manufacturing interruptions or delays if our new facilities are not
available and qualified before the leases on the current spaces expire and we
are not able to reach acceptable terms for extension of the leases.

LEGAL PROCEEDINGS

On January 20, 1998, World Heart Corporation and the Ottawa Heart Institute
Research Corporation filed a complaint in the U.S. District Court for the
District of Delaware. World Heart Corporation is currently developing an LVAD,
using technology developed by the Ottawa Heart Institute Research Corporation.
The Company's facilities include fabrication areascomplaint seeks damages and injunctive relief for medicalalleged breaches of
contract, misappropriation of trade secrets, conversion of trade secrets and
dentalpatent infringement by ABIOMED. The plaintiffs' claims and allegations relate to
a transcutaneous energy transmission device manufacturing,being developed by the Ottawa Heart
Institute Research Corporation in connection with its LVAD under development.
Between 1992 and development facilities1995, we evaluated prototypes of the Ottawa Heart Institute
Research Corporation's transcutaneous energy transmission device for laboratorypossible
use in connection with the AbioCor and durability
testingdetermined that it did not meet our
needs. The plaintiffs allege that we subsequently utilized aspects of plasticstheir
proprietary technology in developing our own transcutaneous energy transmission
device.

We do not believe that we are infringing any intellectual property rights of
the plaintiffs, and electronics. The Company has begun improving
approximately 18,000 square feet of this space to better accommodate its BVS
growth and to allow for expanded engineering, production and testing relatinghave so stated in our response to the TAH.complaint. We are
vigorously defending the case. On October 20, 1999, World Heart Corporation
informed us that they have determined that our transcutaneous energy
transmission device does not infringe the asserted patent. On November 22, 1999,
the parties filed with the court to permanently dismiss the patent infringement
claim, but the plaintiffs continue to press the remaining claims. Unless action
is initiated by the plaintiffs or by the court to dismiss the remaining claims
prior to trial, we intend to defend ourselves in court. A trial is scheduled to
commence in early 2000.

Although we believe all of the plaintiffs' claims and allegations are
without merit, it is possible that our defense may not prevail. If we do not
prevail, we might be required to use or develop alternative transcutaneous or
non-transcutaneous technology, to seek a license to use certain technology, or
to modify the design of our transcutaneous energy transmission device. Although
alternative technologies may be used to provide energy to the AbioCor, such
alternative technologies, though functional, may lack features of our current
design. As a result, if we do not prevail, our development of the AbioCor may be
adversely affected and our business may be harmed.

On May 7, 1999, we filed a motion requesting leave of court to assert a
counterclaim alleging that World Heart Corporation and Ottawa Heart Institute
Research Institute misappropriated our trade secrets. The Company believescourt has deferred
action on that these facilities are adequate for its
current needs.

LEGAL PROCEEDINGS

The Company is not a party to any material pending legal proceedings.

39motion.

MANAGEMENT

EXECUTIVE OFFICERS, KEY EMPLOYEES AND DIRECTORS

The Company's executive officers, key employees and directors are as
follows:EXECUTIVE OFFICERS AND KEY EMPLOYEES

NAME AGE TITLE
------------------------------------- --- ------------------------------------POSITION
- ---- -------- -----------------------------------------------------

David M. Lederman, Ph.D*............. 53............... 55 Chairman of the Board of Directors, President, Chief
Executive Officer and Assistant Treasurer
Robert T.V. Kung, Ph.D*.............. 53................ 55 Senior Vice President--Research and
Development,President--Chief Scientific Officer, and
Assistant Secretary
Anthony W. Bailey*..................... 44 Vice President--Engineering and Director AbioCor
Program
William J. Bolt........................ 47 Vice President--Cardiac Assist Products
John E. Hart........................... 43 Vice President--Marketing
Douglas McNair, MD, Ph.D............... 46 Vice President--Clinical Affairs
David Nikka............................ 45 Vice President--Human Resources
Janice T. Piasecki..................... 45 Vice President--Regulatory Affairs
Eugene D. Rabe*...................... 41........................ 43 Senior Vice President--Global Sales Marketing and Clinical ProgramsServices
John F. Thero*....................... 37......................... 39 Senior Vice President--Finance, Chief Financial
Officer, Treasurer and Assistant Secretary
Anthony W. Bailey.................... 41 Vice President--Engineering
William J. Bolt...................... 45 Vice President (in charge of
ABIODENT)
David Nikka.......................... 42 Vice President--Resources and
Administration
Janice Piasecki...................... 43 Vice President--Regulatory Affairs
Edward G. Taylor, Ph.D............... 46 Vice President--Program Director,
Implantable Artificial HeartMichael Verga.......................... 37 Chief Intellectual Property Counsel

OUTSIDE DIRECTORS

NAME AGE
- ---- --------

W. Gerald Austen, M.D................ 67 DirectorM.D.................. 69
Paul Fireman......................... 53 DirectorB. Fireman........................ 55
John F. O'Brien...................... 54 DirectorO'Brien........................ 56
Desmond H. O'Connell, Jr. ........... 61 DirectorJr............... 63
Henri A. Termeer..................... 51 DirectorTermeer....................... 53

- --------
*Executive------------------------

* Executive Officer

Dr. DavidDR. DAVID M. LedermanLEDERMAN founded the CompanyABIOMED in 1981, and has served as Chairman of
the Board and Chief Executive Officer since that time, and astime. He is also President for
the majority of
that time.ABIOMED. Prior to founding ABIOMED, he was Chairman of the Medical Research
Group at the Everett Subsidiary of Avco Corporation. HeCorporation which he joined in 1972.
Dr. Lederman has made many important contributions in the field of cardiac
assist and heart replacement technology, has authored over 40 medical
publications, and originated the design and development of ABIOMED's artificial
heart blood pumps and their valves, has authored over 40 medical publications,valves. Dr. Lederman is a member of numerous medical
and scientific professional organizations and has been a frequent speaker in
forums on cardiac support systems and on the financing and commercialization of
advanced medical technology. Dr. Lederman received a Ph.D. degree in Aerospace
Engineering from Cornell University.

Dr. RobertDR. ROBERT T.V. KungKUNG has served asABIOMED since 1982 and has been Senior Vice
President and Chief Scientific Officer since 1995. He was Vice President of
Research and Development of the Company since 1987. Fromfrom 1987 to 1995 and Chief Scientist from 1982 to
1987, he served as Chief
Scientist of the Company. Since 1995, Dr. Kung has served as the Senior Vice
President of the Company.1987. Prior to joining ABIOMED, heDr. Kung was a Principal Research Scientist at
Schafer Associates from 1978 to 1982 and at the Avco Everett Research Laboratory.Laboratory
from 1972 to 1978. He developed non-linear optical techniques for laser
applications and investigated physical and chemical phenomena in re-entry
physics. Dr. Kung has been Principal Investigator for the Company's TAHABIOMED's National
Institute of Health-funded AbioCor and Heart BoosterAbioBooster programs

and has conceived of and directed the development of the Company'sABIOMED's laser-based
minimally invasive technologies, as well as the PerioTemp.technologies. Dr. Kung received a Ph.D. degree in Physical
Chemistry from Cornell University.

Mr. Eugene D. Rabe joined the Company in 1993, as its Vice-President for
Sales. In 1996, he assumed responsibility for all domestic sales, clinical and
field support. Recently he was promoted to Vice-President Global Sales,
Marketing and Clinical Programs. Prior to joiningMR. ANTHONY W. BAILEY has served ABIOMED he was Vice-
President, Sales and

Marketing for Endosonics Corporation before which he was a Sales Manager for
St. Jude Medical, Inc. He has been involved in the sales and marketing of
cardiovascular/cardiological devices for over ten years. Mr. Rabe received a
Bachelor's degree from St. Cloud State University and his MBA from the
University of California.

Mr. John F. Thero joined the Company in 1994 as Vice President, Finance and
Administration and Chief Financial Officer. Prior to joining ABIOMED, during
the period 1992 to 1995, Mr. Thero was Chief Financial Officer and acting
President for the restructuring of two venture-backed companies. From 1987 to
1992, Mr. Thero was employed, in various capacities including Chief Financial
Officer, by Aries Technology, Inc. From 1983 to 1987, Mr. Thero was employed
by the commercial audit division of Arthur Andersen & Co. during which time he
became a Certified Public Accountant. Mr. Thero received a B.A. in
Economics/Accounting from The College of the Holy Cross.

Mr. Anthony W. Bailey joined the Company insince 1997, to lead the Electronics
System Development of the Implantable Artificial Heart Program and is currently Vice
President--Engineering. Prior to joining ABIOMED, duringPresident, Engineering and Director of the AbioCor Program. From 1987 to 1997,
Mr. Bailey was Vice President and General Manager for Pace Medical, Inc., a manufacturer of external pacemakers, rhythm management analyzers and
accessories. Fromfrom 1982 to 1987, he was Manager of Design and Development at Shiley
Infusaid, Inc., a manufacturer of implantable drug pumps and infusion
ports. Prior to that, Mr. Bailey served in various engineering functions
with manufacturers of implantable pacemakers, data acquisition and control
systems and medical monitoring equipment. Mr. Bailey received his Bachelor's
degree from the University of Lowell.

Mr. WilliamMR. WILLIAM J. Bolt joinedBOLT has served ABIOMED since 1982 and, has been Vice
President, Cardiac Assist Products since 1998. He is currently responsible for
BVS-product line operations including manufacturing, quality assurance,
engineering support and new product development not related to the Company in 1982. Since that time,AbioCor. From
1994 to 1998 he haswas President of ABIOMED's dental subsidiary, ABIODENT. From
1982 to 1994, he served in various roles, from DirectorVice President of Operations to
Vice President of Engineering, andwhere he was the engineer in-charge whenof the
BVSdevelopment of the BVS-5000 and PerioTemp systems
were developed. He is presently responsible for the business operations of
ABIODENT, including dental product sales, marketing, manufacturing and
engineering support.other systems. Mr. Bolt received ahis Bachelor's
degree in Electrical Engineering and a Masters degree in Business Administrationan MBA from Northeastern University.

MR. JOHN E. HART has served ABIOMED since 1999 as Vice President, Marketing.
Prior to joining ABIOMED, he was Senior Director, Marketing for the Vascular
Therapies Division of U.S. Surgical Corporation/Tyco Healthcare Group from 1997
to 1999, Senior Manager, Cardiology Marketing Programs for the Cordis division
of Johnson & Johnson, from 1996 to 1997, and Marketing/New Business Development
Director for the Professional Healthcare Sector of Kimberly-Clark from 1992 to
1996. Mr. David Nikka joinedHart has worked with C.R. Bard in various global marketing management
positions and in sales and manufacturing with the CompanyEthicon division of Johnson &
Johnson. Mr. Hart received a Bachelor's degree from Trenton State College and an
MBA from New Hampshire College.

DR. DOUGLAS MCNAIR has served ABIOMED since 1998 as Vice President of
Clinical Affairs. Prior to joining ABIOMED, he was Group Vice President for
Regulatory and Government Affairs at Cerner Corporation from 1986 to 1998.
Previously, Dr. McNair was a faculty member of the Departments of Medicine and
Pathology at Baylor College of Medicine and served under Drs. Michael DeBakey
and Antonio Gotto as Co-Director of the Design and Analysis unit of the NIH
National Research and Demonstration Center on Atherosclerosis at Baylor. He has
been an IRB member, a Principal Investigator for various in-vitro testing and
medical device products, and has directed clinical trials for Cerner and other
medical device firms. Since 1992, he has served as a lecturer and member of the
Board of Trustees for the Midwest Bioethics Center. Dr. McNair has an M.D. and a
Ph.D. degree in Biomedical Engineering from the University of Minnesota.

MR. DAVID NIKKA has served ABIOMED since 1997 as its Vice President--Resources
and Administration.President of Human
Resources. Prior to joining ABIOMED, he was Vice President, Human Resources from
1991 to 1997 for Genzyme Genetics, Director of Human Resources from 1989 to 1991
for Genzyme Corporation and Director of Human Resources for Integrated Genetics
from 19861987 to 1989. Mr. Nikka received his Bachelor Degree
from Boston University. Mr. NikkaHe is past Chairperson of both the BIOBiotechnology Industry
Organization and the Massachusetts Biotechnology Council Human ResourceResources
Committees. Ms. Janice Piasecki joined the Company inMr. Nikka received his Bachelor's degree from Boston University.

MS. JANICE T. PIASECKI has served ABIOMED since 1991 and has been
Vice-President, Regulatory Affairs since 1994. From 1991 to 1994, she served as
Manager of Clinical Research and Regulatory Affairs. In thisher role, she has worked
extensively on our domestic and international regulatory submissions, including
the PMA submissionssubmission process for the BVS whichthat led to FDA approvals. She was promoted to
Vice-President, Regulatory Affairs in 1994. Prior to
joining ABIOMED, she held positionpositions of Investigator for the United States Food
and Drug Administration, and Manager of Regulatory Affairs for C.R. Bard.Bard
Ms. Piasecki received her B.S.Bachelor's degree in Biology and Chemistry from Boston
College.

Dr. Edward G. Taylor joined the Company at the end of 1996 as53

MR. EUGENE D. RABE has served ABIOMED since 1993 and has been Senior Vice
President of Global Sales and DirectorServices since 1999. Mr. Rabe assumed
responsibility for international sales in 1996, and was Vice President of the Artificial Heart Program.Sales
from 1993 to 1999. Prior to joining ABIOMED, Dr.
Taylor worked in the United States Air Force from 1972 to 1996 where he
attained the rank of ColonelMr. Rabe was Vice President, Sales
and Marketing for Endosonics Corporation. Mr. Rabe was most recently the Program Directoremployed as a Sales
Manager for the Airborne Warning and Control System (AWACS) in the United States, Europe
and Japan. Previously he had directed high technology research and development
of nationally significant defense programs, including self-protection avionics
for Air Force One.St. Jude Medical, Inc. He was alsohas been involved in the launchmanagement of
sales and operationmarketing of reconnaissance and communication satellites. Dr. Taylor holdscardiovascular/cardiological devices for over twelve
years. Mr. Rabe received a Bachelor's degree from St. Cloud State University and
an MBA from the Illinois InstituteUniversity of California.

MR. JOHN F. THERO has served ABIOMED since 1994 and has been Senior Vice
President of Finance, Treasurer and Chief Financial Officer since 1991. From
1994 to 1999 he was Vice President of Finance, Treasurer and Chief Financial
Officer. Prior to joining ABIOMED, Mr. Thero was Chief Financial Officer and
acting President for the restructuring of two venture-backed companies from 1992
to 1995. From 1987 to 1992, he was employed in various capacities including
Chief Financial Officer, by Aries Technology, Inc. From 1983 to 1987, he was
employed by the commercial audit division of Arthur Andersen LLP during which
time he became a Certified Public Accountant. Mr. Thero received a Bachelor's
degree in Economics/Accounting from The College of the Holy Cross.

MR. MICHAEL VERGA has served ABIOMED since August 1999 as Chief Intellectual
Property Counsel. Prior to joining ABIOMED, he was a patent attorney for the law
firm of Wolf, Greenfield & Sacks, P.C. Mr. Verga has eight years of experience
in domestic and foreign patent prosecution with particular experience in the
medical device, software, electronics, computer architecture, electromagnetics
and semiconductor disciplines. Mr. Verga has also worked as a software and
systems engineer, and engineering manager in the avionics and flight simulation
industry. He is a member of the Massachusetts Bar and is registered to practice
before the U.S. Patent and Trademark Office. Mr. Verga received his Bachelor's
degree in Engineering from Hofstra University, a Master's degree in Electrical
Engineering from the
Air Force InstituteUniversity of TechnologyHouston and a Ph.D. degree in Estimation and ControlJuris Doctor from the Massachusetts Institute of Technology.

Dr.American
University.

DR. W. Gerald AustenGERALD AUSTEN, M.D. has served as a directorDirector of the CompanyABIOMED since 1985.
From 19691974 to the present, Dr. Austen has been Chief of the Surgical Services
at Massachusetts General Hospital, and from 1974 to the present, has been the Edward D. Churchill Professor
of Surgery at Harvard Medical School. HeDr. Austen became President of the
Massachusetts General Physicians Organization in 1994.1994 and since 1999 has served
as Chairman of the Board. From 1969 to 1997 Dr. Austen was Chief of the Surgical
Services at Massachusetts General Hospital. Dr. Austen is the former President
of the American College of Surgeons, the American Association for Thoracic
Surgery, the American Surgical Association and the Massachusetts and American
Heart Associations. Dr. Austen is a member of the Institute of Medicine of the
National Academy of Sciences, a Fellow of the American Academy of Arts and
Sciences and a life member of the corporation of the Massachusetts Institute of
Technology.

Mr. Paul FiremanMR. PAUL B. FIREMAN has served as a directorDirector of the CompanyABIOMED since 1987. He is
the founder of Reebok International Ltd., a leading worldwide designer,
marketer and distributor of sports, fitness and casual footwear, apparel and
equipment. Mr.
Fireman has served as Chief Executive Officer and as a directorDirector of that company sinceReebok
International Ltd., which he founded, from 1979 to the present. He has served as
Reebok's Chairman of the Board of Directors sincefrom 1985 andto the present. He has
also served as Reebok's President from 1989 to the present, after initially
serving as President from 1979 to 1987 and since 1989.1987. Mr. Fireman has also served as the
chairmanChairman of the Entrepreneurial Advisory Board of Babson College since 1995.

Mr. JohnMR. JOHN F. O'BrienO'BRIEN has served as a directorDirector of ABIOMED since 1989. Since
August 1989 he has been the President and Chief Executive Officer and a directorDirector
of First Allmerica Financial Life Insurance Company (formerly State Mutual Life
Assurance Company of America). Since January 1995 he has been President, Chief
Executive Officer and a Director of Allmerica Financial Corporation, a
financial services holding company.Corporation.
Mr. O'Brien is also President, Chief Executive Officer and a directorDirector of
Allmerica Property & Casualty Companies, Inc.; Chairman of the Board, President
and Chief Executive Officer of Citizens Corporation; and a trusteeTrustee and Chairman
of the Board of Allmerica Securities Trust, Allmerica Investment Trust and
Allmerica Funds. From 1972 until 1989, Mr. O'Brien was employed by Fidelity
Investments in various capacities, including as Group Managing Director of FMR
Corp. Mr. O'Brien is

54
also a directorDirector of Cabot Corporation and TJX Companies, Inc. and a Trustee of
the Worcester Art Museum.

Mr. DesmondMR. DESMOND H. O'Connell, Jr.O'CONNELL, JR. has served as a directorDirector of the CompanyABIOMED since
1995. He has beenis currently the President, Chief Executive Officer and a Director of
Serologicals Corporation. He is currently an independent management consultant since September 1990
and has served as a director of Chryslais International Corporation, an
international contract research organization, since 1991.consultant.
From December 1992 until December 1993, he served as the Chairman, Management
Committee of Pharmakon Research International, Inc., a provider of pre-clinical testing
services to pharmaceutical biotechnology companies. During 1991, he briefly
served as Chairman of the Board and Chief Executive Officer of Osteotech, Inc., a medical products company.
Mr. O'Connell was with the BOC Group, PLC
an industrial gas and health care company, in senior management positions from
1980 to 1990, and was a member of the Board of Directors of BOC Group, PLC from
1983 to 1990. From April 1990 until September 1990, Mr. O'Connell was President
and Chief Executive Officer of BOC Health Care. From 1986 to April 1990, he was
Group Managing Director of BOC Group, PLC. Prior to joining BOC, Mr. O'Connell
held various positions at Baxter Laboratories, Inc. including chief executiveChief Executive of
the Therapeutic and Diagnostic Division and Vice President, Corporate
Development. Mr. HenriO'Connell had been a Director of Chryslais International
Corporation from 1991 through May, 1999.

MR. HENRI A. TermeerTERMEER has served as a directorDirector of the CompanyABIOMED since 1987.
Mr. Termeer has served as President and a directorDirector of Genzyme a biotechnology
company engaged in the production and marketing of human health care products,Corporation, since
1983, as its Chief Executive Officer since 1985, and as its Chairman of the
Board since 1988. Mr. Termeer is also Chairman of the Board of Genzyme
Transgenics Corporation. He is also a directorDirector of AutoImmune, Inc., GelTex
Pharmaceuticals, Inc. and Diacrin, Inc. andIn addition, Mr. Termeer serves as a
trusteeTrustee of Hambrecht & Quist Healthcare Investors and Hambrecht & Quist Life
Sciences Investors.

4255

CERTAIN TRANSACTIONS

In July 1997, the Company sold a total of 1,242,710 shares of Common Stock
to Genzyme and certain of the Company's directors for a purchase price of
$13.00 per share, for a total purchase price of $16.2 million. The Chief
Executive Officer of Genzyme, Henri A. Termeer, is a director of the Company.
Of the shares sold, 1,153,846 shares were sold to Genzyme, 23,480 shares were
sold to Paul Fireman, 7,692 shares were sold to Desmond H. O'Connell, Jr. and
57,692 shares were sold to John F. O'Brien. In addition, simultaneously with
this transaction, David M. Lederman, the President and Chief Executive Officer
of the Company sold 153,846 shares of Common Stock to Paul Fireman, a director
of the Company. In connection with these transactions, the Company granted
Genzyme certain registration rights with respect to the shares of Common Stock
purchased by Genzyme. Commencing in July 1998, Genzyme may on up to three
occasions require the Company to register not less than 25% of Genzyme's
shares of Common Stock. Genzyme has also been granted certain piggyback
registration rights to participate in underwritten public offerings by the
Company, subject to certain limitations, commencing in July 1998. In addition,
the other purchasers received similar piggyback registration rights commencing
in July 1998, with respect to the 242,710 shares of Common Stock purchased by
them. In connection with its purchase of the Common Stock, Genzyme agreed,
subject to certain limited exceptions, not to acquire additional voting
securities of the Company for a period of five years following the
consummation of the transaction without the consent of the Company, and,
during that five year period, to vote its shares in the same proportion as
votes cast by other stockholders of the Company or, in Genzyme's discretion,
in accordance with the recommendations of the Company's Board of Directors.

43
PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regardingas of December 1, 1999
with respect to the beneficial ownership of the Company's Common Stock as of September 30, 1997, and as
adjusted to reflect the sale of the Common Stock offered hereby, (i)our common stock by each person who is known by the Company to own beneficially more than 5% of the
outstanding sharesour
directors, each of Common Stock, (ii) by each executive officer and
director of the Company, (iii) by allour executive officers, all of our directors and directors of the
Companyexecutive
officers as a group, and (iv) by each person we know to be the beneficial owner of the Selling Stockholders.five
percent or more of our common stock. This information is based upon information
received from or on behalf of the individuals named individuals. All Selling Stockholders are executive officers of the Company.

BENEFICIAL OWNERSHIP NUMBER BENEFICIAL OWNERSHIP
PRIOR TO OFFERING(1) OF AFTER OFFERING(1)
----------------------- SHARES -----------------------
NUMBER OF PERCENTAGE OF BEING NUMBER OF PERCENTAGE OF
SHARES OWNERSHIP OFFERED SHARES OWNERSHIP
--------- ------------- ------- --------- -------------

David M. Lederman,
Ph.D(2)................ 1,322,554 16.0% 115,000 1,207,554 11.5%
Genzyme Corporation..... 1,153,846 14.0% -- 1,153,846 11.0%
Robert T.V. Kung,
Ph.D(3)(4)............. 173,188 2.1% 35,000 138,188 1.3%
Eugene D. Rabe(4)....... 18,750 * -- 18,750 *
John F. Thero(4)........ 7,764 * -- 7,764 *
W. Gerald Austen,
M.D.(4)................ 25,400 * -- 25,400 *
Paul Fireman(4)......... 225,226 2.7% -- 225,226 2.1%
John F. O'Brien(4)...... 85,092 1.0% -- 85,092 *
Desmond H. O'Connell,
Jr.(4)................. 18,092 * -- 18,092 *
Henri A. Termeer(4)(5).. 1,179,246 14.2% -- 1,179,246 11.2%
All executive officers
and directors as a
group(2)(3)(4)(5) (9
persons)............... 3,055,312 36.2% 150,000 2,905,312 27.2%

- --------
*Represents beneficialtherein.

We determined ownership of less than 1% of the outstanding shares of
Common Stock.

(1) Beneficial ownership is determined in accordance with the rules of the Securities and
Exchange Commission and generallyCommission. Beneficial ownership includes voting power and/or
investment power with respect to securities. Beneficial ownership also
includes sharesthe securities held by the named individuals.
Shares of common stock subject to options currently exercisable or exercisable
within 60 days of September 30, 1997. PercentageDecember 1, 1999, are deemed outstanding for purposes of
beneficial
ownership is based on 8,264,556 sharescomputing the percentage beneficially owned by the person holding the options
but are not deemed outstanding for purposes of Common Stock outstanding on
September 30, 1997 and 10,514,556 shares of Common Stock outstanding upon
completion of this offering. Unlesscomputing the percentage
beneficially owned by any other person. Except as otherwise noted, each person
identified possessesthe persons
or entities named have sole voting and investment power with respect to theall
shares listed.
(2) Includes 725,923shown as beneficially owned by them.

NUMBER OF
SHARES PERCENT PERCENT
BENEFICIALLY BEFORE AFTER
NAME OWNED OFFERING OFFERING
- ---- ------------ -------- --------

David M. Lederman........................................... 1,271,200 14.7% 12.5%
c/o ABIOMED, Inc.
22 Cherry Hill Drive
Danvers, MA 01923
Genzyme Corporation......................................... 1,153,846 13.3% 11.3%
One Kendall Square
Cambridge, MA 02139
W. Gerald Austen............................................ 31,200 * *
Paul B. Fireman............................................. 231,026 2.7% 2.3%
John F. O'Brien............................................. 83,392 1.0% *
Desmond H. O'Connell, Jr.................................... 28,892 * *
Henri A. Termeer............................................ 1,185,046 13.7% 11.7%
Anthony W. Bailey........................................... 5,132 * *
Robert T.V. Kung............................................ 232,625 2.6% 2.3%
Eugene D. Rabe.............................................. 51,625 * *
John F. Thero............................................... 47,250 * *
All Current Executive Officers and Directors as a group (10 3,167,388 35.3% 31.1%
persons)..................................................

- ------------------------

* Less than 1%.

The shares listed above as being beneficially owned by Dr. Lederman include
675,923 shares held by Dr. Lederman's wife, as to which Dr. Lederman disclaims
beneficial ownership. (3) Includes 60,000Dr. Lederman has granted the underwriters an option to
purchase 100,000 shares heldof common stock as part of the underwriters'
over-allotment option. If the option is exercised in full, after this offering,
Dr. Lederman will beneficially own 1,171,200 shares of common stock, or 11.5% of
the shares outstanding. The shares listed above as being beneficially owned by
Dr. Kung's wife and 12,000 shares held in
trust for the benefit of certain relatives of Dr. Kung, as to which Dr.
Kung disclaims beneficial ownership.

(4) Includes the following shares subject to options which are exercisable
within 60 days after September 30, 1997: Dr. Kung--51,188; Mr. Rabe--
18,750; Mr. Thero--7,500; Dr. Austen--25,000; Mr. Fireman--25,000; Mr.
O'Brien--25,000; Mr. O"Connell--5,000; Mr. Termeer--25,000.
(5) IncludesTermeer include 1,153,846 shares held by Genzyme Corporation as to which
Mr. Termeer disclaims beneficial ownership. Mr. Termeer is the Chief Executive
Officer of Genzyme.

44Genzyme Corporation. The shares listed above as being beneficially
owned by Dr. Kung include 55,400 shares held by Dr. Kung's wife and 16,600
shares held in trust for the benefit of certain relatives of Dr. Kung, as to
which Dr. Kung disclaims beneficial ownership.

The preceding table also includes the following shares subject to options
exercisable within 60 days of December 1, 1999: Dr. Austen--22,500;
Mr. Fireman--22,500; Mr. O'Brien--22,500; Mr. O'Connell--10,000;
Mr. Termeer--22,500; Mr. Bailey--5,000; Dr. Kung--110,625; Mr. Rabe--51,625; and
Mr. Thero--47,250.

DESCRIPTION OF CAPITAL STOCK

As of September 30, 1997, the Company's1999, ABIOMED's authorized capital stock consisted of
25,000,000 shares of Common Stock, $.01 par value,common stock and 1,000,000 shares of Class B Preferred Stock,preferred
stock, $.01 par value ("Preferred Stock").value.

COMMON STOCK

As of September 30, 1997,1999, there were 8,264,5568,657,742 shares of Common Stockcommon stock
outstanding. TheseApproximately 404 stockholders held these shares were held of record, by approximately 340
stockholders,
including multiple beneficial holders at depositories, banks, and brokers listed
as a single holder in the street name of each respective depository, bank, or
broker. There will be 10,514,55610,169,867 shares of Common Stockcommon stock outstanding after giving
effect to the sale of the shares of Common Stockcommon stock offered herebyunder this prospectus
by the Company.ABIOMED.

The holders of Common Stock are entitled tocommon stock have one vote per share on all matters to be voted on bywhich
stockholders andmay vote. They are entitled to receive any dividends if any, as may belegally
declared from time to time by the Board of Directors from
funds legally available therefore. Upon liquidationDirectors. If ABIOMED is liquidated or dissolution of the
Company,dissolved, the
holders of Common Stockthe common stock are entitled to receive all assets available for
distribution to the stockholders, subject to any preferential or
other rights of the holders of
Preferred Stock.preferred stock. The Common Stockcommon stock has no preemptive or other subscription
rights, and there are no conversion rights or redemption or sinking fund
provisions with respect to such shares. The holders of Common Stockcommon stock do not have
cumulative voting rights in the election of directors. All of the shares of
Common Stockcommon stock are, and the shares to be sold in the offering will be, fully paid
and nonassessable.

PREFERRED STOCK

The CompanyABIOMED has no Preferred Stockpreferred stock outstanding. The Board of Directors has
the authority tomay,
without stockholder approval, issue the Preferred Stockpreferred stock in one or more series
and to fix the dividend rights dividendand rate, conversion rights, voting rights, rights
and terms of redemption, liquidation preferences, sinking fund terms, and other
rights preferences, privileges and restrictions of any series of Preferred
Stock,preferred stock, the number of shares constituting any
such series and its designation. If the designation
thereof, without further vote or action by the stockholders. The Board of Directors issues preferred
stock, the issuance may without stockholder approval, issue Preferred Stock with rights
and privileges which could, among other things, have the effect of delaying
deferring or preventing a change in
control of ABIOMED. If the Company. The issuanceBoard of Preferred StockDirectors issues preferred stock with voting
and conversion rights, may adversely affect the voting power and other rights of the holders of Common Stock, including the
loss of voting control to others. The Companycommon
stock could be adversely affected. We currently hashave no plans to issue any of
the Preferred Stock.preferred stock. The Board of Directors has designated 25,000 shares of the
Preferred Stockpreferred stock as the "Series A Junior Participating Preferred Stock" in
connection with the Rightsrights described below.

ANTI-TAKEOVER EFFECT OF PROVISIONS OF THE CERTIFICATE OF INCORPORATION AND
BY-
LAWS,BY-LAWS, RIGHTS DISTRIBUTION AND DELAWARE LAW

Certificate of Incorporation and By-lawsCERTIFICATE OF INCORPORATION AND BY-LAWS

The Certificate of Incorporation includes several provisions, in addition to
the Preferred Stock, whichpreferred stock, that may render more difficultdiscourage an unfriendly tender offer, proxy
contest, merger, or other change in control of the Company.control. These provisions are intended to
enhance the likelihood of continuity and stability in the composition of the
Board of Directors and in the policies formulated by the Board of Directors andDirectors.
These provisions are also intended to discourage certain types of transactions
that may involve an actual or threatened change of control of the Company.ABIOMED. These
provisions are also designed to reduce theour vulnerability of the Company to unsolicited
acquisition proposals and to discourage certain tactics that may be used in
proxy fights. However, suchthese provisions could have the effect of discouraging
others from making tender offers for the shares of Common Stock
and, as a consequence,offers. Consequently, they also may inhibit fluctuations in the market
price fluctuations of the shares of Common Stockcommon stock which could result from actual or rumored
takeover attempts. Such factors also may have the effect of preventing changes
in the management of the Company.

The CertificateABIOMED.

Our certificate of Incorporation (i) provides for the classification of the
Company'sincorporation contains provisions that:

- classify our Board of Directors into three classes, (ii) eliminatesclasses;

- eliminate the ability of stockholders to enlarge the Board of Directors, (iii) providesDirectors;

- provide that Board vacancies in the office of a director shall be in the first instancebe filled by the remaining
directors, exceptand in the caseabsence of theany directors, elected by the Common Stock voting as a separate class, in which case it shall be filled by
the holders of that class voting as a separate class, (iv) providesstockholders;

- provide that directors may only be removed "for cause" and only by the
class or classes of stock which elected them,them; and

(v) requires- require an 80% affirmative vote of all votes entitled to be cast to amend
the preceding provisions.

The existence of a classified board is designed to provide continuity and
stability to our management and to render certain hostile takeovers more
difficult. The classification of directors has the effect of making it more
difficult to change the composition of the Board of Directors. It may therefore
make it more difficult for a third party to acquire control of ABIOMED by
delaying, deferring or preventing a change of control that a stockholder might
consider would result in a premium for its stock. At least two stockholder
meetings, instead of one, are required to effect a change in the control of the
Board.

The By-lawsOur by-laws provide that advance written notice of any stockholder
nomination for director must be provided not less than 45 nor more than 60 days
prior to the anticipated date of the annual meeting for election of directors.

The CertificateOur certificate of Incorporationincorporation explicitly directs the Board of Directors
to take into account all relevant factors in exercising its business judgment in
determining what is in the best interests of the CompanyABIOMED and its stockholders in
evaluating certain tender offers and business combination proposals. Relevant
factors include, without limitation,include:

- the Board's estimate of the future value of the Company,ABIOMED;

- the resources and future prospects of the other party,party; and

- the possible social, legal, environmental and economic effects on the Company and on theABIOMED,
our employees, customers, suppliers and creditors of the Company and on the communities in
which the Company'sour facilities are located.

The CertificateOur certificate of Incorporationincorporation and the By-lawsby-laws also provide that all
stockholder action must be effected at a duly called meeting and not by written
consent.

The authority of the Board of Directors to issue authorized but unissued
shares of Common Stockcommon stock might be considered as having the effect of discouraging
an attempt by another person or entity to effect a takeover or otherwise gain
control of the CompanyABIOMED, since the issuance of additional shares of Common Stockcommon stock
would dilute the voting power of the Common Stockcommon stock then outstanding.

Rights DistributionRIGHTS DISTRIBUTION

On August 13, 1997, the Board of Directors declared a dividend of one
preferred share purchase right (a "Right") for each outstanding share of Common Stockcommon stock on
August 28, 1997 (the "Record Date") to the stockholders of record on that date. Each Rightright entitles
the registered holder to purchase from the Companyus one one-thousandth of a share of
Series A Junior Participating Preferred Stock, par value $0.01 per share, (the "Preferred
Shares"), of
the Company,ABIOMED, at a price of $90.00 per one one-thousandth of a Preferred Share,share, subject to
adjustment.

Subject to certain limited exceptions until the earlier to occur of (i) ten
days following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired beneficial ownership
of 15% or more of the outstanding shares of Common Stock, or (ii) ten business
days (or such later date as may be determined by action of the Board of
Directors prior to such time as any person becomes an Acquiring Person)
following the commencement of, or announcement of an intention to make, a
tender offer or exchange offer the consummation of which would result in the
beneficial ownership by a person or group of 15% or more of the outstanding
shares of Common Stock (the earlier of such dates being called the
"Distribution Date"), the Rights will beThe rights are evidenced by the Common Stockcommon stock certificates with a copy of the
Summary of Rights attached thereto.to them until the earlier of the tenth day following
a public announcement that a person or group has acquired 15% or more of the
outstanding common stock and the tenth business day following the commencement
or announcement of a tender offer or exchange offer which would result in a
person or group owning 15% or more of the common stock. As soon as practicable followingpossible
after the Distribution Date,earlier of either of the above occurrences, the rights will become
exercisable, separate certificates evidencing the Rights ("Right
Certificates")rights will be mailed to
stockholders of record on the Distribution
Datedate of such occurrence and the separate

Right Certificates58

rights certificates alone will evidence the Rights.rights. The Rightsrights will expire on
the earlier of (i) August 13, 2007, or (ii) the date on
which the Rights are redeemed.

In the event thatif not redeemed earlier.

If any person becomes an Acquiring Person, proper provision
will be made so thatacquires more than 15% of the outstanding common stock, each
holder of a Right,right, other than Rights beneficiallyrights owned by the Acquiring Person and its affiliates and associates (whichsuch person which will thereafter be void),voided,
will thereafter have the right to receive upon exercise,
that number of shares of Common Stockcommon stock having a twice the market
value of two times the exercise price of the Right. In the event that, at any timeright. If, after a person becomes an Acquiring Person,acquires 15% or
more of the Company isoutstanding common stock, we are acquired in a merger or other
business combination transaction or 50% or more of itsour consolidated assets or
earning power are sold, proper provision will be made so that each holder of a Rightright will thereafter have the right to receive upon the exercise thereof at
the then current exercise price of the Right, that number of
shares of common stock of the acquiring company which at the time of such
transaction will have atwice the market value of two times the exercise price of the Right.

At anyright.

Any time after anya person becomes an Acquiring Personacquires more than 15% of the outstanding common
stock and prior tobefore the acquisition by any person or group of a majority of the
outstanding shares of
Common Stock,common stock, the Board of Directors may exchange the Rightsrights (other
than Rightsrights owned by such person or group which have become void), in whole or
in part, at an exchange ratio of one share of Common Stockcommon stock per Right,right, subject to
adjustment. At any time prior to the time any Person becomes an Acquiring
Person, theThe Board of Directors of the Company may redeem the Rightsrights, in whole, but not in
part, at any time before a person acquires 15% or more of the outstanding common
stock. The redemption price ofshall be $0.001 per Right (the "Redemption Price").right. The
redemption of the Rights may be made effective at such time, on such basis and
with such conditions as the Board of Directors,
in its soleown discretion, may establish. Immediately upon any redemptiondetermine the time of effectiveness and the terms of
the Rights, theredemption. The right to exercise the Rightsany rights will terminate and thewhen they are
redeemed. The only right of the holders of Rightsthe rights after redemption will be
to receive the Redemption Price.redemption price.

The Board of Directors may amend the terms of the Rights may be amended by the Board of Directorsrights without the
consentapproval of the holders of the Rights, except that from andrights. However, after such time as
anya person becomes an Acquiring Person no such amendmentacquires 15% or
more of the outstanding common stock, the Board of Directors may not adversely
affect the interests of the holders of the Rights (other thanrights.

DELAWARE TAKEOVER STATUTE

As a Delaware corporation, we are subject to the Acquiring Person and
its affiliates and associates).General Corporation Law of
the State of Delaware, Takeover Statute

Pursuant toincluding Section 203, an anti-takeover law enacted in
1988. In general, Section 203 restricts the ability of a public Delaware
law, Delaware corporations are prohibitedcorporation from engaging in a wide range"business combination" with an "interested
stockholder" for a period of specified transactions with any "interestedthree years after the date of the transaction in
which the person became an interested stockholder. An interested stockholder"
defined to include, among others,
includes any person or entity who in the last three years obtained 15% or more
of any class or series of stock entitled to vote generally in the election of
directors, unless, among other exceptions, the
transaction is approved by (i)directors. However, if the Board of Directors prior to the date the
interested stockholder obtained such status or (ii) the holders of two-thirds of the outstanding
shares of each class or series of stock entitledapproved the transaction, the person is not deemed
to vote
generally in the election of directors, not including those shares owned by thebe an interested stockholder. By virtue of the Company's decisionBecause we have not to optopted out of the provisions
of this law, it applies to us. As a result, potential acquirors may be
discouraged from attempting to acquire us. This may have the Company.effect of depriving
our stockholders of acquisition opportunities to sell or otherwise dispose our
stock at above-market prices typical of such acquisitions.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stockcommon stock is Boston EquiServe
LP.

4759

UNDERWRITING

The Underwriters named below, actingWe are offering the shares of common stock described in this prospectus
through their representatives
BancAmerica Robertson Stephens and UBSa number of underwriters. Banc of America Securities LLC (the "Representatives"),and Salomon
Smith Barney Inc. are the representatives of the underwriters. We have severally agreed, subjectentered
into a firm commitment underwriting agreement with the representatives. Subject
to the terms and conditions of the Underwriting
Agreement,underwriting agreement, we have agreed to
purchase fromsell to each of the Companyunderwriters, and the Selling Stockholdersunderwriters have each agreed to
purchase, the number of shares of Common Stock set forth opposite their names below. The
Underwriters are committedcommon stock listed next to purchase and pay for all such shares, if any are
purchased.its name in the
following table.

NUMBER
UNDERWRITER OF UNDERWRITER SHARES
- ----------- ---------

BancAmerica Robertson Stephens.....................................
UBSBanc of America Securities LLC.................................................LLC..............................
Salomon Smith Barney Inc....................................

---------
Total.......................................................... 2,400,000Total..................................................... 1,500,000
=========

The Representatives have advised the Company and the Selling Stockholders
that the Underwriters propose tounderwriters initially will offer the shares of Common Stock to the public at the price
to the public set forthspecified on the cover page of this Prospectusprospectus. The underwriters may allow to
some dealers a concession of not more than $ per share. The underwriters
also may allow, and to certainany dealers at such price lessmay reallow, a concession of not more than $
per share of which $ may be reallowed to some other dealers. AfterIf all the public offering,shares are not sold at the public
offering price, concessionthe underwriters may change the offering price and reallowancethe other
selling terms. The common stock is offered subject to dealers may be reduceda number of conditions,
including:

- receipt and acceptance of our common stock by the Representatives. No such reduction shall changeunderwriters; and

- the amountright to reject orders in whole or in part.

The underwriters have an option to buy up to 125,000 additional shares of
proceedscommon stock from ABIOMED and an option to buy up to 100,000 additional shares
of common stock from Dr. David M. Lederman. These additional shares would cover
sales of shares by the underwriters which exceed the number of shares specified
in the table above, and will be sold first by Dr. Lederman and then by ABIOMED
in the event that the option is not exercised in full. The underwriters have
30 days to exercise this option. If the underwriters exercise this option, they
will each purchase additional shares approximately in proportion to the amounts
specified in the table above. ABIOMED will pay the expenses, other than the
underwriting discounts and commissions paid by Dr. Lederman, associated with the
exercise of the over-allotment option.

The following table shows the per share and total underwriting discounts and
commissions to be received by the Company and Selling Stockholders
as set forth on the cover page of this Prospectus.

The Company has grantedpaid to the Underwriters anunderwriters and the estimated offering expenses
to be paid by ABIOMED and

Dr. Lederman. These amounts are shown assuming no exercise and full exercise of
the underwriters' option exercisable duringto purchase additional shares.

PAID BY ABIOMED
---------------------------
NO EXERCISE FULL EXERCISE
----------- -------------

Per share............................................ $ $
Total................................................ $ $

PAID BY DR. LEDERMAN
---------------------------
NO EXERCISE FULL EXERCISE
----------- -------------

Per share............................................ -- $
Total................................................ -- $

ABIOMED, each of its executive officers and directors, and certain of their
family members and trusts who own securities of ABIOMED, and Genzyme
Corporation, which holds 1,153,846 shares of common stock, have entered into
lock-up agreements with the 30-dayunderwriters. Under those agreements, ABIOMED and
those holders of stock and options may not dispose of or hedge any ABIOMED
common stock or securities convertible into or exchangeable for shares of
ABIOMED common stock. These restrictions will be in effect for a period of
90 days after the date of this Prospectus, to purchase up to 360,000
additional sharesprospectus. At any time and without notice, Banc
of Common Stock at the same price per share as the Company
and Selling Stockholders will receive for the 2,400,000 shares that the
Underwriters have agreed to purchase. To the extent that the Underwriters
exercise such option, eachAmerica Securities LLC may, in its sole discretion, release all or some of
the Underwriterssecurities from these lock-up agreements.

ABIOMED and Dr. Lederman will have a firm commitment to
purchase approximatelyindemnify the same percentage of such additional shares that the
number of shares of Common Stock to be purchased by it shown in the above
table represents as a percentage of the 2,400,000 shares offered hereby. If
purchased, such additional shares will be sold by the Underwriters on the same
terms as those on which the 2,400,000 shares are being sold. The Company will
be obligated, pursuant to the option, to sell shares to the Underwriters to
the extent the option is exercised. The Underwriters may exercise such option
only to cover over-allotments made in connection with the sale of shares of
Common Stock offered hereby.

The Underwriting Agreement contains covenants of indemnity among the
Underwriters, the Company and the Selling Stockholdersunderwriters against certain civil
liabilities, including liabilities under the Securities ActAct. If ABIOMED and
liabilities
arising from breaches of representations and warranties contained inDr. Lederman are unable to provide this indemnification, it will contribute to
payments the Underwriting Agreement.

The Company's executive officers, directors, Genzyme and each of the Selling
Stockholders who, in the aggregate hold approximately 2,872,874 shares of
Common Stock (2,722,874 shares of Common Stock after the sale of shares of
Common Stock by the Selling Stockholders in the offering) have agreed in
writing with the Representatives that, for a period of 90 days from the date
of this Prospectus ("Lock-up Period"), subject to certain limited exceptions,
each will not, directly or indirectly, without the prior written consent of
BancAmerica Robertson Stephens, sell, offer, contract to sell, pledge, grant
any option to purchase or otherwise dispose of any shares of Common Stock or
any securities convertible into or exchangeable for, or any rights to purchase
or acquire, Common Stock held by them, thereafter acquired by them or whichunderwriters may be deemedrequired to be beneficially owned by them. However, BancAmerica Robertson
Stephens may,make in its sole discretion at any time or from time to time, without
notice, release all or any portionrespect of the securities subject to the lock-up
agreements.those
liabilities.

In addition, the Company has agreed that during the Lock-up
Period, it will not, without the prior written consent of BancAmerica
Robertson Stephens, issue, sell, contract to sell or otherwise dispose of any
shares of Common Stock, any options or warrants to purchase any shares of
Common Stock or any securities convertible into, exercisable for or
exchangeable for shares of Common Stock other than the Company's sale of
shares inconnection with this offering, the issuanceunderwriters may purchase and sell
shares of Common Stock uponcommon stock in the exerciseopen market. These transactions may include:

- short sales;

- stabilizing transactions; and

- purchases to cover positions created by short sales.

Short sales involve the sale by the underwriters of outstanding options and under the Company's existing employee stock purchase
plan, the Company's issuance of options under existing employee and director
stock options plans and under certain other conditions. See "Risk Factors--
Shares Eligible For Future Sale."

The offering price for the Common Stock has been determined by negotiations
among the Company, the Selling Stockholders and the Representatives of the
Underwriters, based largely upon the market price for the Common Stock as
reported on the Nasdaq National Market.

The Underwriters do not intend to confirm sales to any accounts over which
they exercise discretionary authority in excess of 5% of thea greater number of
shares than they are required to purchase in this offering. Stabilizing
transactions consist of Common Stock offered hereby.

The Representatives have advisedbids or purchases made for the Company that, pursuant to Regulation M
under the Securities Act, certain persons participatingpurpose of preventing or
retarding a decline in the offering may
engage in transactions, including stabilizing bids, syndicate covering
transactions or the imposition of penalty bids, which may have the effect of
stabilizing or maintaining the market price of the Common Stock atcommon stock while this offering
is in progress.

The underwriters may also impose a level
abovepenalty bid. This means that whichif the
representatives purchase shares in the open market in stabilizing transactions
or to cover short sales, the representatives can require the underwriters that
sold those shares as part of this offering to repay the underwriting discount
received by them.

The underwriters may engage in activities that stabilize, maintain or
otherwise affect the price of the common stock, including:

- over-allotment;

- stabilization;

- syndicate covering transactions; and

- imposition of penalty bids.

As a result of these activities, the price of the common stock may be higher
than the price that otherwise might otherwise prevailexist in the open market. A "stabilizing
bid" is a bid for orIf the
purchase of the Common Stock on behalf of the
Underwriters for the purpose of fixing or maintaining the price of the Common
Stock. A "syndicate covering transaction" is the bid for or the purchase of
the Common Stock on behalf of the Underwriters to reduce a short position
incurred by the Underwriters in connection with the offering. A "penalty bid"
is an arrangement permitting the Representatives to reclaim the selling
concession otherwise accruing to an Underwriter or syndicate member in
connection with the offering if the Common Stock originally sold by such
Underwriter or syndicate member is purchased by the Representatives in a
syndicate covering transaction and has therefore not been effectively placed
by such Underwriter or syndicate member.underwriters commence these activities, they may discontinue them at any time.
The Representatives have advised the
Company that suchunderwriters may carry out these transactions may be effected on the Nasdaq National Market,
in the over-the-counter-market or otherwise and, if commenced, may be discontinued at any time.otherwise.

In connection with this offering, certain Underwriterssome underwriters and any selling group
members who are qualified market makers on the Nasdaq National Market may engage
in passive market making transactions in the Common Stockcommon stock on the Nasdaq StockNational
Market in accordance with Rule 103 of Regulation M, underduring the Securities Exchange Actbusiness day
before the pricing of 1934 ("Exchange Act").the offering, before the commencement of offers or sales
of the common stock. Passive market making consists of displaying bids on
the Nasdaq National Market limited by the bid prices of independentmakers must comply with applicable volume
and price limitations and must be identified as a passive market makers and making purchases limited by such prices and effected in response to
order flow. Net purchases bymaker. In
general, a passive market maker on each daymust display its bid at a price not in excess of
the highest independent bid for the security; if all independent bids are
limited to
a specific percentage oflowered below the passive market maker's average daily trading
volume inbid, however, the Common Stock during a specific period andbid must then be
discontinuedlowered when such limit is reached. Passive market making may stabilize the market
price of the Common Stock at a level above that which might otherwise prevail
and, if commenced, may be discontinued at any time.

Since September 1996, an entity affiliated with UBS Securities LLC has
managed certain assets of the Company, primarily in the form of marketable
securities, held by ABD Holding, Inc., a wholly owned subsidiary of the
Company. The Company pays quarterly fees for such services based on a
percentage of the assets managed. UBS Securities LLC also received fees in
connection with its role as the Company's financial advisor in connection with
the implementation of a stockholder rights plan for the holders of the
Company's Common Stock in August 1997 and its opinion as to the fairness from
a financial point of view of the consideration received by the Company
pursuant to a private placement of the Company's Common Stock in July 1997.
See "Certain Transactions."purchase limits are exceeded.

LEGAL MATTERS

TheFoley, Hoag & Eliot LLP, Boston, Massachusetts, will pass on the validity of
the securitiescommon stock offered hereby has been passedby this prospectus for us. Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C., Boston, Massachusetts, will pass upon for the
Company and the Selling Stockholders by Brown, Rudnick, Freed & Gesmer,
Boston, Massachusetts. Certaincertain legal
matters in connection with this offering will be passed upon for the Underwriters by Testa, Hurwitz & Thibeault, LLP,
Boston, Massachusetts. A member of Brown, Rudnick, Freed & Gesmer, counsel to
the Company, is the Secretary of the Company.underwriters.

EXPERTS

The audited financial statements included orand incorporated by reference in
this Prospectus orprospectus and elsewhere in this Registration Statementthe registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reportreports with respect thereto, and are included or incorporated by reference
herein in reliance upon the
authority of said firm as experts in giving said report.

AVAILABLEaccounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

The Company is subject to the informational requirements of the Exchange
Act,We file annual, quarterly and in accordance therewith filescurrent reports, proxy statements and other
information with the Commission. Such reports, proxy statementsSEC. You may read and other
information filed by the Company can be inspected and copiedcopy any document we file at the
SEC's public reference facilities maintained by the Commissionroom at 450 Fifth Street, NW, Room 1024, Judiciary Plaza, Washington, D.C., 20549,
and at the Commission's
Regional Offices at Citicorp Center, 500 West Madison Street, Suite 1400,SEC's public reference rooms in Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York, New
York 10048,York. Please call the SEC at prescribed rates. In addition, such reports, proxy statements
and information are available through the Commission's Electronic Data
Gathering and Retrieval System at http://www.sec.gov. The Company's Common
Stock is listed on the Nasdaq National Market, and reports, proxy statements
and certain other1-800-SEC-0330 for further information concerning
the Company canpublic reference rooms. Our SEC filings are also be inspectedavailable to the public on
the SEC's Website at the offices of the Nasdaq National Market, 1735 K Street NW, Washington, D.C.
20006.

The Company hasHTTP://WWW.SEC.GOV.

We have filed with the CommissionSEC a Registration Statementregistration statement on Form S-3 under the
Securities Act of 1933 as amended, with respect to the Common
Stock beingcommon stock offered hereby.in connection
with this prospectus. This Prospectus, which constitutes a part of the
Registration Statement,prospectus does not contain all of the information
set forth in such Registration Statementthe registration statement. We have omitted certain parts of the
registration statement in accordance with the rules and regulations of the SEC.
For further information with respect to us and the exhibits and schedules theretocommon stock, you should
refer to which
reference is hereby made. The statementsthe registration statement. Statements contained in this Prospectusprospectus as
to the contents of any contract or other document are not necessarily complete
and, in each instance, you should refer to the copy of such contract or document
filed as an exhibit to or incorporated by reference in the registration
statement. Each statement as to the contents of such Registration Statement arecontract or document is
qualified in their entiretyall respects by such reference. The Registration Statement, together with its exhibits and
schedules,You may be inspectedobtain copies of the
registration statement from the SEC's principal office in Washington, D.C. upon
payment of the fees prescribed by the SEC, or you may examine the registration
statement without charge at the Public Reference Sectionoffices of the Commission in Washington, D.C. atSEC described above.

The SEC allows us to "incorporate by reference" the address noted above,information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus, and copies of
allinformation that we file later with the SEC
will automatically update and supersede this information. We incorporate by

reference the documents listed below and any future filings we will make with
the SEC under Sections 13(a), 13(c), 14 or any part thereof may be obtained from the Commission upon payment15(d) of the prescribed fees.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed by the Company with the Commission pursuant to
theSecurities Exchange Act
are incorporated herein by reference:of 1934.

(1) the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1997;1999;

(2) the Company's Quarterly ReportsReport on Form 10-Q for the fiscal quartersquarter ended June 30,
and September 30, 1997;1999;

(3) the Company's CurrentQuarterly Report on Form 8-K filed with10-Q for the Commissionfiscal quarter ended
September 30, 1999;

(4) Proxy Statement used for our annual meeting of stockholders held on
August 25, 1997;11, 1999; and

(4)(5) the description of the Company's Common Stockour common stock and the Rightsrights we distributed to
stockholders in 1997 contained in the Company's Registration Statementsour registration statements on
Form 8-A filed with the CommissionSEC on June 11, 1987 and August 25, 1997.

All reports and other documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of
this Prospectus and prior to the termination of the offering shall be deemed
to be incorporated by reference in this Prospectus and shall be part hereof
from the date of the filing of such document. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein, or in any other subsequently filed
document that also is (or is deemed to be) incorporated by reference herein,
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of the Registration Statement or this Prospectus. The Company will provide
without charge to each person, including any beneficial owner, to whom this
Prospectus is delivered, upon written or oralYou may request of such person, a copy of any ofthese filings at no cost, by writing or
telephoning at the documents referred to above (other than exhibits). Requests for
such documents should be submitted in writing to:following address:

ABIOMED, Inc.
Investor Relations
ABIOMED,
Inc.,22 Cherry Hill Drive
Danvers, Massachusetts 01923
(978) 777-5410

You should rely only on the information or by telephone at
(978) 777-5410.

51representations provided in this
prospectus. We have authorized no one to provide you with different information.
We are not making an offer of these securities in any state where the offer is
not permitted. You should not assume that the information in this prospectus is
accurate as of any date other than the date on the front of the document.

ABIOMED, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

PAGE
------------

Report of Independent Public Accountants..................................Accountants.................... F-2
Consolidated Balance Sheets as of March 31, 19961998 and 19971999
and September 30, 19971999 (unaudited)............................................................................. F-3
Consolidated Statements of Operations for the Fiscal Years
Ended March 31, 1995, 19961997, 1998 and 19971999 and for the Six Months
Ended September 30, 19961998 and 19971999 (unaudited)...................................................................... F-4
Consolidated Statements of Stockholders' InvestmentEquity for the
Fiscal Years Ended March 31, 1995, 19961997, 1998 and 19971999 and for
the Six Months Ended September 30, 19971999 (unaudited).................................................. F-5
Consolidated Statements of Cash Flows for the Fiscal Years
Ended March 31, 1995, 19961997, 1998 and 19971999 and for the Six Months
Ended September 30, 19961998 and 19971999 (unaudited)...................................................................... F-6
Notes to Consolidated Financial Statements................................Statements.................. F-7

F-1

ABIOMED, INC. AND SUBSIDIARIES

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To ABIOMED, Inc.:

We have audited the accompanying consolidated balance sheets of
ABIOMED, Inc. (a Delaware corporation) and subsidiaries as of March 31, 19961998 and
1997,1999, and the related consolidated statements of operations, stockholders'
investmentequity and cash flows for each of the three years in the period ended March 31,
1997.1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of ABIOMED, Inc. and
subsidiaries as of March 31, 19961998 and 1997,1999, and the results of their operations
and their cash flows for each of the three years in the period ended March 31,
1997,1999, in conformity with generally accepted accounting principles.

Arthur AndersenARTHUR ANDERSEN LLP

Boston, Massachusetts
May 8, 1997April 30, 1999

F-2

ABIOMED, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

MARCH 31,
--------------------------- SEPTEMBER 30,
-------------------------- -------------
1996 1997 19971998 1999 1999
------------ ------------ -------------
(unaudited)(UNAUDITED)

ASSETS
Current Assets:
Cash and cash equivalents (Note 1).................................................... $ 2,938,3322,683,151 $ 1,616,6969,279,210 $ 711,4255,117,314
Short-term marketable securities (Note 1).......................... 7,709,110 7,744,664 23,600,089............. 23,714,641 8,902,031 8,543,274
Accounts receivable, net of allowance for doubtful
accounts of $111,000, $229,000 and $231,000approximately $204,000 at March 31, 1996, 19971998
and 1999 and $210,000 at September 30, 1997, respectively............ 2,606,289 4,816,500 6,257,7971999......... 5,356,348 6,437,225 6,916,380
Inventories (Note 1)............... 1,653,512 1,820,783 1,847,624.................................. 2,327,442 2,895,857 3,559,112
Prepaid expenses and other current assets............................ 92,280 173,172 391,383assets............. 208,387 335,403 578,774
------------ ------------ -------------------------
Total current assets............. 14,999,523 16,171,815 32,808,318assets.............................. 34,289,969 27,849,726 24,714,854
------------ ------------ -------------------------
Property and Equipment, at cost (Note 1):
Machinery and equipment............ 2,378,851 3,147,837 3,981,322equipment............................... 4,100,905 5,443,930 5,854,020
Furniture and fixtures ............ 156,048 241,867 380,242fixtures................................ 533,460 575,166 1,036,796
Leasehold improvements............. 378,998 1,118,677 1,262,937improvements................................ 1,561,189 1,728,351 2,026,496
------------ ------------ -------------
2,913,897 4,508,381 5,624,501
Less -- Accumulated------------
6,195,554 7,747,447 8,917,312
Less--Accumulated depreciation and amortization.................. 2,331,145 2,618,603 2,988,902amortization....... 2,674,238 3,884,088 5,109,700
------------ ------------ -------------
582,752 1,889,778 2,635,599------------
3,521,316 3,863,359 3,807,612
------------ ------------ ------------
Other Assets, net (Notes 1 and 7): 627,154 485,000 904,286(Note 8).............................. 943,839 1,268,536 1,136,334
------------ ------------ -------------------------
$ 16,209,42938,755,124 $ 18,546,59332,981,621 $ 36,348,20329,658,800
============ ============ =========================
LIABILITIES AND STOCKHOLDERS' INVESTMENTEQUITY
Current Liabilities:
Accounts Payable...................payable...................................... $ 777,9432,057,473 $ 1,289,024874,648 $ 1,132,7301,728,964
Accrued expenses (Notes 8 and 9)... 1,486,981 2,032,506 2,567,027(Note 10)............................ 2,948,604 4,830,620 4,438,945
------------ ------------ -------------------------
Total current liabilities........ 2,264,924 3,321,530 3,699,757liabilities......................... 5,006,077 5,705,268 6,167,909
------------ ------------ -------------------------
Long-term Liabilities................................... 63,604 204,816 158,775
------------ ------------ ------------
Liabilities of Discontinued Operations, net (Note 2).... 667,466 -- --
------------ ------------ ------------
Commitments and Contingencies (Notes 56 and 8)
Stockholders' Equity (Notes 3 and 7)
Stockholders' Investment (Notes 2 and
6):
Class B Preferred Stock, $.01 par value --
Authorized --value--Authorized--
1,000,000 sharesshares; issued and outstanding-- none.....outstanding--none...... -- -- --
Common Stock, $.01 par value --
Authorized --25,000,000 sharesvalue--Authorized--25,000,000
shares; issued and outstanding --
5,518,054, 7,008,282outstanding--8,567,015, 8,650,802
and 8,264,5568,657,742 shares at March 31, 1996,1998, March 31,
19971999 and September 30, 1997,
respectively...................... 55,180 70,082 82,646
Class A Common Stock, $.01 par
value --
Authorized -- 2,346,000 shares
issued and outstanding-- 1,428,000
shares at March 31, 1996 and none
at March 31, 1997 and September
30, 1997, respectively............ 14,280 --1999, respectively........... 85,670 86,508 86,577
Additional paid-in capital........... 36,625,221 37,169,893 53,221,747capital............................ 57,454,983 58,219,906 58,287,537
Accumulated deficit.................. (22,750,176) (22,014,912) (20,655,947)deficit................................... (24,522,676) (31,234,877) (35,041,998)
------------ ------------ -------------------------
Total stockholders' investment....... 13,944,505 15,225,063 32,648,446equity........................ 33,017,977 27,071,537 23,332,116
------------ ------------ -------------------------
$ 16,209,42938,755,124 $ 18,546,59332,981,621 $ 36,348,20329,658,800
============ ============ =========================

The accompanying notes are an integral part of these consolidated financial
statements.THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

F-3

ABIOMED, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

SIX MONTHS ENDED
YEARS ENDED MARCH 31, SEPTEMBER 30,
------------------------------------- -----------------------
1995 1996--------------------------------------- -------------------------
1997 1996 19971998 1999 1998 1999
----------- ----------- ----------- ----------- -----------
(unaudited) (unaudited)(UNAUDITED)

Revenues (Note 1):
Products..............Products................................. $10,872,203 $17,260,577 $18,078,957 $ 6,892,9317,877,493 $ 9,725,332 $12,311,178 $5,759,555 $9,324,205
Contracts............. 2,337,505 3,118,2787,615,342
Contracts................................ 4,150,752 1,753,849 3,680,2525,184,859 4,010,647 2,893,176 2,904,648
----------- ----------- ----------- ---------- ----------
9,230,436 12,843,610 16,461,930 7,513,404 13,004,457----------- -----------
15,022,955 22,445,436 22,089,604 10,770,669 10,519,990
----------- ----------- ----------- ---------- --------------------- -----------
Costs and expenses:Expenses:
Cost of products...... 3,288,833 3,921,319 5,360,449 2,122,853 3,437,803product revenues................. 4,427,189 6,502,256 6,772,132 3,000,211 2,472,455
Research and development (Note 1)............. 2,464,519 3,218,211 3,832,918 1,780,737 3,654,181........ 3,772,609 9,090,517 13,449,545 6,984,224 6,842,159
Selling, general and administrative....... 4,278,392 5,740,830 7,068,403 3,229,235 4,970,150administrative...... 6,081,884 9,054,095 9,772,292 4,538,306 5,410,000
----------- ----------- ----------- ---------- ----------
10,031,744 12,880,360 16,261,770 7,132,825 12,062,134----------- -----------
14,281,682 24,646,868 29,993,969 14,522,741 14,724,614
----------- ----------- ----------- ---------- --------------------- -----------
Income (Loss) From Operations.............. 741,273 (2,201,432) (7,904,365) (3,752,072) (4,204,624)
Interest and other income, net........... 535,104 1,206,317 1,192,164 727,003 397,503
----------- ----------- ----------- ----------- -----------
Income (Loss) From Continuing Operations... 1,276,377 (995,115) (6,712,201) (3,025,069) (3,807,121)
Loss From Discontinued Operations (Note
2)....................................... (541,113) (1,512,649) -- -- --
----------- ----------- ----------- ----------- -----------
Net Income (Loss).......................... $ 735,264 $(2,507,764) $(6,712,201) $(3,025,069) $(3,807,121)
=========== =========== =========== =========== ===========
Income (loss) from operations............. (801,308) (36,750) 200,160 380,579 942,323
InterestContinuing Operations
per Share (Note 1):
Basic.................................... $ 0.18 $ (0.12) $ (0.78) $ (0.35) $ (0.44)
Diluted.................................. 0.18 (0.12) (0.78) (0.35) (0.44)
Loss from Discontinued Operations per Share
(Notes 1 and other
income............... 449,124 527,874 535,104 256,537 416,6422):
Basic.................................... (0.07) (0.19) -- -- --
Diluted.................................. (0.08) (0.19) -- -- --
----------- ----------- ----------- ---------- --------------------- -----------
Net income (loss).......Income (Loss) per Share (Note 1):
Basic.................................... $ (352,184)0.11 $ 491,124(0.31) $ 735,264(0.78) $ 637,116 $1,358,965(0.35) $ (0.44)
Diluted.................................. 0.10 (0.31) (0.78) (0.35) (0.44)
=========== =========== =========== ========== ==========
Net income (loss) per
common and common
equivalent share=========== ===========
Weighted Average Shares Outstanding
(Note 1)..................... $ (0.05) $ 0.07 $ 0.10 $ 0.09 $ 0.17
=========== =========== =========== ========== ==========
Weighted average number
of common and common
equivalent shares
outstanding (Note 1)... 6,511,777 6,995,664:
Basic.................................... 6,978,569 8,074,150 8,619,100 8,598,869 8,653,108
Diluted.................................. 7,162,347 7,196,343 7,868,675
=========== =========== =========== ========== ==========8,074,150 8,619,100 8,598,869 8,653,108

The accompanying notes are an integral part of these consolidated financial
statements.THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

F-4

ABIOMED, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENTEQUITY

CLASS A
COMMON STOCK COMMON STOCK
------------------- --------------------- ---------------------- ADDITIONAL TOTAL
NUMBER $0.01$.01 NUMBER $0.01$.01 PAID-IN ACCUMULATED STOCKHOLDERS'
OF SHARES PAR VALUE OF SHARES PAR VALUE CAPITAL DEFICIT INVESTMENTEQUITY
--------- --------- ---------- --------- ----------- ------------ -------------

Balance, March 31, 1994................... 4,432,686 $44,327 2,040,000 $20,400 $33,413,242 $(22,889,116) $10,588,853
Stock options
exercised............. 1,100 11 -- -- 6,314 -- 6,325
Stock issued under
employee stock
purchase plan......... 639 7 -- -- 3,873 -- 3,880
Stock issued in
exchange for amount
due to Abiomed Limited
Partnership........... 451,427 4,514 -- -- 3,053,341 -- 3,057,855
Net loss............... -- -- -- -- -- (352,184) (352,184)
--------- ------- ---------- ------- ----------- ------------ -----------
Balance, March 31,
1995................... 4,885,852 48,859 2,040,000 20,400 36,476,770 (23,241,300) 13,304,729
Conversion of Class A
Common Stock to Common
Stock................. 612,000 6,120 (612,000) (6,120) -- -- --
Stock options
exercised............. 19,425 194 -- -- 143,018 -- 143,212
Stock issued under
employee stock
purchase plan......... 777 7 -- -- 5,433 -- 5,440
Net income............. -- -- -- -- -- 491,124 491,124
--------- ------- ---------- ------- ----------- ------------ -----------
Balance, March 31,
1996...................1996............. 5,518,054 55,180$55,180 1,428,000 14,280 36,625,221 (22,750,176) 13,944,505$14,280 $36,625,221 $(22,750,176) $13,944,505
Conversion of Class A Common Stock
to Common Stock................. 1,428,000 14,280 (1,428,000) (14,280) -- -- --
Stock options exercised.............exercised........... 59,112 611 -- -- 533,142 -- 533,753
Stock issued to directors and
under employee stock purchase
plan.........plan............................ 3,116 11 -- -- 11,530 -- 11,541
Net income.............income........................ -- -- -- -- -- 735,264 735,264
--------- ------- ---------- ------- ----------- ------------ -----------
Balance, March 31, 1997...................1997............. 7,008,282 70,082 -- -- 37,169,893 (22,014,912) 15,225,063
Sales of Common Stock, net........ 1,532,710 15,327 -- -- 20,054,077 -- 20,069,404
Stock options exercised............. 12,015 120exercised........... 20,015 200 -- -- 83,448151,180 -- 83,568151,380
Stock issued to directors and
under employee stock purchase
plan......... 1,549 17plan............................ 6,008 61 -- -- 15,76479,833 -- 15,781
Private placement of
Common Stock ......... 1,242,710 12,427 -- -- 15,952,642 -- 15,965,06979,894
Net income.............loss.......................... -- -- -- -- -- 1,358,965 1,358,965(2,507,764) (2,507,764)
--------- ------- ---------- ------- ----------- ------------ -----------
Balance, March 31, 1998............. 8,567,015 85,670 -- -- 57,454,983 (24,522,676) 33,017,977
Stock options exercised........... 69,400 694 -- -- 635,447 -- 636,141
Stock issued to directors and
under employee stock purchase
plan............................ 14,387 144 -- -- 129,476 -- 129,620
Net loss.......................... -- -- -- -- -- (6,712,201) (6,712,201)
--------- ------- ---------- ------- ----------- ------------ -----------
Balance, March 31, 1999............. 8,650,802 86,508 -- -- 58,219,906 (31,234,877) 27,071,537
Stock options exercised
(unaudited)..................... 2,300 23 -- -- 18,377 -- 18,400
Stock issued to directors and
under employee stock purchase
plan (unaudited)................ 4,640 46 -- -- 49,254 -- 49,300
Net loss (unaudited).............. -- -- -- -- -- (3,807,121) (3,807,121)
--------- ------- ---------- ------- ----------- ------------ -----------
Balance, September 30, 19971999
(unaudited)....... 8,264,556 82,646....................... 8,657,742 $86,577 -- -- 53,221,747 (20,655,947) 32,648,446$58,287,537 $(35,041,998) $23,332,116
========= ======= ========== ======= =========== ============ ===========

The accompanying notes are an integral part of these consolidated financial
statements.THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

F-5

ABIOMED, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED
YEARS ENDED MARCH 31, SEPTEMBER 30,
---------------------------------- ------------------------
1995 1996------------------------------------------ --------------------------
1997 1996 1997
--------- ----------1998 1999 1998 1999
------------ ------------ ------------ ------------ -----------
----------- -----------
(unaudited) (unaudited)(UNAUDITED)

Cash flowsFlows from operating
activities:Operating Activities:
Net income (loss)....... $(352,184) $ 491,124.............. $ 735,264 $ 637,116(2,507,764) $ 1,358,965(6,712,201) $ (3,025,069) $(3,807,121)
Adjustments to reconcile net
income (loss) to net cash
provided by
(used in)used in operating activities --activities:
Depreciation and
amortization.......... 353,293 349,756 429,612 192,168 441,376
Noncash transactions
related to Abiomed
Limited Partnership... (251,883) -- -- -- --amortization............... 424,225 876,939 1,385,988 763,872 1,330,504
Changes in current
assets and
liabilities --liabilities:
Accounts receivable... (73,518) (830,555) (2,210,211) (337,286) (1,441,297)
Inventories........... 815,518 (244,232) (167,271) (164,591) (26,841)receivable, net... (2,217,017) (805,313) (1,080,877) 194,661 (479,155)
Inventories................ (39,362) (858,704) (568,415) (882,131) (663,255)
Prepaid expenses and other
current
assets............... 58,530 (38,450)assets................... (80,892) (112,073) (708,574)(266,941) (627,851) (212,506) (216,061)
Assets and liabilities of
discontinued operations,
net...................... (56,591) 1,155,934 (667,466) (56,778) --
Accounts payable...... (65,894) 579,663payable........... 511,081 148,932 (156,294)768,449 (1,182,825) (813,063) 854,316
Accrued expenses...... 428,244 259,602 545,525 (252,435) 534,521
--------- ---------- ----------- ----------expenses........... 514,611 1,013,650 1,882,016 287,609 (391,675)
Long-term liabilities...... -- (63,604) 141,212 23,865 (46,041)
------------ ------------ ------------ ------------ -----------
Net cash provided by
(used in)used in
operating activities......... 912,106 566,908 (236,892) 111,831 1,856
--------- ---------- ----------- ----------activities... (208,681) (687,354) (7,430,419) (3,719,540) (3,418,488)
------------ ------------ ------------ ------------ -----------
Cash flowsFlows from investing
activities:
(Purchases) maturitiesInvesting
Activities:
Proceeds from the sale of
short termshort-term marketable
security
investments, net....... (604,618) 2,701,323 (35,554) 4,519,658 (15,855,425)securities................... 43,654,918 50,501,474 40,360,661 18,772,594 7,440,457
Purchases of short-term
marketable securities........ (43,690,472) (66,471,451) (25,548,051) (15,496,494) (7,081,700)
Purchases of property and
equipment.......... (132,087) (322,642) (1,594,484) (531,873) (1,116,120)
Purchasesequipment.................... (1,591,846) (2,540,168) (1,551,893) (1,174,378) (1,169,865)
------------ ------------ ------------ ------------ -----------
Net cash (used in) provided
by investing activities.... (1,627,400) (18,510,145) 13,260,717 2,101,722 (811,108)
------------ ------------ ------------ ------------ -----------
Cash Flows from Financing
Activities:
Proceeds from sales of Abiomed
Limited Partnership
units from limited
partners (Note 7)......Common
Stock, net................... -- (770,000)20,069,404 -- -- --
--------- ---------- ----------- ---------- -----------
Net cash provided by
(used in) investing
activities......... (736,705) 1,608,681 (1,630,038) 3,987,785 (16,971,545)
--------- ---------- ----------- ---------- -----------
Cash flows from financing
activities:
Registration fees and
costs in connection
with exchange of common
stock for amounts due
to Abiomed Limited
Partnership............ (51,573) -- -- -- --
Proceeds from private
placement of Common
Stock, net............. -- -- -- -- 15,965,069
Proceeds from exercise of stock
options and stock issued
under employee purchase
plan.... 10,205 148,652plan......................... 545,294 266,401 99,349
--------- ---------- ----------- ----------231,274 765,761 651,506 67,700
------------ ------------ ------------ ------------ -----------
Net cash (used in)
provided by
financing activities......... (41,368) 148,652activities....... 545,294 266,401 16,064,418
--------- ---------- ----------- ----------20,300,678 765,761 651,506 67,700
------------ ------------ ------------ ------------ -----------
Net increase (decrease)(Decrease) Increase in cash and cash
equivalents, excluding
investments............. 134,033 2,324,241 (1,321,636) 4,366,017 (905,271) Cash
and cash
equivalents,Cash Equivalents........... (1,290,787) 1,103,179 6,596,059 (966,312) (4,161,896)
Cash and Cash Equivalents,
excluding investments,marketable
securities, at beginning of
period..... 480,058 614,091 2,938,332 2,938,332 1,616,696
--------- ---------- ----------- ----------period......................... 2,870,759 1,579,972 2,683,151 2,683,151 9,279,210
------------ ------------ ------------ ------------ -----------
Cash and cash
equivalents,Cash Equivalents,
excluding investments,marketable
securities, at end of period..................period... $ 614,091 $2,938,3321,579,972 $ 1,616,696 $7,304,3492,683,151 $ 711,425
========= ========== =========== ==========9,279,210 $ 1,716,839 $ 5,117,314
============ ============ ============ ============ ===========

The accompanying notes are an integral part of these consolidated financial
statements.THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

F-6

ABIOMED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 1997 AND SEPTEMBER 30, 1997 (UNAUDITED)(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

(1) SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

ABIOMED, Inc. and subsidiaries (the Company)"Company") is engaged primarily in the
research, development, manufacture and commercializationmarketing of medical devices, with a primary
focus onproducts designed to safely
and effectively assist or replace the developmentpumping function of cardiac assist and heart replacement technology.
In particular, the failing heart. The
Company markets and sells the BVS-5000 system, a bi-ventricular temporary
cardiac assist device, from whichartificial heart and is developing the majority of the Company's product
revenues have been derived.AbioCor-TM- Implantable Replacement
Heart. The accompanying consolidated financial statements reflect the
application of certain significant accounting policies described below.

(a) Principles of Consolidation(A) PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries, and beginning in fiscal 1996, the accounts of its
majority-owned subsidiary Abiomed Limited Partnership. All significant
intercompany accounts and transactions have been eliminated in consolidation.

(b) Uses of Estimates in the Preparation of Financial Statements(B) USES OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.

The accompanying consolidated financial statements include amounts from
interim periods ended September 30, 1998 and 1999 that are unaudited but, in the
opinion of management, include all adjustments (consisting only of normal,
recurring adjustments) necessary for a fair presentation of results for these
interim periods. The results of operations for the six months ended
September 30, 19971999 are not necessarily indicative of results to be expected for
the fiscal year ending March 31, 1998.

(d) Product Revenues2000.

(D) PRODUCT REVENUES

The Company recognizes product revenues at the time products are shipped to
the customers. Service revenues, which are not material, are recognized ratably over
the periods of the service contracts. In fiscal 1995, 19961997, 1998, 1999 and 1997, 13%, 9%the six
months ended September 30, 1998 and 1999, all product revenues were derived from
sales of the BVS 5000 and 7%, 6%, 3%, 4% and 3%, respectively, of product
revenues were from customers located outside of the United States. No customer
accounted for greater than 10% of product revenues during fiscal 1995, 19961997, 1998,
1999 or 1997.

During the year ended March 31, 1997 and the six months ended September 30, 1997,1998 and 1999.

(E) CONTRACT REVENUES

Research and development is a significant portion of the Company recognized $580,000Company's
operations. The Company's research and $870,000, respectively,development efforts are focused on the
development of product
revenuesnew products, primarily related to sales-type lease transactions. The termscardiac assist and heart
replacement, including the continued enhancement of these
noncancellable leases are for one to three years. As of September 30, 1997,
the long-termBVS and related
technologies. A portion of these lease payments, approximately $490,000, is
included in other assets and the current portion, approximately $350,000, is
included in accounts receivable.

(e) Contract Revenues

In fiscal 1995, 1996 and 1997, the majority of the Company's research and development contract revenues were generated fromexpenses have
been supported by

F-7

ABIOMED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

(1) SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

contracts and grants with various government agencies. Each of theseThe Company's
government-sponsored research and development contracts and grants generally
provide for revenuespayment on a cost-plus-fixed-fee basis. The Company recognizes
revenuerevenues under its government contracts and grants as work is performed,
provided that the government has appropriated sufficient funds for the work. The
Company retains rights to all technological discoveries and products resulting
from these efforts. Costs associated with these contracts and grants are
recorded in the accompanying consolidated financial statements of operations as part of
research and development expenses and totaled approximately $1,718,000, $2,457,000,
$3,232,000,
$1,396,000$4,110,000, $2,957,000, $1,591,000 and $3,410,000$1,185,000 for fiscal 1995, 19961997, 1998, 1999
and 1997, and for the six months ended September 30, 19961998 and 1997,1999, respectively.

F-7

ABIOMED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

MARCH 31, 1997 AND SEPTEMBERThe Company, at its sole discretion, may elect to further develop
government-funded technologies or products by spending resources outside or
above the contract limits. In fiscal 1999 and during the six months ended
September 30, 1997 (UNAUDITED)

(f)1999, the majority of the Company's research and development
expenditures were directed to development of the AbioCor Implantable Replacement
Heart. These expenditures included amounts funded under the Company's government
contract and amounts funded from the Company's own resources. Company funding of
such expenses is discretionary and not included in the contracts and grants
costs per above.

(F) INVENTORIES

Inventories Inventories include raw materials, work-in-process and finished goods, are pricedstated at the lower of cost (first-in, first-out) or market
and consist of the following:

MARCH 31,
-------------------------------------------- SEPTEMBER 30,
1996 1997 19971998 1999 1999
---------- ---------- -------------
(unaudited)

Raw materials............................ $ 799,548 $ 896,433 $ 919,677$1,320,600 $1,403,253 $1,494,188
Work-in-process.......................... 428,287 373,383 360,025483,723 636,125 1,121,670
Finished goods........................... 425,677 550,967 567,922523,119 856,479 943,254
---------- ---------- ----------
$1,653,512 $1,820,783 $1,847,624$2,327,442 $2,895,857 $3,559,112
========== ========== ==========

Finished goods and work-in-process inventories consist of direct material,
labor and overhead.

(g) Depreciation and Amortization(G) DEPRECIATION AND AMORTIZATION

The Company provides for depreciation and amortization by charges to
operations in amounts that allocate the cost of depreciable assets over their
estimated useful lives as follows:

ESTIMATED
CLASSIFICATION METHOD USEFUL LIFE
- -------------- ------------------- -------------

Machinery and equip-
ment................... Sum-of-the-year's digits/equipment.......................... Straight-line 3- 5 Years
Furniture and fixtures.. Sum-of-the-year's digits/fixtures........................... Straight-line 5-10 Years
Leasehold improvements..improvements........................... Straight-line Life of lease

(h) Net Income (Loss)F-8

ABIOMED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

(1) SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(H) NET INCOME (LOSS) PER SHARE

Basic net income (loss) per Common and Common Equivalent Share

Net income per common and common equivalent share is computed by dividing net income by the weighted average number of common and common equivalent
shares outstanding during the period using the treasury stock method. Net loss
per share is computed by dividing the net loss(loss)
by the weighted average number of common shares outstanding during the period excludingperiod.
Diluted net income (loss) per share is computed by dividing net income (loss) by
the weighted average number of dilutive common shares outstanding during the
period. Diluted weighted average shares reflect the dilutive effect, if any, of
common stock options outstanding.

(i) Cashbased on the treasury stock method. No common stock options
are considered dilutive in periods, such as the fiscal years ended March 31,
1998, 1999 and Cash Equivalentsthe six months ended September 30, 1998 and 1999, in which a loss
is reported because all such common equivalent shares are antidilutive. The
number of shares that otherwise would have been dilutive for the fiscal years
ended March 31, 1998, 1999 and the six months ended September 30, 1998 and 1999
were 287,709, 95,426, 214,195 and 283,768, respectively.

(I) CASH AND CASH EQUIVALENTS

The Company classifies any marketable security with an originala maturity date of
90 days or less at the time of purchase as a cash equivalent.

(j) Investments(J) MARKETABLE SECURITIES

The Company classifies any security including marketable securities, with an originala maturity of greater than 90 days
at the time of purchase as investmentsmarketable securities and classifies investmentsmarketable
securities with a maturity of greater than one year from the balance sheet date
as long-term investments.

Under Statement of Financial Accounting Standards (SFAS)SFAS No. 115, Accounting
for Certain Investments in Debt and Equity Securities, investmentsACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY
SECURITIES, securities that the Company has the positive intent and ability to
hold to maturity are reported at amortized cost and classified as
held-to-maturity.held-to-maturity securities.

The Company has classified all investmentsmarketable securities at March 31, 19961998 and
19971999 and September 30, 1999 as held-to-maturity.held-to-maturity securities. The amortized cost
and market value of short-term investmentsmarketable securities were approximately $7,709,000$23,715,000 and
$7,545,000$23,886,000 at March 31, 19961998, $14,102,000 and $7,745,000 and $7,689,000$14,188,000 at March 31, 1997,1999,
and $11,552,000 and $11,550,000 at September 30, 1999, respectively. At
March 31, 1997,1999 and September 30, 1999 these short-term investments consisted
primarily of government grade securities.

F-8

ABIOMED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED(K) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL STATEMENTS--(CONTINUED)

MARCH 31, 1997 AND SEPTEMBER 30, 1997 (UNAUDITED)

(k) Disclosures about Fair Value of Financial InstrumentsINSTRUMENTS

As of March 31, 19961998 and 19971999 and September 30, 1999, the Company's
financial instruments were comprised of cash and cash equivalents, marketable
securities, accounts receivable and accounts payable,
and short term investments, the carrying amounts of
which approximated fair market value.

(l) Recent Accounting Pronouncements

For fiscal 1997, under(L) COMPREHENSIVE INCOME

SFAS No. 121 Accounting130, REPORTING COMPREHENSIVE INCOME, requires disclosure of all
components of comprehensive income and loss on an annual and interim basis.
Comprehensive income and loss is defined as the change in equity of a business
enterprise during a period from transactions and other events and circumstances
from non-owner sources. There were no components of comprehensive

F-9

ABIOMED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

(1) SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

income or loss that require disclosure for the Impairment of Long-
lived Assetsyears ending March 31, 1997,
1998, and 1999 or for Long-lived Assetsthe six months ended September 30, 1998 and 1999.

(M) SEGMENT AND ENTERPRISE WIDE DISCLOSURES

SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED
INFORMATION, requires certain financial and supplementary information to be
Disposeddisclosed on an annual and interim basis for each reportable segment of an
enterprise. The Company believes that it operates in one business segment: the
research, development, and sale of medical devices.

(N) RECLASSIFICATION OF PRIOR YEAR AMOUNTS

Certain prior year financial statement information has been reclassified to
be consistent with the current year presentation.

(O) RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the FASB issued SFAS No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES, as amended by SFAS No. 137, effective for
years beginning after June 15, 2000 but permitting early adoption as of the
beginning of any fiscal quarter after its issuance. The Company is
required to review impairmentadopted the new
statement effective January 1, 1999. The new standard requires that all
companies record derivatives on the balance sheet as assets or liabilities,
measured at fair value. Gains or losses resulting from changes in the values of
long-lived assets and certain intangibles
whenever events indicate thatthose derivatives would be accounted for depending on the carrying amountuse of the assets may not be
recoverable.derivative
and whether it qualifies for hedge accounting. The adoption of this statement diddoes not have a material impactan
effect on the Company's results of operations.

On March 3, 1997,operations or financial position.

(2) DISCONTINUED OPERATIONS

In fiscal 1998, the Financial Accounting Standards Board (FASB) issued
SFAS No. 128, Earnings Per Share, superseding Accounting Principles Board
(APB) Opinion No. 15. SFAS No. 128 establishes standardsCompany made the decision to shift all of its focus to
the Company's core cardiovascular business and to sell, license or otherwise
dispose of its dental business. The Company reported a $1,513,000 loss, $0.19
per share, from discontinued operations for the computationyear ended March 31, 1998. This
loss included a $967,000 provision for estimated losses to be incurred through
the date of final disposition, including the disposal of assets and
presentationextinguishment of earnings per share (EPS)the liabilities of the business.

In fiscal 1999, the Company incurred costs associated with the
discontinuance of operations of $402,000, and applies to entitieswrote off all remaining assets
totaling $335,000. As of March 31, 1999 and September 30, 1999, reserves of
$230,000 and $205,000, respectively, remain as a contingency against additional
costs associated with publicly held common stock or potential common stock. This statement is
effective for fiscal years ending after December 15, 1997 and requires
restatementthe discontinuation of all prior-period EPS data presented. The statement is not
expected to have a material impact on the Company's EPS presentation.

(2)dental business.

(3) CAPITAL STOCK

Each share of Common Stock has a voting right of one vote per share.share and
generally has the right to elect, as a class, at least 25% of the Company's
directors. During fiscal 1996 and 1997, respectively, 612,000 and 1,428,000 shares of Class A Common Stock,
representing all of the remaining shares of Class A Common Stock, were converted
to Common Stock.

As of August 1997, Class A Common Stock
is no longer authorized.

OnIn July 15, 1997, the Company completed a private placement of 1,242,710 shares
of its Common Stock to Genzyme Corporation and certain of the Company's
directors. Proceeds to the Company from

F-10

ABIOMED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

(3) CAPITAL STOCK (CONTINUED)

the private placement, net of direct expenses of approximately $145,000, totaled
approximately $16,010,000.

In November 1997, the Company completed an offering of 290,000 shares of its
Common Stock. Proceeds to the Company from the private
placement,stock offering, net of direct
expenses of approximately $145,000 in direct transaction related
expenses,$725,000, totaled approximately $15,965,000.$4,060,000.

The Company has authorized 1,000,000 shares of Class B Preferred Stock, $.01
par value, of which the designation, rights and privileges can be set by the
Board of Directors. No shareshares of Class B Preferred Stock hashave been issued or isare
outstanding.

OnIn August 13, 1997, the Company declared a dividend of one Preferred Share
Purchase Right (the "Right") for each outstanding share of Common Stock to its
stockholders of record at August 28, 1997. Each right entitles the registered
holder to purchase from the Company one one-thousandth of a share of Series A
Junior Participating Preferred Stock with a par value of $0.01 per share, at a
price of $90.00 per one one-thousandth of a share, subject to adjustment.amendment. In
accordance with the terms set forth in the Rights Agreement, the Rights are not
exercisable until the occurrence of certain events, as defined. In addition, the
registered holders of the Rights will have no rights as a Common stockholder of
the Company until the Rights are exercised. The terms of the Rights may be
amended by the Board of Directors. The Rights will expire on August 13, 2007.

F-9

ABIOMED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

MARCH 31, 1997 AND SEPTEMBER 30, 1997 (UNAUDITED)

(3) LINE(4) LINES OF CREDIT WITH A BANK

The Company has an unsecured demand line of credit agreement with a bank
under which it can borrow up to $3,000,000 from a bank at the bank's prime rate.rate (8.25% at
September 30, 1999). The Company is required to maintain a compensating balance
of $100,000 plus 5% of any amounts outstanding under the arrangement. The line
of credit expires in October 2000. There were no borrowings under the company'sCompany's
line of credit at March 31, 19961998 and 19971999 and September 30, 1997.
The1999.

On October 14, 1999, the Company entered into an agreement with the bank
whereby it will be able to draw up to $1.2 million in term loans through
March 31, 2000 for the acquisition of manufacturing equipment and leasehold
improvements. These promissory notes are subject to various financing covenants,
secured by the acquired equipment and leasehold improvements and are to be
repaid in equal monthly installments through September 1, 2003. These notes will
bear interest at either the bank's prime rate or LIBOR rate, at the Company's
election. Subsequent to September 30, 1999, the Company has renewedborrowed a total of
$250,000 under this line of credit in each ofloan facility at the past three years.
The current line of credit expires in September 1998.

(4)bank's prime rate.

(5) INCOME TAXES

The Company accounts for income taxes in accordance with the provisions of
SFAS No. 109, Accounting for Income Taxes.ACCOUNTING FOR INCOME TAXES. The asset and liability approach used
under SFAS No. 109 requires a recognition of deferred tax assets and liabilities
for the expected future tax consequences of temporary differences between the
carrying amounts and the tax basesbasis of other assets and liabilities.

At March 31, 19971999, the Company had available net operating loss
carryforwards of approximately $21,241,000.$28,908,000. The Company also had available, at
March 31, 1997,1999, approximately $766,000$1,171,000 of tax creditscredit carryforwards to reduce
future federal income taxes, if any. The net operating loss and tax credit

F-11

ABIOMED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

(5) INCOME TAXES (CONTINUED)

carryforwards expire through 2010.2019. These carryforwards are subject to review by
the Internal Revenue Service and may be subject to limitation in any given year
under certain conditions.

During 1997,The following table summarizes the Company utilized a portion of itsCompany's approximate net operating loss
carryforward to reduce its current year taxable income. The Company has placed
a valuation allowance of approximately $11,330,000(NOL) and credit carryforwards that are available as of March 31, 1997
against its otherwise recognizable net deferred1999 to offset
future taxable income and income tax, assetrespectively. The NOLs and carryforwards
are organized by the fiscal year in which they were generated.

TAX DATES OF
NOL CREDITS EXPIRATION
----------- ---------- ----------------------

Year Ended March 31,
1987............................... $ -- $ 52,000 3/31/02
1989............................... -- 144,000 3/31/04
1990............................... 532,000 -- 3/31/05
1991............................... 3,116,000 50,000 3/31/06
1992............................... 6,973,000 61,000 3/31/07
1993............................... 5,081,000 75,000 3/31/08
1994............................... 3,334,000 73,000 3/31/09
1995............................... 1,254,000 64,000 3/31/10
1996............................... -- 28,000 3/31/11
1997............................... -- 104,000 3/31/12
1998............................... 1,405,000 270,000 3/31/13
1999............................... 7,213,000 250,000 3/31/14--3/31/19
----------- ----------
$28,908,000 $1,171,000
=========== ==========

Given the Company's history of operating losses, the Company has not given
recognition to any of these future tax benefits in the accompanying consolidated
financial statements due to the uncertainty surrounding the timing of the
realization of the tax benefits. The deferred tax assetCompany has placed a valuation allowance of
approximately $15,515,000 as of March 31, 1996 and 19971999 against its otherwise
recognizable net deferred tax asset.

The deferred tax asset consisted of the following:

MARCH 31,
--------------------------
1996 1997---------------------------
1998 1999
------------ ------------

Purchase of technology (Note 7)................. $ 1,573,000 $ 1,353,000
Net operating loss and tax credit carryforwards.................................. 9,082,000 9,262,000carryforwards............. $ 9,374,000 $ 12,734,000
Purchase of technology (Note 8)............................. 1,068,000 815,000
Nondeductible reserves...................................... 241,000 366,000
Nondeductible accruals...................................... 879,000 1,192,000
Depreciation................................................ 169,000 169,000
Other, net...................................... 549,000 715,000net.................................................. 533,000 239,000
------------ ------------
11,204,000 11,330,00012,264,000 15,515,000
Less--Valuation allowance....................... (11,204,000) (11,330,000)allowance................................... (12,264,000) (15,515,000)
------------ ------------
$ -- $ --
============ ============

(5)F-12

ABIOMED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

(6) COMMITMENTS

(a) The Company leases its facilities and certain equipment under various
operating lease agreements with terms through fiscal 2001.2010. Total rent
expense under these leases, included in the accompanying consolidated
statements of operations, was approximately $262,000, $233,000$324,000, $360,000, $350,000,
$181,000 and $324,000$226,000 for fiscal 1995,
19961997, 1998 and 1997,1999 and the six months
ended September 30, 1998 and 1999, respectively.

F-10

ABIOMED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

MARCH 31, 1997 AND SEPTEMBER 30, 1997 (UNAUDITED)

Future minimum lease payments under these agreements are as follows:

YEARS ENDED MARCH 31, AMOUNT
- --------------------- ------------------

1998............................................................ $307,000
1999............................................................ 247,000
2000............................................................ 120,000
2001............................................................ 31,000
--------
$705,000
========2000........................................................ $ 690,000
2001........................................................ 999,000
2002........................................................ 872,000
2003........................................................ 775,000
2004........................................................ 733,000
Thereafter.................................................. 2,250,000
----------
$6,319,000
==========

(b) The Company maintains various insurance coverages.coverage. Most policies renew on
a fiscal year basis while severalcertain policies have been secured for
a three-
year period.three-year periods. Future insurance obligations under these insurance
policies over a three-year period,the remaining policy terms are approximately $540,000.

(6)$303,000 and
$225,000 as of March 31, 1999 and September 30, 1999, respectively.

(c) On July 30, 1999, the Company entered into an equipment lease line
agreement with a leasing company that provides for up to $2,200,000 in
leases for furniture and equipment. In connection with this lease line,
on October 25, 1999, the Company entered into a 36-month operating lease
for approximately $605,000 for office furniture to be used at its new
facility leased at 22 Cherry Hill Drive, Danvers, Massachusetts. This
lease provides for an additional 12-month option period at the then
current fair market value rental rate.

Future minimum lease payments under this noncancellable lease are
approximately as follows:

YEARS ENDED MARCH 31, AMOUNT
- --------------------- --------

2000........................................................ $ 83,000
2001........................................................ 199,000
2002........................................................ 199,000
2003........................................................ 116,000
--------
$597,000
========

(7) STOCK OPTIONSOPTION AND PURCHASE PLANS

All stock options granted by the Company under the below-described plans described below
were granted at the fair value of the stock at the date of grant. Outstanding
stock options, if not exercised, expire 10 years from the date of grant.

F-13

ABIOMED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

(7) STOCK OPTION AND PURCHASE PLANS (CONTINUED)

The 1992 Combination Stock Option Plan (the Combination Plan), as amended,
approved by the Company's stockholders, combinedwas adopted in September 1992 as a combination and restatedrestatement of the Company's
then outstanding Incentive Stock Optionincentive stock option plan and nonqualified plan. Options
granted and outstanding under the Combination Plan are primarily held by Company
employees and Nonqualified Plan. The
options generally become exercisable ratably over five years. All of the
options granted under the Combination Plan during the three years ended March
31, 1997 were to employees.

In addition, the Company has a nonqualified stock option plan for
nonemployeenon-employee directors (the Directors' Plan). The Directors' Plan, as amended,
was adopted in July 1989 and amended, with shareholder approval, granted options to
purchase 12,500 shares of the Company's Common Stock to each of the Company's
then elected outside directors and provides for grants of options to purchase 12,500
shares of the Company's Common Stock to any newly elected eligible director. Thereafter, each eligible director will be granted a new optionand
grants of additional options to purchase 12,500 shares of Common Stock to
existing directors on July 1 of each successive fifth year. These options vest
over a five-year period at the rate of 2,500 shares per year, commencing on
June 30 of the year following the date of grant. F-11Separate from the Directors'
Plan, non-employee directors of the Company receive as compensation an annual
retainer of 400 shares of Common Stock. The Company issued 2,000 shares of its
Common Stock for this purpose in the years ending March 31, 1998 and 1999, the
fair value of which has been recorded as an expense in the accompanying
consolidated statements of operations. No shares were granted to non-employee
directors as compensation during the six months ended September 30, 1999.

The Company adopted the 1998 Equity Incentive Plan (the Equity Incentive
Plan) in August 1998. The Equity Incentive Plan provides for grants of options
to key employees, directors, advisors and consultants as either incentive stock
options or nonqualified stock options as determined by the Company's Board of
Directors. A maximum of 500,000 shares of common stock may be awarded under this
plan. Options granted under the Equity Incentive Plan are exercisable at such
times and subject to such terms as the Board of Directors may specify at the
time of each stock option grant. As of March 31, 1999, no stock options had been
granted under the Equity Incentive Plan. In the six months ended September 30,
1999, the Company granted options to purchase 165,700 shares under this plan at
an average exercise price of $13.51. All of these options were outstanding as of
September 30, 1999 and none were exercisable under this plan as of that date.

F-14

ABIOMED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--STATEMENTS (CONTINUED)

MARCH 31, 1997(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

(7) STOCK OPTION AND SEPTEMBER 30, 1997 (UNAUDITED)PURCHASE PLANS (CONTINUED)

The following table summarizes stock option activity under these plans:

COMBINATION PLAN DIRECTORS' PLAN
---------------------------------- --------------------------------------------------------------------- -----------------------------------
WEIGHTED WEIGHTED
NUMBER AVERAGE NUMBER AVERAGE
OF EXERCISE PRICE OF EXERCISE PRICE
OPTIONS EXERCISE PRICE PER SHARE OPTIONS EXERCISE PRICE PER SHARE
--------- ------------ --------- -------- -------------- --------- ------- -------------------------- ---------

Options outstanding,Outstanding,
March 31, 1994......... 410,830 $ 0.55-1996.......... 578,165 $0.55-$13.50 $ 8.47 95,000 $ 7.00-$13.88 $10.72
Options granted........ 17,000 5.63- 6.50 6.19 -- -- --
Options exercised...... (1,100) 5.75 5.75 -- -- --
Options canceled....... (31,500) 5.75- 13.50 8.48 -- -- --
-------- ------------- ------ ------- ------------- ------
Options outstanding,
March 31, 1995......... 395,230 0.55-13.50 8.38 95,000 7.00-13.88 $10.72
Options granted........ 219,000 6.25-11.00 10.23 12,500 11.00 11.00
Options exercised...... (16,925) 5.75- 8.50 7.34 (2,500) 7.00 7.00
Options canceled....... (19,140) 5.75-13.50 9.90 (15,000) 11.00-11.13 11.02
-------- ------------- ------ ------- ------------- ------
Options outstanding,
March 31, 1996......... 578,165 0.55-13.50 $ 9.09 90,000 7.00-13.88 10.81
Option granted.........$7.00-$13.88 $10.81
Granted............... 234,235 11.00-13.50 12.53 -- -- --
Options exercised...... (59,112)Exercised............. (58,912) 0.55-13.50 8.65 -- -- --
Options canceled....... (55,413)Canceled.............. (55,613) 5.75-13.50 11.45 -- -- --
-------- ------------- --------------- -------
------------- ------
Options outstanding,Outstanding,
March 31, 1997.........1997.......... 697,875 $ 5.63-$13.50 $10.295.63-13.50 10.29 90,000 $ 7.00-$13.88 $10.81
Option granted......... 159,750 10.00-12.15 11.527.00-13.88 10.81
Granted............... 178,850 10.00-18.00 11.91 50,000 14.00 14.00
Options exercised...... (12,015) 5.63-8.00 6.96Exercised............. (20,015) 5.63-10.63 7.56 -- -- --
Options canceled....... (21,200) 5.63-10.63 9.11Canceled.............. (37,325) 5.63-13.25 10.69 -- -- --
-------- ------------- --------------- -------
------------- ------
Options outstanding,Outstanding,
March 31, 1998.......... 819,385 5.63-18.00 10.71 140,000 7.00-14.00 11.95
Granted............... 337,250 9.25-14.50 11.87 -- -- --
Exercised............. (69,400) 5.63-13.50 9.17 -- -- --
Canceled.............. (129,850) 5.63-14.94 11.77 -- -- --
--------- -------
Outstanding,
March 31, 1999.......... 957,385 5.63-18.00 11.08 140,000 7.00-14.00 11.95
Granted............... 129,850 8.88-14.88 12.96 --
Exercised............. (2,300) 8.00 8.00 --
Canceled.............. (21,750) 8.00-17.00 11.82 (7,500) 13.88 13.88
--------- -------
Outstanding,
September 30, 1997..... 824,410 1999...... 1,063,185 $5.63-$ 5.63-$13.50 $10.53 140,000 $ 7.00-18.00 $11.30 132,500 $7.00-$14.00 $10.81
========$11.84
========= =======
Options exercisable:Exercisable:
March 31, 1997......... 179,4151999........ 288,037 $5.63-$13.50 $ 5.63-$13.50 $8.96 70,000 $ 7.00-9.62 95,000 $7.00-$13.88 $10.76
========$11.14
========= =======
September 30, 1997..... 182,500 $ 5.63-1999.... 354,258 $5.63-$13.50 $9.02 82,500 $ 7.00-$10.07 100,000 $7.00-$14.00 $10.76
========$11.21
========= =======
Shares available for
Future issuance,future issuance:
March 31, 1997......... 459,032 107,500
========1999........ 110,107 57,500
========= =======
September 30, 1997..... 320,482 57,500
========1999.... 2,007 65,000
========= =======
EQUITY INCENTIVE PLAN
------------------------------------
WEIGHTED
NUMBER AVERAGE
OF EXERCISE PRICE
OPTIONS PRICE PER SHARE
-------- ------------- ---------

Outstanding,
March 31, 1996.......... -- -- --
Granted............... -- -- --
Exercised............. -- -- --
Canceled.............. -- -- --
-------
Outstanding,
March 31, 1997.......... -- -- --
Granted............... -- -- --
Exercised............. -- -- --
Canceled.............. -- -- --
-------
Outstanding,
March 31, 1998.......... -- -- --
Granted............... -- -- --
Exercised............. -- -- --
Canceled.............. -- -- --
-------
Outstanding,
March 31, 1999.......... -- -- --
Granted............... 165,700 $13.38-$14.25 $13.51
Exercised............. -- -- --
Canceled.............. -- -- --
-------
Outstanding,
September 30, 1999...... 165,700 $13.38-$14.25 $13.51
=======
Exercisable:
March 31, 1999........ -- $ -- $ --
=======
September 30, 1999.... -- $ -- $ --
=======
Shares available for
future issuance:
March 31, 1999........ --
=======
September 30, 1999.... 334,300
=======

F-15

ABIOMED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

(7) STOCK OPTION AND PURCHASE PLANS (CONTINUED)

The following table summarizes certain data for options outstanding under
the Combination, Directors' and Equity Incentive Plans at September 30, 1999.

WEIGHTED
WEIGHTED AVERAGE
AVERAGE REMAINING
NUMBER RANGE OF EXERCISE CONTRACTUAL
OF SHARES EXERCISE PRICES PRICE LIFE (YEARS)
--------- --------------- -------- ------------

Options outstanding, end of year:............... 159,425 $5.63-$8.00 $ 7.38 9.12
560,500 $8.88-$11.75 $10.90 8.25
239,210 $12.13-$13.25 $12.62 7.88
290,250 $13.38-$13.63 $13.46 7.38
112,000 $14.00-$18.00 $14.44 6.93
---------
1,361,385 $11.63 7.99
=========
Options exercisable, end of year:............... 147,350 $5.63-$8.00 $ 7.45 9.16
182,440 $8.88-$11.75 $10.89 8.22
76,218 $12.13-$13.25 $12.59 6.76
25,325 $13.38-$13.63 $13.50 8.73
22,925 $14.00-$18.00 $14.00 5.67
---------
454,258 $10.34 8.19
=========

The Company has an Employee Stock Purchase Plan (the Purchase Plan), as
amended. Under the Purchase Plan, all employees (including officers and
directors) of the Company who have completed six months of employment are
eligible to purchase the Company's Common Stock at an exercise price equal to
85% of the fair market value of the Common Stock. The Company has reserved
100,000 shares of Common Stock for issuance under the Purchase Plan, of which
89,13874,292 shares are available for future issuance as of March 31, 1997.1999. During the
fiscal years ended March 31, 19961998 and 1997,1999 and the six months ended
September 30, 1997, 7771999, 4,039 shares, 1,11612,387 shares and 1,5494,640 shares, respectively,
of Common Stock were sold pursuant to the Purchase Plan.

F-12

ABIOMED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

MARCH 31, 1997 AND SEPTEMBER 30, 1997 (UNAUDITED)

In October 1995, FASB issued SFAS No. 123, Accounting for Stock-Based
Compensation. SFAS No. 123ACCOUNTING FOR STOCK-BASED COMPENSATION, requires the
measurement of the fair value of stock options, including stock purchase plans, or
warrants granted to employees to be included in the statement of operations or
disclosed in the notes to financial statements. The Company has determined that
it will continue to account for stock-based compensation for employees under APB
Opinion No. 25 and elect the disclosure-only alternative under SFAS No 123. The
Company has computed the pro forma disclosures required under SFAS No. 123 for
options granted in fiscal 19961997, 1998 and 19971999

F-16

ABIOMED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

(7) STOCK OPTION AND PURCHASE PLANS (CONTINUED)

using the Black-Scholes option pricing model prescribed by SFAS No. 123. The
weighted average information and assumptions used for 1996 and 1997 are as follows:

1996SIX MONTHS ENDED
YEAR ENDED MARCH 31, SEPTEMBER 30,
------------------------- ----------------
1997 1998 1999 1998 1999
------- ------- ------- ------- -------
Risk-free interest rate..................................rate.......................... 6.75% 6.75%5.50% 5.68% 5.50% 5.80%
Expected dividend yield..................................yield.......................... -- -- Expected life............................................-- -- --
Assumed life..................................... 5 years 5 years Expected volatility...................................... 30%5 years 5 years 5 years
Assumed volatility............................... 33% 33% 35% 33% 38%

The Black-Scholes option-pricing model was developed for use in estimating
the fair value of traded options, which have no vesting restrictions and are
fully transferable. In addition, option-pricing models require the input of
highly subjective assumptions including expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective input
assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

The total fair value of the options granted during fiscal 19961997, 1998 and
19971999 and during the six months ended September 30, 1998 and 1999 was computed as
approximately $431,000$598,000, $501,000, $483,000, $251,000 and $598,000,$1,680,000,
respectively. Of these amounts approximately $108,000$257,000, $383,000, $504,000,
$267,000 and $257,000$408,000 would be charged to operations for the years ended
March 31, 19961997, 1998 and 19971999 and during the six months ended September 30, 1998
and 1999, respectively. The remaining amount,
approximately $664,000,amounts would be amortized over the
remaining vesting periods.periods of the underlying options. Similarly, the total fair
value of stock sold under thisthe Purchase Plan was computed as approximately
$4,000$3,000, $17,000, $31,000, $9,000 and $3,000 during$11,000 for fiscal 19961997, 1998 and 1997.1999 and
for the six months ended September 30, 1998 and 1999, respectively. The
resulting pro forma compensation expense may not be representative of the amount
to be expected in future years as pro forma compensation expense may vary based
upon the number of options granted and shares purchased.

The pro forma net income (loss) and pro forma net income (loss) per common
share presented below have been computed assuming no tax benefit. The effect of
a tax benefit has not been considered since a substantial portion of the stock
options granted are incentive stock options and the Company does not anticipate
a future deduction associated with the exercise of these stock options.

F-17

ABIOMED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

(7) STOCK OPTION AND PURCHASE PLANS (CONTINUED)

The pro forma effect of SFAS No. 123 for the years ended March 31, 19961997,
1998 and 19971999 is as follows:

1996 1997
--------------------- ---------------------BASIC NET INCOME DILUTED NET INCOME
NET INCOME (LOSS) (LOSS) PER SHARE (LOSS) PER SHARE
------------------------- ------------------- -------------------
AS PRO AS PRO
AS REPORTED PRO FORMA AS REPORTED PROFORMA REPORTED FORMA
----------- --------- ----------- ----------------- -------- -------- --------
Net income..................... $491,124 $379,124 $735,264 $475,264
Pro forma net income per common
and common equivalent share...
Years Ended March 31,
1997............................. $ 0 .07735,264 $ 0 .05475,264 $ 0 .100.11 $ 0 .070.07 $ 0.10 $ 0.07
1998............................. $(2,507,764) $(2,907,764) $(0.31) $(0.36) $(0.31) $(0.36)
1999............................. $(6,712,201) $(7,247,201) $(0.78) $(0.84) $(0.78) $(0.84)

Six Months Ended September 30,
1998............................. $(3,025,069) $(3,292,194) $(0.35) $(0.38) $(0.35) $(0.38)
1999............................. $(3,807,121) $(4,220,856) $(0.44) $(0.49) $(0.44) $(0.49)

(7)(8) ROYALTY OBLIGATION

Commencing April 1, 1995 and endingUntil August 3, 2000, the Company owes a royalty to certain third parties
equal in aggregate to approximately 2.1% of certain revenues derived from the
BVS 5000BVS-5000 and certain

F-13

ABIOMED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

MARCH 31, 1997 AND SEPTEMBER 30, 1997 (UNAUDITED) other technology. This royalty is subject to certain
maximum revenue amounts and to certain adjustments, as defined, in the event
that the Company sells the underlying technology. For the years ended March 31,
19961997, 1998 and 1997,1999 and the six months ended September 30, 19971998 and 1999, the
amount of this royalty, net of certain reimbursed expenses, was approximately
$160,000, $216,000, $338,000, $341,000, $147,000 and $174,000$146,000, respectively. These amounts
are reflected as part of the cost of product salesproducts in the accompanying consolidated
financial statements.statements of operations.

This royalty is paid to the third parties through Abiomed Limited
Partnership which, at present, is inactive except with respect to the
distribution of such royalties. During fiscal 1996,In 1995, the Company paid $770,000 to reduce its
royalty obligation to 2.1%, as described above. This one-time payment
capitalized by the Company is being amortized on a straight-line basis over the
estimated useful life of the asset (5 years) and, net of accumulated amortization, is
classified as a long-term other asset in the accompanying consolidated financial statements.

(8)balance
sheets.

(9) EMPLOYEE DEFERRED COMPENSATION PROFIT-SHARING PLAN AND TRUST

The Company has an Employee Deferred Compensation Profit-sharing Plan and
Trustemployee deferred compensation profit-sharing plan (the
401(k) Plan) that covers all employees over 20 years of age who
have completed at least six months of service with the Company.age. Contributions by
the Company, arewhich consist of amounts paid by the Company to match a portion of
employees' contributions and discretionary amounts determined by the Company's
Board of Directors, and totaled approximately $36,000, $80,000$72,000, $144,000, $237,000, $0 and
$59,000$150,000 for the fiscal years ended March 31, 1995, 19961997, 1998 and 1997,1999 and for the
six months ended September 30, 1998 and 1999, respectively.

(9)F-18

ABIOMED, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

(10) ACCRUED EXPENSES

Accrued expenses consist of the following:

MARCH 31,
-------------------------------------------- SEPTEMBER 30,
1996 1997 19971998 1999 1999
---------- ---------- -------------
(unaudited)(UNAUDITED)

Salaries and benefits................... $ 703,478 $ 700,570 $1,227,718
Legal and audit......................... 72,436 76,914 103,106benefits.................................... $1,460,222 $2,606,089 $1,936,067
Contract services........................................ 321,512 336,960 547,215
Warranty................................................. 173,362 181,145 273,248
Sales taxes.............................................. 157,277 55,903 168,769
Professional fees........................................ 126,377 137,212 565,356
Deferred revenue......................................... 245,924 434,660 162,423
Customer advances....................... 56,067 287,882 67,340
Sales taxes............................. 214,521 172,836 221,023
Warranty................................ 72,662 227,093 187,472
Other................................... 367,817 567,211 760,368advances........................................ 85,284 65,095 84,314
Other.................................................... 378,646 1,013,556 701,553
---------- ---------- ----------
$1,486,981 $2,032,506 $2,567,027$2,948,604 $4,830,620 $4,438,945
========== ========== ==========

F-14F-19

[DRAWINGBVS-5000-REGISTERED TRADEMARK- BI-VENTRICULAR ASSIST SYSTEM

[Photograph of BVS console and two blood pumps appear here.]

BVS-5000 pneumatic console with two single-use BVS blood pumps mounted on
bedside stand. The BVS provides a patient's failing heart with full circulatory
assistance, while allowing the heart to rest, heal and recover its function.

ABIOMED, the ABIOMED logo and BVS are our registered trademarks. Angioflex,
AbioBooster, AbioCor and AbioVest are our trademarks. This prospectus also
includes trademarks of companies other than ABIOMED.

- ------------------------------------------------------------
- ------------------------------------------------------------

1,500,000 Shares

[ABIOMED LOGO]

-------------------

Prospectus
, 2000
-------------------

BANC OF A TAH IMPLANTED THE COMPANY'S TOTAL ARTIFICIAL HEART IS
IN A WOMAN] A CLASS III DEVICE UNDER DEVELOPMENT
AND HAS NOT BEEN APPROVED FOR SALE IN ANY
COUNTRY. THE COMPANY DOES NOT INTEND TO
APPLY FOR REGULATORY APPROVAL TO MARKET
THIS DEVICE FOR SEVERAL YEARS, IF EVER,
AND WILL BE REQUIRED TO SUCCESSFULLY
COMPLETE CLINICAL TRIALS TO DEMONSTRATE
ITS SAFETY AND EFFICACY PRIOR TO FILING
FOR REGULATORY APPROVAL. SEE "RISK
FACTORS."

[ILLUSTRATION OF THE IMPLANTABLE ILLUSTRATION OF THE IMPLANTABLE
COMPONENTS] COMPONENTS OF THE ABIOMED TAH, A
BATTERY-POWERED TOTALLY
IMPLANTABLE ARTIFICIAL HEART BEING
DEVELOPED AS A PERMANENT
REPLACEMENT DEVICE TO ASSUME THE
FULL PUMPING FUNCTION OF BOTH THE
LEFT AND RIGHT VENTRICLES OF THE
HEART.

DEVELOPMENTAL MODEL TAH WITH THE [PHOTOGRAPH OF TAH SYSTEM.
IMPLANTABLE COMPONENTS: THE THORACIC COMPONENTS OF TAH SYSTEM ARE
UNIT, THE INTERNAL RECHARGEABLE IDENTIFIED WITH CAPTIONS]
BATTERY, THE INTERNAL ELECTRONICS
PACKAGE AND THE INTERNAL COMPONENT
OF THE ENERGY TRANSMISSION SYSTEM.

[ABIOMED LOGO APPEARS HERE]AMERICA SECURITIES LLC

SALOMON SMITH BARNEY

- ------------------------------------------------------------
- ------------------------------------------------------------

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

SEC Registration Fee................................................... $14,323Fee........................................ $ 20,294
NASD Filing Fee........................................................ 30,500Fee............................................. 8,187
Nasdaq National Market Listing Fee.....................................Fee.......................... 17,500
Transfer Agent and Registrant Fees.....................................Fees.......................... 2,500*
Accounting Fees and Expenses...........................................Expenses................................ 50,000*
Legal Fees and Expenses................................................ 175,000*Expenses..................................... 225,000*
Printing and Engraving ................................................Engraving...................................... 60,000*
Miscellaneous.......................................................... 50,177*
-------
TOTAL................................................................ 400,000*
=======Miscellaneous............................................... 116,519*
--------
TOTAL................................................... $500,000*
========

- --------------------------------

* Estimated

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company's CertificateABIOMED's certificate of Incorporationincorporation provides that, to the fullest extent
permitted by Delaware law, no director of the CompanyABIOMED shall be personally liable to
the CompanyABIOMED or its stockholders for monetary damages for breach of fiduciary duty as
a director, notwithstanding any other provision of law. However, a director
shall be liable to the extent required by law (i) for any breach of the
director's duty of loyalty to the CompanyABIOMED or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) in respect of certain unlawful dividend payments or
stock redemptions or repurchases, or (iv) for any transaction from which the
director derived an improper personal benefit.

The CompanyABIOMED entered into indemnification agreements with each of its directors
and anticipates that it will enter into similar agreements with any future
director. Generally, these agreements attempt to provide the maximum protection
permitted by Delaware law with respect to indemnification. The indemnification
agreements provide that the CompanyABIOMED will pay certain amounts incurred by a director
in connection with any civil or criminal action or proceeding, specifically
including actions by or in the name of the CompanyABIOMED (derivative suits) where the
individual's involvement is by reason of the fact that he is or was a director
or officer. For directors, such amounts include, to the maximum extent permitted
by law, attorney's fees, judgments, civil or criminal fines, settlement amounts
and other expenses customarily incurred in connection with legal proceedings.
Under the indemnification agreements, a director will not receive
indemnification if the director is found not to have acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
the Company. The CompanyABIOMED. ABIOMED has also entered into similar agreements with certain of the Company'sits
officers and top management personnel who are not also directors. The
indemnification agreements with officers are slightly more restrictive.
Generally, the indemnification agreements attempt to provide the maximum
protection permitted by Delaware law with respect to indemnification of
directors and officers.

The effect of these provisions would be to permit such indemnification by
the CompanyABIOMED for liabilities arising under the Securities Act of 1933, as amended.

Reference is hereby made to Section 8 of the Underwriting Agreement amongbetween
ABIOMED, the Company, the Selling Stockholdersunderwriters and the Underwriters,Dr. David M. Lederman, filed as Exhibit 1.1 to
this Registration Statement,registration statement, for a description of indemnification arrangements
among the Company, the Selling Stockholdersbetween ABIOMED and the Underwriters.

Reference is hereby made to Section 2 of the Selling Stockholder Agreement
among the Company and the Selling Stockholders, filed as Exhibit 99.1 to this
Registration Statement, for a description of indemnification arrangements
among the Company and the Selling Stockholders.underwriters.

II-1

ITEM 16. EXHIBITS

EXHIBIT
NUMBER
-------- ---------------------

1.1 Form of Underwriting Agreement***

3.1 Restated Certificate of Incorporation of the Company**ABIOMED,
Inc.--Filed as Exhibit 3.1 to Registration Statement No.
333-36657*

3.2 Amended and Restated Bylaws of the Company--FiledABIOMED, Inc.--Filed as
Exhibit 3(b)3.02 to the Company's AnnualQuarterly Report on Form 10-K10-Q
for the fiscal yearperiod ended March 31, 1991*September 30, 1996*

3.3 Certificate of Designations of Series A Junior Participating
Preferred Stock--Filed as Exhibit 3.3 Preferred Stock**to Registration
Statement No. 333-36657*

4.1 Specimen Certificate of Common Stock--Filed as Exhibit 4.1
to Registration Statement No. 33-14861 on Form S-1*

4.2 Description of Capital Stock (contained in the Restated
Certificate of Incorporation of the CompanyABIOMED, Inc. filed as
Exhibit 3.1 and in the Certificate of Designations of Series
A Junior Participating Preferred Stock filed as Exhibit
3.3)**

4.3 Rights Agreement between the RegistrantABIOMED, Inc. and BankBoston, N.A.,
as Rights Agent dated as of August 13, 1997 (including Form
of Right Certificate attached thereto as Exhibit A)--Filed
as Exhibit 4 to the Registrant'sABIOMED, Inc.'s Current Report on Form 8-K,
dated August 13, 1997*

5.1 Legal Opinion of Brown, Rudnick, FreedFoley, Hoag & Gesmer*Eliot LLP***

23.1 Consent of Arthur Andersen LLP***

23.2 Consent of Brown, Rudnick, FreedFoley, Hoag & GesmerEliot LLP (included in Exhibit
23.2 5.1)***

24.1 Power of Attorney (previously filed, except for Power(contained on the signature page of Attorney of one director which is filed herewith)this
registration statement)** ***
99.1 Form of Selling Stockholder Agreement***
99.2 Common Stock Purchase Agreement between the Company and Genzyme
Corporation**
99.3 Common Stock Purchase Agreements between the Company and certain
directors**

- --------------------------------

* Not filed herewith. In accordance with Rule 411 promulgated pursuant to the
Securities Act of 1933, as amended, reference is made to the documents
previously filed with the Commission, which are incorporated by reference
herein.

** Previously filed.Filed herewith.

*** Filed herewith.To be filed by amendment.

ITEM 17. UNDERTAKINGS

(a)The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial BONA FIDE offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act of 1933
may be permitted to directors, officers and controlling persons of the
Registrantregistrant pursuant to the Registrants By-Laws,foregoing provisions, or otherwise, the Registrantregistrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event

II-2
that a claim for indemnification
against such liabilities (other than the payment by the Registrantregistrant of expenses
incurred or paid by a director, officer or controlling

II-2
person of the Registrantregistrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrantregistrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

(b) The undersigned Registrantregistrant hereby further undertakes that:

(1) For purposes of determining any liability under the Securities Act, of
1933, each filing of the Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
initial bona fide offering thereof.

(2) For purposes of determining any liability under the Securities Act of
1933, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrantregistrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(3)(2) For the purpose of determining any liability under the Securities Act,
of 1933, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.

II-3

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OFPursuant to the requirements of the Securities Act of 1933, THE REGISTRANT
CERTIFIES THAT IT HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALFthe registrant
certifies that it has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Boston,
Commonwealth of Massachusetts, on December 17, 1999.

ABIOMED, INC.

By: /s/ DAVID M. LEDERMAN
-----------------------------------------
Dr. David M. Lederman
President and Chief Executive Officer

KNOW ALL BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF BOSTON, COMMONWEALTH OF MASSACHUSETTS, ON OCTOBER
10, 1997.

ABIOMED, Inc.

/s/ Dr.THESE PRESENTS that each individual whose signature appears
below hereby constitutes and appoints David M. Lederman By: _________________________________
DR. DAVID M. LEDERMANPRESIDENT AND
CHIEF EXECUTIVE OFFICER

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES AND ON THE DATES INDICATED.

SIGNATURE TITLE DATE

Chief Executive
/s/ David M. Lederman Officer, President October 10, 1997
- ------------------------------------- and Director
DAVID M. LEDERMAN (Principal
Executive Officer)

Chief Financial
/s/ John F. Thero, Officer, Vice October 10, 1997
- ------------------------------------- President--Finance
JOHN F. THERO and
Treasurer
(Principal Financialeach of them, his true and Accounting
Officer)

Director
* October 10, 1997
- -------------------------------------
DESMOND H. O'CONNELL, JR.

Director
* October 10, 1997
- -------------------------------------
JOHN F. O'BRIEN

Director
* October 10, 1997
- -------------------------------------
HENRI A. TERMEER

Director
* October 10, 1997
- -------------------------------------
W. GERALD AUSTEN

Director
* October 10, 1997
- -------------------------------------
PAUL FIREMAN

/s/ David M. Lederman
*By: ___________________________
DAVID M. LEDERMANATTORNEY-IN-FACTlawful attorneys-in-fact and agents with full power
of substitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all pre- or post-effective amendments to this
registration statement, any subsequent registration statement for the same
offering which may be filed under Rule 462(b) under the Securities Act (a
"Rule 462(b) registration statement") and any and all pre- or post- effective
amendments thereto, and to file the same, with all exhibits thereto, and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing which they, or any
of them, may deem necessary or advisable to be done in connection with this
registration statement or any Rule 462(b) registration statement, as fully to
all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or any
substitute or substitutes for any or all of them, may lawfully do or cause to be
done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

SIGNATURE TITLE DATE
--------- ----- ----

Chief Executive Officer,
/s/ DAVID M. LEDERMAN President and Director
------------------------------------------- (Principal Executive December 17, 1999
David M. Lederman Officer)

Chief Financial Officer,
/s/ JOHN F. THERO Vice President--Finance
------------------------------------------- and Treasurer (Principal December 17, 1999
John F. Thero Financial and Accounting
Officer)

/s/ W. GERALD AUSTEN
------------------------------------------- Director December 17, 1999
W. Gerald Austen

/s/ PAUL FIREMAN
------------------------------------------- Director December 17, 1999
Paul Fireman

II-4
SIGNATURE TITLE DATE
--------- ----- ----

/s/ JOHN F. O'BRIEN
------------------------------------------- Director December 17, 1999
John F. O'Brien

/s/ DESMOND H. O'CONNELL, JR.
------------------------------------------- Director December 17, 1999
Desmond H. O'Connell, Jr.

/s/ HENRI A. TERMEER
------------------------------------------- Director December 17, 1999
Henri A. Termeer

II-5

EXHIBIT INDEX

EXHIBIT
NUMBER
DESCRIPTION
------- ------------ ---------------------

1.1 Form of Underwriting Agreement***

3.1 Restated Certificate of Incorporation of the Company**ABIOMED,
Inc.--Filed as Exhibit 3.1 to Registration Statement No.
333-36657*

3.3 Certificate of Designations of Series A Junior Participating
Preferred Stock--Filed as Exhibit 3.3 Stock**to Registration
Statement No. 333-36657*

4.1 Specimen Certificate of Common Stock--Filed as Exhibit 4.1
to Registration Statement No. 33-14861 on Form S-1*

4.3 Rights Agreement between the RegistrantABIOMED, Inc. and BankBoston, N.A.,
as Rights Agent dated as of August 13, 1997 (including Form
of Right Certificate attached thereto as Exhibit A)--Filed
as Exhibit 4 to the
Registrant'sABIOMED, Inc.'s Current Report on Form 8-K,
dated August 13, 1997*

5.1 Legal Opinion of Brown, Rudnick, FreedFoley, Hoag & Gesmer*Eliot LLP***

23.1 Consent of Arthur Andersen LLP***

23.2 Consent of Brown, Rudnick, FreedFoley, Hoag & GesmerEliot LLP (included in Exhibit
5.1)***

24.1 Power of Attorney (previously filed, except for Power(contained on the signature page of Attorney of
one director of which is filed herewith)this
registration statement)** ***
99.1 Form of Selling Stockholder Agreement***
99.2 Common Stock Purchase Agreement between the Company and Genzyme
Corporation**
99.3 Common Stock Purchase Agreements between the Company and certain
directors**

- --------------------------------

** Previously filed.Filed herewith.

*** Filed herewith. To be filed by amendment.