FORWARD LOOKING STATEMENTS

Abiomed's discussion of financial condition and results of operations may contain "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Our actual results may differ materially from those anticipated in these forward-looking statements based upon a number of factors, including uncertainties associated with development, testing and related regulatory approvals, anticipated future losses, complex manufacturing, high quality requirements, dependence on limited sources of supply, competition, market acceptance of our new products, technological change, government regulation, future capital needs and uncertainty of additional financing and other risks detailed in our filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this Report. In particular, we encourage you to review the risks and uncertainties discussed under Item 1A of Part I of our Annual Report on Form 10-K, for the year ended March 31, 2008. We undertake no obligation to release publicly the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances that occur after the date of this Report or to reflect the occurrence of unanticipated events.

OVERVIEW

We are a leading provider of medical devices in circulatory support and we offer a continuum of care in heart recovery to acute heart failure patients. Our strategy is focused on establishing heart recovery as the goal for all acute cardiac attacks. Our products are designed to enable the heart to rest, heal and recover by improving blood flow and/or performing the pumping function of the heart. We believe we are the only company with commercially available cardiac assist devices approved for heart recovery from all causes by the U.S. Food and Drug Administration, or FDA, and our products have been used to treat thousands of patients to date. Our products can be used in a broad range of clinical settings, including by heart surgeons for patients in profound shock and by interventional cardiologists for patients who are in shock, pre-shock or in need of prophylactic support in the cardiac catheterization lab, or cath lab. Our circulatory care products are designed to provide hemodynamic support for acute patients from the cath lab to the surgery suite, with a goal of heart recovery and sending the patient home with his or her native heart. We believe heart recovery is the optimal clinical outcome for patients because it provides a better quality of life than alternatives. In addition, we believe heart recovery is the most cost-effective path for the healthcare system. Since 2004, our executive team has focused our efforts on expanding our product portfolio. We have significantly increased our product portfolio, which now includes several circulatory care products that either have been approved or cleared by the FDA in the U.S., have received CE mark approval in Europe, or have received registration or regulatory approval in numerous other countries. We also have additional new circulatory care products under development.

Impella 2.5, Impella 5.0, and Impella LD

Our Impella 2.5 and 5.0 catheters are percutaneous micro heart pumps with integrated motors and sensors for use in interventional cardiology and heart surgery. These devices are designed for use by interventional cardiologists to support pre-shock patients in the cath lab who may not require as much support as patients in the surgery suite or first use in surgery for patients who may require assistance to maintain their circulation. Our Impella catheters are also designed to provide ventricular support for patients requiring hemodynamic stabilization or suffering from reduced cardiac output and can aid in recovering the hearts of patients following a heart attack. These products increase flow to the heart and organs without the need for drugs such as inotropes while reducing the workload of the heart. Our Impella devices have CE mark approval in Europe, are approved in over 40 countries, have already been used to treat numerous patients in Europe and other countries outside the U.S. and have been the subject of over 50 peer-reviewed publications and other clinical presentations and publications.

These catheters can be quickly inserted via the femoral artery using a guide wire to reach the left ventricle of the heart where they are directly deployed to draw blood out of the ventricle and deliver it to the circulation, thereby reducing ventricular work (resting the heart) and providing flow to the rest of the organs. The Impella 2.5 is introduced with normal interventional cardiology procedures, while the Impella 5.0 is implanted via a small incision in the femoral artery in the groin. The Impella 2.5 can pump up to 2.5 liters of blood per minute and the Impella 5.0 can pump up to five liters of blood per minute. The Impella 5.0 has been used to treat patients in need of cardiac support resulting from post-cardiotomy cardiogenic shock, myocarditis, low cardiac output after a heart attack, or post-coronary intervention procedures, or as a bridge to other circulatory support devices, including our iPulse, AB5000 and BVS 5000 systems.

We are pursuing FDA approval for our Impella heart pumps through a pre-market approval, or PMA path, for our Impella 2.5 and 5.0 products. In August 2007, we received approval from the FDA to begin a high-risk percutaneous coronary intervention, or PCI, pivotal clinical trial for the Impella 2.5. This approval was based on the submission of the clinical results of the safety pilot clinical trial. The pivotal study will determine the safety and effectiveness of the Impella 2.5 as compared to optimal medical management with an IAB, during "high-risk" angioplasty procedures. The study inclusion criteria have been extended to include patients with triple vessel disease with low ejection fraction. The study is approved under category B2 status and the trial sites are eligible for full reimbursement from the Centers for Medicare Medicaid Services, or CMS. The randomized pivotal study, at up to 150 hospitals and 654 patients undergoing high-risk PCI procedure, is comprised of two arms comparing nearly equal number of Impella 2.5 supported patients and intra-aortic balloon, or IAB, supported patients during the procedure. Patients receiving the Impella 2.5 can be supported for up to five days as a left VAD. As of August 6, 2008, 187 hospitals are pursuing the study, with 55 hospitals ready for enrollment of patients, 36 with investigational review board, or IRB, approval, but not yet enrolling, and 96 hospitals having submitted to the IRB or submission is pending. As of August 6, 2008, we have completed 107 patients from 28 hospitals or 16% of the 654 patients required.

In March 2008, we received approval from the FDA to begin a second pivotal study for our Impella 2.5 in the U.S. under an investigative device exemption, or IDE, for hemodynamically unstable patients undergoing a PCI procedure due to acute myocardial infarction, or AMI, commonly referred to as heart attack. The AMI study will determine the safety and effectiveness of the Impella 2.5 as a left ventricular assist device for heart attack patients as compared to optimal medical management with an IAB. The study is approved under category B2 status and the trial sites are eligible for full CMS reimbursement. The randomized study, at up to 150 hospitals, is comprised of two arms; those patients that receive the Impella 2.5 for up to five days and patients that receive IAB therapy. The study will compare 192 Impella 2.5 patients to 192 IAB patients relative to a composite end point comparing safety and efficacy. The proposed primary endpoint will be a composite endpoint of major events assessed at 30 days post-AMI. These major events include but are not limited to: death, acute renal failure, and need for a major cardiovascular operation. The secondary endpoint will be a composite of cardiac function such as ejection fraction, requirement for inotropic support and cardiac power output. As of August 6, 2008, 53 U.S. hospitals are pursuing the study. As of August 6, 2008, no hospitals have enrolled any patients, however, 4 hospitals have received IRB approval, and 49 have submitted to the IRB or submission is pending.

Our Impella 2.5 device recently received 510(k) clearance from the FDA for partial circulatory support for up to six hours, which allows for immediate commercial launch of our Impella 2.5 in the U.S. There are an estimated 14,000 interventional cardiologists at approximately 1,900 hospitals in the U. S. which represents the primary target market in the U.S. for our Impella 2.5 device.

Impella 2.5, Impella 5.0, and Impella LD (continued)

The clinical experience to date with our Impella 2.5 has been favorable, including our recently completed U.S. safety pilot clinical trial. Factors that affect the length of time to complete the pivotal studies in the U.S. study include the timing of each center receiving IRB approval, the timing of the training we will provide each center, and the rate of patient enrollment. As a result of these factors, at this time we cannot estimate the duration of the two Impella 2.5 pivotal studies discussed above. However, there can be no assurance that our Impella 2.5 clinical trials will be successful or that we will receive FDA approval for the indications that are the subject of the clinical trials.

The Impella 5.0 is in a pilot clinical study that is enrolling up to 20 patients at 15 U.S. sites. The study includes postcardiotomy patients who have been weaned from heart-lung machines and whose hearts require added support to maintain good blood flow. The study is enrolling those patients that would typically need more flow and hemodynamic support than provided by an IAB.

IAB and iPulse

Our IAB is easy to insert and is designed to enhance blood flow to the heart and other organs for patients with diminished heart function. To support the IAB, we developed our iPulse combination console. The iPulse console is also designed to support our AB5000 ventricle and BVS 5000 blood pump, other manufacturers' IABs and products we may offer in the future. We believe the ability of the iPulse console to support multiple devices will make it more attractive than consoles designed to operate a single device. The new iPulse console will support procedures with associated Medicare reimbursement that extends across four diagnostic related groups, which further enhances its attractiveness to customers.

The iPulse console is designed to support our IAB as well as other manufacturers' IABs, which are used in the cath lab and surgery suite. Because our multi-functional console also supports our AB5000 ventricle and BVS 5000 blood pump, we believe the iPulse will provide our customers additional flexibility in allocating console resources between the surgery suite and the cath lab. In addition, because a significant portion of IABs are used in the surgery suite, we believe adoption of our iPulse console and Portable Driver will increase utilization of our AB5000 ventricle.

We received 510(k) clearance from the FDA for our IAB in December 2006 and CE Mark approval in January 2007. The iPulse console has received CE mark approval in Europe and was approved by the FDA in late December 2007 for commercial sale in the U.S. We expect customer demand to shift over time from our AB5000 console to our iPulse combination console.

AB5000 and BVS 5000

We manufacture and sell the AB5000 Circulatory Support System and the BVS 5000 Biventricular Support System for the temporary support of acute heart failure patients in profound shock, including patients suffering from cardiogenic shock after a heart attack, post-cardiotomy cardiogenic shock, or myocarditis. The AB5000 and BVS 5000 systems, which are implanted in the surgery suite, can assume the full pumping function of a patient's failing heart, allowing the heart to rest, heal and potentially recover. Both systems are designed to provide either univentricular or biventricular support. We believe the AB5000 and BVS 5000 systems are the only commercially available cardiac assist devices that are approved by the FDA for heart recovery for patients who have undergone successful cardiac surgery and subsequently develop low cardiac output, or patients who suffer from acute cardiac disorders leading to hemodynamic instability.

The BVS 5000 Biventricular Support System was our first product and has been available for sale since 1992. It was the first FDA-approved heart assist device capable of assuming the pumping function of the heart. Since its introduction, the BVS 5000 has supported thousands of patients in the U.S., Europe and other countries.

The AB5000 Circulatory Support System, our next-generation product for heart recovery, is designed to provide a longer duration of support than the BVS 5000 and facilitates patient mobility in the hospital. The AB5000 can provide up to 6.0 liters of pulsatile blood flow per minute to support patients in profound shock and was approved by the FDA in 2003. Our AB5000 is designed to provide enhanced patient mobility within and between medical centers and to provide enhanced features and ease of use for caregivers. We believe the AB5000 system's high flow rates, ease of implant and historically low incidence of adverse events facilitate heart recovery, for patients with potential for recovery, potentially avoiding the need for heart transplantation and thereby improving patient outcomes. We announced in January 2008 that we received FDA labeling approval of one year bench reliability for our AB5000 ventricle. We recently developed a new iPulse combination console that can run our AB5000 ventricle, our BVS 5000 blood pump, our IAB and other manufacturers' IABs.

Each of the AB5000 and BVS 5000 systems consists of a ventricle or blood pump, one atrial or ventricular cannula, one arterial cannula and a driver console to operate the pump. Other than the console, each component is a disposable item. The AB5000 console supports biventricular BVS 5000 blood pumps, AB5000 ventricles or a combination of the two. Both the AB5000 and BVS 5000 systems use the same cannulae and console, allowing for seamless transition of devices without requiring an additional surgical procedure. We expect customer demand to shift from the AB5000 console to our recently FDA-approved iPulse combination console.

Portable Driver

We recently announced that we have developed a new Portable Circulatory Support Driver for both in-hospital and out-of-hospital patients. The Portable Driver is designed to support our AB5000 VAD. The combination of our new Portable Driver and FDA-approved AB5000 VAD is designed to provide support of acute heart failure patients. In many cases, profound shock heart patients require biventricular support (both sides of the heart). The AB5000 can assume the pumping function of a patient's failing heart, allowing the heart to rest, heal and potentially recover. The AB5000 is designed to provide either uni-ventricular or bi-ventricular support. We recently received FDA labeling approval of one year bench reliability for our AB5000 VAD, which is expected to complement the Portable Driver reliability. The Portable Driver is not yet approved by the FDA. We received CE mark approval for our Portable Driver in March 2008. In May 2008, we received conditional approval for the Portable Driver for an IDE to conduct a U.S. patient discharge study at 20 hospitals for 30 patients.

Cannulae

Each of our AB5000 and BVS 5000 systems requires two cannulae, or tubes, that connect the ventricle or blood pump to the heart and an associated artery. We offer a variety of cannulae. Our integrated cannula system was approved by the FDA in July 2006. This integrated cannula system, which is easier to implant and can be removed through a small incision, has the potential for use off-pump (also called beating heart) with minimally invasive procedures. For example, although removal of the cannulae requires a surgical procedure, it does not require a sternotomy, a substantially more invasive procedure that separates the breastbone in order to access the heart. Moreover, because the AB5000 and the BVS 5000 blood pumps use the same cannulae, clinicians can seamlessly transfer patients from one device to another without requiring an additional surgical procedure.

AbioCor

Our AbioCor Implantable Replacement Heart is the first completely self-contained artificial heart. Designed to sustain the body's circulation, the AbioCor is intended for end-stage biventricular heart failure patients whose other treatment options have been exhausted. Patients with advanced age, impaired organ function or cancer are generally ineligible for a heart transplant and are potential candidates to receive the AbioCor implantable heart. The complete AbioCor system consists internally of a thoracic unit, a rechargeable battery, an electronics package and a power receiver coil, and externally, a power transmitter coil, power and battery pack, handheld alarm monitor, patient home electronics and an in hospital console. Once implanted, the AbioCor system does not penetrate the skin, reducing the chance of infection. This technology provides patients with mobility and remote diagnostics.

We received HDE supplement approval from the FDA for product enhancement of the AbioCor in January 2008. HDE approval signifies that no comparable alternative therapy exists for patients facing imminent death without the technology. HDE approval allows the AbioCor to be made available to a limited patient population, with no more than 4,000 patients receiving the technology in the U.S. each year under HDE approval limits. We began selling the AbioCor in the fourth quarter of fiscal 2008 in a controlled roll-out to a limited number of heart centers in the U.S. We have selected the following sites to date as AbioCor centers: The Johns Hopkins Hospital in Baltimore, MD; Robert Wood Johnson University Hospital in New Brunswick, NJ; and St. Vincent's Hospital in Indianapolis, IN. We are unable to determine how many patient procedures will be performed after the centers are trained. In May 2008, we received a positive National Coverage Determination, or NCD, from CMS to reimburse hospitals for the cost of the AbioCor replacement heart and the cost of implanting the device as part of Coverage with Evidence Development, or CED. Three insurance companies have existing coverage policies for the AbioCor: Cigna, Humana and Healthnet. We do not expect that revenues from sales of the AbioCor will be a material portion of our total revenues for the foreseeable future as our primary strategic focus is centered around heart recovery for acute heart failure patients.

Results of Operations

The following table sets forth certain consolidated statements of operations
data for the periods indicated as a percentage of total revenues (which includes
revenues from products and funded research and development) for the three months
ended June 30, 2008 and 2007, respectively:



                                                                    Three Months Ended
                                                                         June 30,
                                                                   2008            2007
Revenues:
Products                                                             99.5 %          98.8 %
Funded research and development                                       0.5             1.2

                                                                    100.0           100.0

Costs and expenses:
Cost of product revenue excluding amortization of intangibles        34.4            25.1
Research and development                                             37.6            39.2
Selling, general and administrative                                  82.6            88.5
Arbitration decision                                                   -              8.8
Amortization of intangible assets                                     2.6             2.7

                                                                    157.2           164.3

Loss from operations                                                (57.2 )         (64.3 )

Other income:
Investment income, net                                                1.5             6.4
Other income, net                                                     0.9             0.0

                                                                      2.4             6.5

Loss before provision for income taxes                              (54.8 )         (57.8 )
Provision for income taxes                                            0.9             1.0

Net loss                                                            (55.7 )%        (58.8 )%

Three months ended June 30, 2008 compared with the three months ended June 30, 2007

Revenues

Total revenue for the three months ended June 30, 2008 increased by $2.3 million, or 16%, to $16.4 million from $14.1 million for the three months ended June 30, 2007. Our revenues are primarily from sales of medical products for heart recovery.

Product revenues for the three months ended June 30, 2008 increased by $2.4 million, or 17%, to $16.3 million from $13.9 million for the three months ended June 30, 2007. Revenues from disposables, service and other products (non-console revenues) were $14.7 million and $12.0 million for the three months ended June 30, 2008 and 2007, respectively, and comprised approximately 90% and 86% of total revenues, respectively. Total disposables, service, and other programs increased $2.7 million, or 23%, for the three months ended June 30, 2008. For the three months ended June 30, 2008, revenues from Impella disposables, which include revenues generated from our two U.S. pivotal studies for Impella 2.5, increased 323% to $5.5 million, revenues from AB5000 disposables decreased 17% and revenues from BVS disposables declined 16% compared to the three months ended June 30, 2007. Total console revenue for the three months ended June 30, 2008 decreased $0.2 million, or 11%, due primarily to declines in sales of AB5000 consoles for the respective period. Our new iPulse combination console is approved under CE-mark in Europe and was approved by the FDA under a PMA supplement approval in late December 2007. We expect demand to continue to shift from our AB5000 console to our iPulse combination console.

The Impella 2.5 has been approved by the FDA for two pivotal studies in the U.S. In June 2008, we received 510(k) clearance for our Impella 2.5 device for partial circulatory support for up to six hours. This clearance allows for immediate commercial shipment of the device to U.S. hospitals that purchase the device. The Impella 2.5, Impella 5.0 and Impella LD are approved in Europe under CE-mark and are now approved in over 40 countries. During the two U.S. pivotal studies for the Impella 2.5, we are generating revenue from the sale of Impella 2.5 disposables. We expect revenue from our Impella 2.5 to increase in the U.S. with this recent 510(k) clearance and as we enroll more patients in our two pivotal studies; however, for the full fiscal year 2009, we would not expect to maintain the same level of year over year growth of Impella disposable sales that we saw during the first quarter of fiscal year 2009.

The BVS product was launched over 15 years ago and revenue from this product has been declining as AB5000, our next-generation product for heart recovery, is designed to provide a longer duration of support than the BVS 5000 and facilitates patient mobility in the hospital. We expect revenue from BVS to continue to decline as our customers transition more toAB5000 disposables and also as our new Impella products are introduced in the U.S. The decrease in revenue from our AB5000 disposables was attributable to a strategic focus on increasing penetration of our Impella 2.5 product. We expect limited growth in our revenues from our AB5000 business for the remainder of fiscal 2009 as we continue to focus on our Impella product.

Cost of Product Revenues

Cost of product revenues, excluding amortization of intangibles, for the three months ended June 30, 2008 increased by $2.1 million, or 60%, to $5.6 million from $3.5 million for the three months ended June 30, 2007. This resulted in gross margin for the three months ended June 30, 2008 of 66% compared to 75% for the three months ended June 30, 2007. The decrease in gross margin was primarily due to the effect of certain Impella, AB5000 and iPulse console placement programs during the quarter to generate future disposable revenue and scrapping of certain inventory. During the quarter ended June 30, 2008, a total of 70 consoles, including 46 consoles related to Impella orders were placed or consigned with customers in connection with disposable orders and in anticipation of future diposable orders. The cost of goods sold during the quarter ended June 30, 2008 associated with these strategic console placements was $1.4 million. Cost of product revenues also increased as a result of higher revenues in the quarter ended June 30, 2008 compared to the same period of the prior year. If we realize the future Impella and AB5000 disposable revenue from these console placement programs that we expect, and if we are successful in achieving our full year fiscal 2009 revenue forecast, we believe we can generate full fiscal year 2009 gross margins of approximately 75%, subject to the level of future console placements, our overall revenue mix and other variables and factors being consistent with our current expectations.

Research and Development Expenses

Research and development expenses for the three months ended June 30, 2008 increased by $0.6 million, or 11%, to $6.1 million from $5.5 million for the three months ended June 30, 2007. Research and development expenses for the three months ended June 30, 2008 and 2007 included $1.0 million and $0.3 million, respectively, in clinical trial expenses primarily associated with our Impella 2.5 and 5.0 U.S. trials. Our increase in product development costs reflects our efforts to expand and enhance our product lines across a clinical spectrum of circulatory care, particularly due to increased clinical trial activity on Impella 2.5.

We expect to continue to increase our expenditures on research and development activities throughout fiscal 2009 as additional patients are enrolled in our Impella 2.5 PCI and AMI pivotal clinical trials.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended June 30, 2008 increased by $1.1 million, or 9%, to $13.5 million from $12.4 million for the three months ended June 30, 2007. The increase is primarily due to increased investments in our international global distribution network, and is also due to increased investments in marketing initiatives to commercialize the Impella and IPulse products.

We expect to continue to increase our expenditures on sales and marketing activities throughout fiscal 2009, with particular investments in clinical personnel with cath lab expertise and also plan to increase our marketing, service and training investments to support the efforts of the sales and clinical teams to drive recovery awareness for acute heart failure patients globally.

Arbitration Decision

As discussed in Note 8, the aggregate arbitrator award for the three months . . .