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                                                                    EXHIBIT 99.1

Biosurgery purchasing approximately 614,000 shares at the twenty day average
trading price of the Company's common stock prior to the investment. The third
$5.0 million investment was made by Genzyme Biosurgery in January 2001, with
Genzyme Biosurgery purchasing approximately 2.4 million shares at the twenty day
average trading price of the Company's common stock prior to the investment. At
Focal's option, one additional $5.0 million investment will be made by Genzyme
Biosurgery. The final investment of $5.0 million may be called by Focal in the
second quarter of 2001, subject to the satisfaction of closing conditions. The
final investment will be priced based upon the twenty day trading average of the
Company's stock.

    ETHICON (A JOHNSON & JOHNSON COMPANY)

    In January 1997, the Company entered into an exclusive Distribution, License
and Supply Agreement with Ethicon, Inc., a Johnson & Johnson company, for the
research, development and commercialization of the Company's surgical sealant
products. Ethicon received marketing rights for all surgical sealant indications
in all territories outside North America, while the Company retained
manufacturing rights and receives a combined royalty/transfer price on all
Ethicon sales. The Ethicon Agreement outlines the basis and timetable for the
development, supply, marketing, packaging and distribution of FOCALSEAL-L and
FOCALSEAL-S surgical sealants for use intraoperatively as surgical sealants for
lung surgery and neurosurgery indications and other indications. In August 1998,
the Ethicon Agreement was expanded with a funding agreement for development of a
cardiovascular surgical sealant. However, in February 2000, Ethicon informed
Focal that it does not intend to continue the development and commercialization
of the cardiovascular surgical sealant.

    Ethicon is responsible for obtaining regulatory clearances and approvals in
Japan and countries outside of the European Union. Ethicon will pay Focal a
specified percentage of net sales of surgical sealant products manufactured by
Focal and shipped to Ethicon. In addition, in the event Focal is unable to
achieve specified supply targets or is in non-compliance with the manufacturing
standards established for the CE mark and by Ethicon,

    Ethicon has the right to manufacture surgical sealants for sale in all
territories outside North America. Such manufacturing rights, if exercised by
Ethicon, will be royalty-bearing and non-exclusive.

    Ethicon may terminate the agreement at any time upon twelve months' prior
written notice. In addition, Focal has the right to terminate the agreement on
ninety days' prior written notice if Ethicon fails to meet the applicable annual
purchase minimums set forth in the agreement. Ethicon is required to satisfy its
initial annual purchase minimums on or before April 5, 2001 either by purchasing
products or by making a payment to the Company. If Ethicon fails to do so, Focal
has the right to terminate.

PATENTS AND PROPRIETARY RIGHTS

    The Company believes that patents and other proprietary rights are important
to its business. The Company's policy is to file patent applications to protect
technology, inventions and improvements to its inventions that are considered
important to its business and that provide a competitive advantage. Focal also
relies on trade secrets, general know-how, in-licensing opportunities and
continuing technological innovation.

    The Company has received, licensed or believes it has the option or right to
license 47 issued United States patents and 36 foreign patents corresponding to
certain of the issued United States patents, has six additional United States
patent applications that have been allowed and has 23 patent applications
pending in the United States, as well as foreign counterparts of certain of
these applications. The issued United States patents have expiration dates
ranging from 2010 to 2017. These patents and patent applications cover certain
aspects of the Company's photopolymerizable polymer formulations, surgical
sealant compositions and methods, and designs for delivery devices.

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    The Company has licensed from the University of Texas and Endoluminal
Therapeutics, Inc. (a company controlled by one of the Company's founding
scientists) worldwide rights to certain technologies which are the subject of
issued patents and pending patent applications based upon technologies developed
by two of the Company's founders. These licenses are terminable in the event of
failure by the Company to pay scheduled royalties, failure to commercialize
products in the fields covered by these licenses and under certain other
conditions.

    Because of the substantial length of time and expense associated with
bringing new products through the development and regulatory approval processes
in order to reach the marketplace, the medical products industry places
considerable importance on obtaining patent and trade secret protection for new
technologies, products and processes. Accordingly, the Company intends to seek
patent protection for its proprietary technology, products and processes.

    The Company's success will depend in part on its ability to obtain patent
protection for its products, preserve its trade secrets, prevent third parties
from infringing upon its proprietary rights and operate without infringing upon
the proprietary rights of others, both in the United States and internationally.
There can be no assurance that the Company's pending or future patent
applications will issue, or that the claims of the Company's issued patents, or
any patents that may issue in the future will provide any competitive advantages
for the Company's products or that they will not be successfully challenged,
narrowed, invalidated or circumvented in the future. Moreover, litigation and
interference or opposition proceedings associated with enforcing or defending
patents or trade secrets is expensive and can divert the efforts of technical
and management personnel.

    The Company has filed patent applications in certain foreign countries
corresponding to certain patent applications that it filed in the United States
and may file additional patent applications inside and outside the United
States. The Company believes that the protection afforded by foreign patents or
any other foreign intellectual property protection, if obtained, may be more
limited than that provided domestically. In addition, there can be no assurance
that competitors will not seek to apply for and obtain patents that will
prevent, limit or interfere with the Company's ability to make, use, import and
sell its products.

    The Company is aware that certain medical device, pharmaceutical and other
companies, universities and research institutions have filed patent applications
or have issued patents relating to the compositions and methods for wound
closure and adhesion prevention. In addition, the medical device and
pharmaceutical industries have been characterized by extensive litigation
regarding patents and other intellectual property rights, and many companies in
the medical device and pharmaceutical industries have employed intellectual
property litigation to gain a competitive advantage. There can be no assurance
that litigation will not be brought against the Company by third parties in the
future challenging the Company's patent rights or claiming infringement by the
Company of patents held by the third parties. Because patent applications in the
United States are confidential until the patents issue, and publication of
discoveries in the scientific and patent literature tends to lag behind actual
discoveries by several months, the Company cannot be certain that Company
inventors or licensors were the first to conceive of inventions covered by
pending patent applications or that the Company was the first to file patent
applications for such inventions.

    The Company may be required or find it desirable to obtain licenses to
patents or proprietary rights of others. No assurance can be given that any
licenses required under any patents or proprietary rights of third parties would
be made available on terms acceptable to the Company. If the Company does not
obtain such licenses, it could encounter delays in product introductions while
it attempts to design around such patents, or could find that the development,
manufacture or sale of products requiring such licenses is foreclosed.
Litigation may be necessary to defend against or assert claims of patent
infringement or invalidity, to enforce or defend patents issued to the Company;
to protect trade secrets or know-how owned by the Company, or to determine the
scope and validity of the proprietary

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rights of others. In addition, interference proceedings declared by the United
States Patent and Trademark Office, or opposition proceedings in a foreign
patent office, may be necessary to determine the priority of inventions with
respect to patent applications of the Company or its licensors. Litigation,
interference or opposition proceedings could result in substantial costs to and
diversion of effort by the Company, and adverse determinations in any such
proceedings could have a material adverse effect on the business, financial
condition or results of operations of the Company.

    The Company also relies upon unpatented trade secrets and improvements,
unpatented know-how and continuing technological innovation to develop and
maintain its competitive position, which it seeks to protect, in part, by
confidentiality agreements with its commercial partners, collaborators,
employees and consultants. The Company also has invention and patent assignment
agreements with its employees and certain, but not all, commercial partners and
consultants. There can be no assurance that relevant inventions will not be
developed by a person not bound by an invention assignment agreement. There can
be no assurance that binding agreements will not be breached, that the Company
would have adequate remedies for any breach, or that the Company's trade secrets
will not otherwise become known or be independently discovered by competitors.

    The Company currently owns the following trademarks:

    - Focal-TM-

    - FocalGel-TM-

    - FocalSeal-TM-

    - Corporate Logo

GOVERNMENT REGULATION

    UNITED STATES

    The Company's proposed products and its research and development activities
are subject to regulation by numerous governmental authorities, principally the
FDA and corresponding state and foreign regulatory agencies. The Federal Food,
Drug, and Cosmetic Act, as amended (the "FDC Act"), the regulations promulgated
thereunder, and other federal and state statutes and regulations, govern, among
other things, the preclinical and clinical testing, manufacture, safety,
efficacy, labeling, storage, record keeping, advertising and promotion of
medical devices and drugs, including the products currently under development by
the Company. Product development and approval within this regulatory framework
takes a number of years and involves the expenditure of substantial resources.

    In the United States, medical devices are classified into three different
classes, class I, II and III, on the basis of controls deemed necessary to
reasonably ensure the safety and effectiveness of the device. Class I devices
are subject to general controls (e.g., labeling and adherence to the FDA's good
manufacturing practice requirements ("GMPs")) and class II devices are subject
to general and special controls (e.g., performance standards, postmarket
surveillance, patient registries, and FDA guidelines). Generally, class III
devices are those which must receive premarket approval by the FDA to ensure
their safety and effectiveness (e.g., life-sustaining, life-supporting and
implantable devices, or new devices which have been found not to be
substantially equivalent to legally marketed Class I or II devices).

    Unless it is exempt, a new medical device can be marketed only with
marketing clearance obtained through a premarket notification under Section
510(k) of the FDC Act or a premarket approval ("PMA") application under Section
515 of the FDC Act. A 510(k) clearance will typically be granted by the FDA if
it can be established that the device is substantially equivalent to a
"predicate device," which is a legally marketed class I or II device or a
preamendment class III device (i.e. one that has been marketed since a date
prior to May 28, 1976) for which the FDA has not called for PMAs. The

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FDA has been requiring an increasingly rigorous demonstration of substantial
equivalence and this may include a requirement to submit human clinical trial
data. It generally takes four to twelve months from the date of a 510(k)
submission to obtain clearance, but it may take longer.

    The FDA may determine that a medical device is not substantially equivalent
to a predicate device, or that additional information is needed before a
substantial equivalence determination can be made. A "not substantially
equivalent" determination, or a request for additional information, could
prevent or delay the market introduction of new products that fall into this
category. For any devices that are cleared through the 510(k) process,
modifications or enhancements that could significantly affect the safety or
effectiveness, or that constitute a major change in the intended use of the
device, will require new 510(k) submissions.

    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
preamendment class III device for which the FDA has called for PMAs. A PMA
application must be supported by valid scientific evidence to demonstrate the
safety and effectiveness of the device, typically including the results of
clinical trials, bench tests, and laboratory and animal studies. The PMA must
also contain a complete description of the device and its components, and a
detailed description of the methods, facilities and controls used to manufacture
the device. In addition, the submission must include the proposed labeling,
advertising literature, and any training materials. The PMA process can be
expensive, uncertain and lengthy, and a number of devices for which FDA approval
has been sought by other companies have never been approved for marketing.

    Upon receipt of a PMA application, the FDA makes a threshold determination
as to whether the application is sufficiently complete to permit a substantive
review. If the FDA determines that the PMA application is sufficiently complete
to permit a substantive review, the FDA will accept the application for filing.
Once the submission is accepted for filing, the FDA begins an in-depth review of
the PMA. The FDA review of a PMA application generally takes one to three years
from the date the PMA is accepted for filing, but may take significantly longer.
The review time is often significantly extended by the FDA asking for more
information or clarification of information already provided in the submission.
During the review period, an advisory committee, typically a panel of
clinicians, may be convened to review and evaluate the application and provide a
recommendation to the FDA as to whether the device should be approved. The FDA
accords substantial weight to the recommendation but is not bound by it. Toward
the end of the PMA review process, the FDA generally will conduct an inspection
of the manufacturer's facilities to ensure compliance with applicable GMP
requirements, which include elaborate testing, control documentation and other
quality assurance procedures. The Company underwent an FDA GMP inspection of its
facilities in Lexington, Massachusetts, and the FOCALSEAL-L surgical sealant
data was subject to a bioresearch monitoring review in connection with the
Company's PMA approval.

    If the FDA's evaluations of both the PMA application and the manufacturing
facilities are favorable, the FDA may issue either an approval letter or an
approvable letter, which usually contains a number of conditions that must be
met in order to secure final approval of the PMA. When and if those conditions
have been fulfilled to the satisfaction of the FDA, the agency will issue a PMA
approval letter, authorizing marketing of the device for certain indications. If
the FDA's evaluation of the PMA application or manufacturing facilities is not
favorable, the FDA will deny approval of the PMA application or issue a
"non-approvable" letter. The FDA may determine that additional clinical trials
are necessary, in which case the PMA may be delayed for one or more years while
additional clinical trials are conducted and submitted in an amendment to the
PMA. Modifications to a device that is the subject of an approved PMA, its
labeling or manufacturing process may require approval by the FDA of PMA
supplements or new PMAs. Supplements to a PMA often require the submission of
the same type of information required for an initial PMA, except that the
supplement is generally limited to that information needed to support the
proposed change from the product covered by the original PMA. In May 2000, the
Company received the approval letter for the FOCALSEAL-L surgical

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sealant. The Company has agreed to a five-year, annual follow up review of the
original 180 clinical trial patients to monitor any potential differences
between the treated group and the control group. The Company does not consider
this requirement burdensome or unusual for a new implantable medical device.

    If human clinical trials of a device are required, either for a 510(k)
submission or a PMA application, and the device presents a "significant risk,"
the sponsor of the trial (usually the manufacturer or the distributor of the
device) must file an investigational device exemption ("IDE") application prior
to commencing human clinical trials. The IDE application must be supported by
data, typically including the results of animal and laboratory testing. If the
IDE application is approved by the FDA and one or more appropriate Institutional
Review Boards ("IRBs"), human 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. Submission of an IDE
does not give assurance that FDA will approve the IDE and, if it is approved,
there can be no assurance that FDA will determine that the data derived from the
studies support the safety and efficacy of the device or warrant the
continuation of clinical studies. Sponsors of clinical trials are permitted to
sell investigational devices distributed in the course of the study provided
such 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.

    The Company's FOCALSEAL surgical sealant products will be regulated as a
class III medical device and will require a separate PMA approval for each
indication to be marketed in the United States. In addition, the Company may be
required to obtain IDEs for additional applications of FOCALSEAL surgical
sealant and for other products that the Company develops that are regulated by
the FDA as medical devices. There is no assurance that data, typically the
results of animal and laboratory testing, that may be provided by the Company in
support of future IDE applications will be deemed adequate for the purpose of
obtaining IDE approval, that the Company will obtain approval to conduct
clinical studies of any such future product, or that such clinical studies, if
completed, will generate data adequate to support PMA approval. There can be no
assurance that PMA approval can be obtained for any product in a timely fashion,
or at all.

    Upon clearance or approval by the FDA, any device manufactured or
distributed by the Company will be subject to pervasive and continuing
regulation by the FDA. The Company will be subject to inspection by the FDA and
will have to comply with the host of regulatory requirements that usually apply
to medical devices marketed in the United States, including labeling
regulations, GMP requirements, the Medical Device Reporting ("MDR") regulation
(which requires a manufacturer to report to the FDA certain types of adverse
events involving its products), and the FDA's prohibitions against promoting
products for unapproved or "off-label" uses. The Company's failure to comply
with applicable regulatory requirements could result in enforcement action by
the FDA, which could have a material adverse effect on the Company's business,
financial condition and results of operations.

    Other products that may be developed by the Company, including products for
local drug delivery, may be regulated as drugs requiring FDA approval of a new
drug application ("NDA") prior to commercialization in the United States. The
NDA approval process is generally considered more onerous, costly and lengthy
than the PMA process, often requiring more extensive preclinical and clinical
testing, and many products for which NDAs have been submitted by other companies
have never been approved for marketing.

    If the FDA believes that a company is not in compliance with law, it can
institute proceedings to detain or seize products, issue a recall, enjoin future
violations and assess civil and criminal penalties

                                       16
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against the Company, its officers and its employees. Failure to comply with the
regulatory requirements could have material adverse effect on the Company's
business, financial condition and results of operations. In addition,
regulations regarding the manufacture and sale of the Company's products are
subject to change. The Company cannot predict the effect, if any, that such
changes might have on its business, financial condition or results of
operations.

    INTERNATIONAL

    In order for the Company and its strategic partners to market the Company's
products in Europe and other foreign countries, the Company and/or its partners
must obtain required regulatory approvals and comply with extensive regulations
governing safety, quality and manufacturing processes. These regulations vary
significantly from country to country. The time required to obtain approval to
market the Company's products may be longer or shorter than that required in the
United States. In order to market FOCALSEAL surgical sealants and other products
being developed by the Company in the member countries of the European Union,
the Company will be required to obtain CE mark certification. CE mark
certification is an international symbol of adherence to quality assurance
standards and compliance with applicable European medical device directives. In
December 1997, the Company received a CE mark for its FOCALSEAL-L surgical
sealant for lung surgery and obtained ISO 9001 status. In November 1999, the
Company received a CE mark for its FOCALSEAL-S sealant for neurosurgery. In
September 2000, Focal successfully completed the CE Mark recertification audit,
which occurs every three years. Although the audit has been successfully
completed, there can be no assurance that the Company will be successful in
maintaining its CE mark certification and ISO 9001 status or that additional CE
Mark approvals will be received for other clinical indications.

SALES AND MARKETING

    Focal is marketing and selling its surgical sealants in North America
through Genzyme Biosurgery and internationally through Ethicon, Inc., a Johnson
& Johnson Company. Genzyme Biosurgery has a team of approximately 30 sales
representatives who, together with Focal product specialists, have been
distributing the FOCALSEAL-L lung surgery sealant product throughout the United
States since commercial launch in July 2000. In Canada, a team of six of Genzyme
Biosurgery's sales representatives are distributing the product, which was
launched in Canada in April 2000. The sales team in the United States is
initially focused on the top several hundred largest cardiothoracic centers that
account for a majority of the lung surgery procedures performed annually.
FOCALSEAL-L surgical sealant is currently being used in over 130 hospitals in
the U.S., with a reorder rate of approximately 70%.

    Ethicon has a team of specialized sales representatives to sell Focal's
product in Europe and certain other countries including Israel and Australia.
Sales to date have not been substantial.

    The Company has limited sales and marketing experience and capabilities. The
Company relies significantly on Genzyme Biosurgery and Ethicon to market and
sell its lead products. Its revenue is significantly dependent on the success
and efforts of these parties. All product revenues, substantially all
collaborative research revenues and substantially all accounts receivable are
derived from Genzyme Biosurgery and Ethicon. If the Company terminates its
relationships with either Genzyme Biosurgery or Ethicon it may have to enter
into additional marketing arrangements, which may not be available on favorable
terms. If the Company determines to perform sales and marketing functions
independently, it will face a number of risks, including difficulties in hiring,
training and retaining a sales and marketing force, and increased expenses to
establish a sales and marketing strategy and hire and train employees. Any such
third party or independent sales and marketing efforts may not be successful,
which could materially impair the Company's ability to generate revenue.

    The Company's sales and marketing strategy for other products that it may in
the future seek to develop, includes using a combination of the Company's own
product specialists, strategic marketing

                                       17
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partners and distributors. The sales and marketing plans for these products, if
any, will be dependent on the Company's success in entering into strategic
marketing relationships, its ability to leverage its own internal sales force to
market additional products beyond the surgical sealant products and its ability
to hire and retain additional specialized sales personnel.

MANUFACTURING

    The Company believes that it has sufficient manufacturing capacity at its
Lexington, Massachusetts facility to meet anticipated supply requirements for
FOCALSEAL-L and FOCALSEAL-S surgical sealant in the United States and in
international markets for the next several years.

    The Company performs certain steps in the FOCALSEAL surgical sealant
manufacturing process internally and relies on outside contractors for others.
Certain proprietary processes, including polymer synthesis, are performed by
Focal. The Company uses outside contractors for nonproprietary, high volume
processes including sterilization and aseptic filling. The Company also
contracts with third parties for the manufacture of syringes, applicators, light
sources and light wands.

    Manufacturers often encounter difficulties in scaling up production of their
products, including problems involving production yields, quality control and
assurance, component supply and shortages of qualified personnel. The Company
expects that it has sufficient current manufacturing capacity to meet commercial
needs over the next several years. It may need to establish additional
manufacturing capacity if demand for its products increases in future years.
There can be no assurance that the Company will be successful in scaling up its
manufacturing efforts for new products or increased volume on existing products
in the future or that reliable high-volume manufacturing can be maintained at
commercially reasonable costs.

    The Company would experience supply interruptions in the event it is unable
to maintain commercial levels of polymer synthesis, as the Company's polymer
formulations are proprietary and are not available from third parties. In
addition, there can be no assurance that the Company will not encounter
unanticipated problems and delays in connection with its contract manufacturers
and suppliers. Delays associated with or difficulties encountered in maintaining
commercial manufacturing, the establishment of new manufacturing facilities as
needed, or problems encountered with contract manufacturers and suppliers, would
result in disruptions of product supply to the Company's marketing partners and
for use in clinical trials. In such event Ethicon or Genzyme could, under its
agreement with the Company, commence manufacturing of surgical sealant for
sales. Any of the foregoing would have a material adverse affect on the
Company's financial condition and results of operations.

    The Company purchases raw materials used in its products from various
suppliers. Certain materials and components are currently purchased by the
Company from single sources. These materials have generally been readily
available in the marketplace and have not been the subject of shortages. There
can, however, be no assurance that the Company or its suppliers or contract
manufacturers will not experience material shortages in the future. Any such
future shortages of materials or components could have a material adverse effect
on the Company's financial condition and results of operations.

    The Company is also required to register as a medical device manufacturer
with the FDA and to list its products with the FDA. As such, the Company is
subject to inspections by the FDA for compliance with applicable GMP
requirements, which include elaborate testing, control documentation and other
quality assurance procedures. Further, the Company and the third party
manufacturers of its products are required to comply with various FDA
requirements for design, safety, advertising and labeling.

    Complex medical devices, such as the Company's products, can experience
performance that require review and possible corrective action by the
manufacturer. There can be no assurance that

                                       18
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component failures, manufacturing errors or design defects that could result in
an unsafe condition or injury will not occur. If any such failures or defects
were deemed serious, the Company could be required to withdraw or recall
products, which could result in significant costs to the Company. There can be
no assurance that market withdrawals or product recalls will not occur in the
future. Any future product problems could result in market withdrawals or
recalls of products, which could have a material adverse affect on the Company's
business, financial condition or results of operations.

COMPETITION AND TECHNOLOGICAL CHANGE

    The Company competes with many domestic and foreign medical device,
pharmaceutical and biopharmaceutical companies. In the surgical sealant area,
the Company will compete with existing methodologies for sealing air and fluid
leaks resulting from surgery, including some traditional wound closure products
such as sutures and staples, marketed by companies such as Johnson & Johnson,
and United States Surgical Corporation (Tyco). Other products currently being
marketed include fibrin glue, sold in Europe and the Pacific Rim countries by
Immuno AG, Cention and Fujisawa and in the U.S. by Baxter Healthcare Corporation
and others. Additional products are under development at Bristol-Myers Squibb
Company and Vitex. Other potential competitors in the surgical sealant market
include Closure Medical Corporation, B. Braun GmBH, Cryolife, Cohesion and
others. Competitive products may also be under development by other large
medical device, pharmaceutical and biopharmaceutical companies. The other areas
in which Focal is developing products, such as local drug delivery and adhesion
prevention, are intensely competitive markets and the Company will encounter
competition from major medical device, pharmaceutical and biopharmaceutical
companies in such markets. Many of the Company's current and potential
competitors have substantially greater financial, technological, research and
development, regulatory and clinical, marketing, sales, and personnel resources
than the Company.

    Certain of these competitors may also have greater experience in developing
products, conducting clinical trials, obtaining regulatory approvals, and
manufacturing and marketing such products. Certain of these competitors may
obtain patent protection, approval or clearance by the FDA or foreign countries
or product commercialization earlier than the Company, any of which could
materially adversely affect the Company. Furthermore, if the Company attains
significant commercial sales of its products, it will also be competing with
respect to manufacturing efficiency and marketing capabilities, areas in which
it currently has limited experience. Finally, there can be no assurance that the
Company's marketing partners will not pursue parallel development of other
technologies or products, which may result in a marketing partner developing
additional products that would compete with the Company's products.

    Other recently developed technologies or procedures are, or may in the
future be, the basis of competitive products. There can be no assurance that the
Company's current competitors or other parties will not succeed in developing
alternative technologies and products that are more effective, easier to use or
more economical than those which have or are being developed by the Company or
that would render the Company's technology and products obsolete and
non-competitive in these fields. In such event, the Company's business,
financial condition and results of operations could be materially adversely
affected.

THIRD PARTY REIMBURSEMENT

    Reimbursement and health care payment systems in international markets vary
significantly by country. In connection with international product
introductions, the Company and its strategic marketing partners may be required
to seek international reimbursement approvals. If required, there can be no
assurance that any such approvals will be obtained in a timely manner, or at
all, and failure to receive such international reimbursement approvals could
have an adverse effect on market acceptance of the Company's products in the
international markets in which such approvals are sought.

                                       19
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    In the United States, health care providers, such as hospitals and
physicians, that purchase medical devices such as the Company's products,
generally rely on third-party payors, principally federal Medicare, state
Medicaid and private health insurance plans, to reimburse all or part of the
cost of surgical procedures. The Company anticipates that in a prospective
payment system, such as the DRG system utilized by Medicare, and in many managed
care systems used by private health care payors, there will be no separate,
additional reimbursement for the Company's products. Accordingly, the Company
believes that there will be no procedure-specific reimbursement codes for the
Company's products. The Company anticipates that hospital administrators and
physicians will justify the additional cost of surgical sealants by the
attendant cost savings and clinical benefits that the Company believes will be
derived from the use of its products.

    There can be no assurance that reimbursement for the Company's products will
be available in the United States or in international markets under either
governmental or private reimbursement systems. Furthermore, the Company could be
adversely affected by changes in reimbursement policies of governmental or
private health care payors. Failure by physicians, hospitals and other users of
the Company's products to obtain sufficient reimbursement from health care
payors for procedures in which the Company's products are used or adverse
changes in governmental and private third party payors' policies toward
reimbursement for such procedures would have a material adverse effect on the
Company's business, financial condition and results of operations.

    The Company's business may be also materially adversely affected by the
continuing efforts of government and third-party payors to contain or reduce the
costs of health care through various means. For example, in certain foreign
markets, pricing or profitability of certain medical products and prescription
pharmaceuticals is subject to government control. In the United States, an
increasing emphasis on managed care has put, and will continue to put, pressure
on pharmaceutical and medical product pricing. Such initiatives and proposals,
if adopted, could decrease the price that the Company receives for any products
it may develop and sell in the future, and thereby have a material adverse
effect on the Company's business, financial condition and results of operations.
Further, to the extent that such proposals or initiatives have a material
adverse effect on other companies that are corporate partners or prospective
corporate partners for certain of the Company's products, the Company's ability
to commercialize its products may be materially adversely affected.

EMPLOYEES

    As of December 31, 2000, the Company employed 66 persons of whom 15 were in
research and development, 17 were in manufacturing, 11 were in sales and
marketing, 12 were in clinical, regulatory affairs and quality assurance, and 11
were in management, finance and administration. None of the Company's current
employees is represented by a labor union or is the subject of a collective
bargaining agreement. The Company believes that relations with its employees are
good.

SCIENTIFIC ADVISORS AND CLINICAL INVESTIGATORS

    Focal has recruited several physician specialists and experienced
practitioners in various fields pertaining to its products to serve as
scientific advisors and clinical investigators.

    There is no fixed term of service for the scientific advisors. Current
members may resign or be removed at any time, and additional members may be
appointed. In general, members do not serve on an exclusive basis with the
Company and are not obligated to assign inventions to the Company. Drs. Langer,
Brem, and Slepian are scientific founders of the Company and certain inventions
of Dr. Slepian have been licensed to the Company under the Company's license
agreements with Endoluminal Therapeutics, Inc., a company controlled by
Dr. Slepian. Drs. Langer and Brem also serve as members of the Company's board
of directors. Scientific advisors have from time to time received option grants
to purchase Common Stock of the Company. Scientific advisors have also received
cash

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<PAGE>

compensation, with the amount of such compensation dependent on the time
commitment and level of involvement of each advisor. All scientific advisors
receive reimbursement for expenses incurred in traveling to and attending
meetings on behalf of the Company.

    The following individuals are currently either scientific advisors to Focal
or surgeons involved in Focal's clinical trials. Their respective areas of
specialization are identified below.

<TABLE>
<S>                                         <C>
PROCEDURE DEVELOPMENT
Joseph LoCicero III, M.D..................  Harvard Medical School
Peter Johnson, M.D........................  University of Pittsburgh Medical School
David Torchiana, M.D......................  Massachusetts General Hospital

LUNG SURGERY
John Wain, M.D............................  Massachusetts General Hospital
Larry Kaiser, M.D.........................  University of Pennsylvania Medical Center
Stephen Yang, M.D.........................  Johns Hopkins Medical Center
Richard Feins, M.D........................  Strong Memorial Hospital
Cameron Wright, M.D.......................  Massachusetts General Hospital
David Johnstone, M.D......................  Strong Memorial Hospital
Albert Linder, M.D........................  Lungenklinik Hemer, Hemer Germany

NEUROSURGERY
Andre Grotenhuis, M.D.....................  University Hospital Nijmegan, The Netherlands
Prof. Nicholas de Tribolet, M.D...........  Centre Hospitalier Universitaire Vaudriis,
                                            Switzerland
Prof. Bernard George, M.D.................  Hospital Lasiboisiere, France
Rees Cosgrove, M.D........................  Massachusetts General Hospital
Henry Van Loveren, M.D....................  Mayfield Neurological Institute, University of
                                            Cincinnati

DRUG DELIVERY AND TISSUE ENGINEERING
Robert Langer, Ph.D.......................  Massachusetts Institute of Technology
Marvin Slepian, M.D.......................  University of Arizona Medical Center
Henry Brem, M.D...........................  Johns Hopkins Medical Center
Jane Shaw, Ph.D...........................  President of Stable Network; Former President of
                                            Alza Corporation
</TABLE>

RISK FACTORS THAT MAY AFFECT OPERATING RESULTS

    This Annual Report on Form 10-K contains forward-looking statements. For
this purpose, any statements contained herein that are not statements of
historical fact may be considered to be forward-looking statements. Although not
a complete list of words that might identify forward-looking statements, Focal
uses the words "believes," "anticipates," "plans," "expects," "intends" and
similar expressions to identify forward-looking statements. There are a number
of important factors that could cause our actual results to differ materially
from those indicated by forward-looking statements. Factors that could cause or
contribute to such differences include those discussed below, as well as those
discussed elsewhere in this Form 10-K, including without limitation in
"Business--Patents and Proprietary Rights," "Government Regulation," "Sales and
Marketing," "Manufacturing," "Competition and Technological Change," and "Third
Party Reimbursement," and in "Management's Discussion and Analysis of Financial
Condition and Results of Operations." The Company expressly disclaims any
obligation to update or alter its forward-looking statements, whether as a
result of new information, future events or otherwise.

    HISTORY OF OPERATING LOSSES; ACCUMULATED DEFICIT; UNCERTAINTY OF FUTURE
PROFITABILITY.  The Company has incurred net losses in each year since its
inception, including a net loss of approximately

                                       21
<PAGE>

$19.1 million during 2000. At December 31, 2000, the Company had an accumulated
deficit of $95.2 million. The Company's operating losses have resulted primarily
from expenses incurred in connection with the Company's research, development
and marketing activities, including preclinical and clinical trials, development
of manufacturing processes and sales, general and administrative expenses. The
Company expects to incur net losses for the foreseeable future and may incur net
losses in subsequent periods, although the amount of future net losses and time
required by the Company to reach profitability are highly uncertain. The
Company's ability to achieve and sustain profitability will be dependent upon
obtaining regulatory approval for and successfully commercializing its FOCALSEAL
surgical sealants, including receiving adequate sales and marketing support from
its strategic marketing partners, Genzyme Biosurgery and Ethicon. There can be
no assurance that Focal will obtain required regulatory approvals, or
successfully develop, manufacture, commercialize and market products or that the
Company will ever record significant product revenues or achieve profitability.
Profitability, if achieved, may not be sustained.

    NEED FOR ADDITIONAL FUNDING IN THE NEAR TERM; UNCERTAINTY OF ACCESS TO
CAPITAL.  The Company anticipates that its existing funds will be sufficient to
fund its operating and capital requirements through 2001. The Company expects to
use rather than generate funds from operations for the foreseeable future. In
particular, the Company will require substantial funds in the near term to
conduct research and development, including preclinical testing and clinical
trials of its FOCALSEAL surgical sealant products, and to manufacture and market
any products that are approved for commercial sale, including its FOCALSEAL-L
lung surgical sealant, which is currently marketed and sold domestically and
internationally. If the Company cannot raise more funds, the Company could be
required to reduce its capital expenditures, scale back its research and product
developments, reduce its workforce and/or license to others products or
technologies the Company would otherwise seek to commercialize itself.

    The Company may seek additional funding through collaborative arrangements,
borrowing money and by the sale of additional equity securities. Any sales of
additional equity securities are likely to result in further dilution to its
then-existing stockholders. Further, if the Company issues additional equity
securities, the new equity securities may have rights, preferences or privileges
senior to those of existing holders of its common stock. The Company may also
borrow money from conventional lenders, possibly at high interest rates, which
will increase the risk of its investors' holdings. Despite its efforts,
additional funding may not be available to it at all or only on terms that are
unacceptable to it. The Company also could be required to seek funds through
arrangements with collaborative partners or others that may require it to
relinquish rights to some of its technologies, product candidates or products
which the Company would otherwise pursue on its own.

    Even if the Company is able to raise additional funds in a timely manner,
its future capital requirements will vary depending on many factors, including
the following:

    - continued progress in its research and development programs, as well as
      the magnitude of these programs;

    - the resources required to successfully complete its clinical trials;

    - the time and costs involved in obtaining regulatory approvals;

    - the cost of manufacturing and commercialization activities;

    - the cost of any additional facilities requirements;

    - the timing, receipt and amount of sales and royalties from its potential
      products in the market; and

                                       22
<PAGE>

    - the costs involved in preparing, filing, prosecuting, maintaining and
      enforcing patent claims and other patent-related costs, including
      litigation costs and the costs of obtaining any required licenses to
      technologies.

    The Company's ability to pursue further development and ultimate
commercialization of its surgical sealant products for cardiovascular and
gastrointestinal surgery is contingent on its ability to secure additional
resources for these programs.

    DEPENDENCE ON STRATEGIC MARKETING PARTNERS.  The Company has established
strategic marketing alliances with Genzyme Biosurgery and Ethicon in the field
of surgical sealants. Under these agreements, the Company is dependent upon
Genzyme and Ethicon for the marketing and sale of the Company's surgical
sealants. The Company anticipates that revenues derived from sales of
FOCALSEAL-L surgical sealant in North America by Genzyme Biosurgery will account
for a substantial majority of the Company's near term product revenues. In June
1999, Ethicon announced that it has excess inventory of FOCAL SEAL-L and,
consequently, the Company recorded negligible product sales under its
arrangement with Ethicon in 2000 and expects similar results in 2001. The
failure of Genzyme Biosurgery or Ethicon to continue to support the Company in
the commercialization of its sealant products would have a material adverse
affect on the Company's business, financial condition and results of operations.

    The Company's strategy for development and commercialization of certain of
its future products may depend upon the Company entering into additional
arrangements with research collaborators, corporate partners and others, and
upon the subsequent success of these third parties in performing their
obligations. There can be no assurance that the Company will be able to enter
into additional strategic alliances on terms favorable to the Company. The
Company's inability to enter into additional strategic alliances could have an
adverse affect on the Company's financial condition and results of operations.

    The Company cannot control the amount and timing of resources which its
current or any future corporate partners devote to the Company's programs or
potential products. If any of the Company's current or future corporate partners
breach their agreements with the Company or otherwise fail to conduct their
collaborative activities in a timely manner, the clinical development and/or
commercialization of products may be delayed, and the Company may be required to
devote additional resources to product development and commercialization, or
terminate certain development programs. The termination of any current or future
strategic alliances could have a material adverse affect on the Company's
business, financial condition and results of operations.

    In addition, Focal's current and any future strategic partners may develop,
either alone or with others, products that compete directly with the development
and marketing of the Company's products. Competing products, either developed by
the corporate partners or to which the corporate partners have rights, may
result in their withdrawal of support with respect to all or a portion of the
Company's technology, marketing and development efforts, which would have a
material adverse affect on the Company's business, financial condition and
results of operations. There can be no assurance that disputes will not arise in
the future with respect to the ownership of rights to any products or technology
developed with corporate partners. These and other possible disagreements
between corporate partners in the Company could lead to delays in or termination
of the collaborative research, development or commercialization of certain
products and could require or result in litigation or arbitration, which would
be time-consuming and expensive, and would have a material adverse affect on the
Company's business, financial condition and results of operations.

    UNCERTAINTY OF MARKET ACCEPTANCE.  The Company's FOCALSEAL surgical sealants
represent a new method of sealing air and fluid leaks that arise in connection
with surgery, and there can be no assurance that these products will gain
commercial acceptance among physicians, patients and health care payors, even if
necessary international and United States marketing approvals can be obtained.

                                       23
<PAGE>

The Company believes that recommendations and endorsements by physicians will be
essential for market acceptance of FOCALSEAL, and there can be no assurance that
any such recommendations or endorsements will be obtained. Physicians will not
use the FOCALSEAL surgical sealants unless they determine, based on clinical
data and other factors, that these systems are an effective means of sealing air
and fluid leaks and that the clinical benefits to the patient and cost savings
achieved through use of these systems outweigh their cost. Such determinations
will depend, in part, on the ability of the Company's FOCALSEAL-L surgical
sealant to reduce the time a lung surgery patient must be connected to a chest
tube and the length of hospital stays associated with lung surgery. Acceptance
among physicians may also depend upon the Company's ability to train thoracic
surgeons and other potential users of the Company's products in the application
of liquid surgical sealants, which such physicians typically have not performed,
and the willingness of such users to learn these new techniques. Failure of the
Company's products to achieve significant market acceptance would have a
material adverse effect on the Company's business, financial condition and
results of operations.

    UNCERTAINTIES RELATED TO EARLY STAGE OF COMMERCIALIZATION AND
DEVELOPMENT.  Except for the FOCALSEAL-L and FOCALSEAL-S surgical sealants for
lung surgery and neurosurgery indications, all of the Company's products are in
early stages of development or research. In addition, FOCALSEAL-L and
FOCALSEAL-S surgical sealants will potentially require significant additional
research and development efforts before either is suitable for any indications
beyond lung surgery and neurosurgery, if ever.

    The development and commercialization of new bioabsorbable synthetic polymer
products are highly uncertain and subject to a number of significant risks.
Potential products that appear to be promising at early stages of development
may not reach the market for a number of reasons. Such reasons include the
possibilities that the potential products will be found ineffective or cause
harmful side effects during preclinical testing or clinical trials, fail to
receive necessary regulatory approvals, be difficult to manufacture on a
commercial scale, be uneconomical, fail to achieve market acceptance or be
precluded from commercialization by proprietary rights of third parties. No
assurance can be given that any of the Company's development programs will be
successfully completed, that clinical trials will generate anticipated results
or will commence or be completed as planned, that any PMA application will be
accepted or ultimately approved by the FDA, that required regulatory approvals
will be obtained on a timely basis, if at all, or that any products for which
approval is obtained will be commercially successful. If any of the Company's
development programs are not successfully completed, required regulatory
approvals are not obtained, or products for which approvals are obtained are not
commercially successful, the Company's business, financial condition and results
of operations would be materially adversely affected.

    EARLY STAGE OF CLINICAL TESTING AND LACK OF EXTENSIVE CLINICAL DATA.  Focal
has commenced United States clinical trials of FOCALSEAL-S surgical sealant and
the Company has been working to expedite its current clinical trial by revising
the trial to include a broader study population and a less complicated study
protocol. The Company has suspended enrollment of patients under the current
protocol and is actively working with the FDA on obtaining agreement on a more
efficient format. There are no assurances that the FDA will agree to the revised
study protocol or that the FDA will not require the Company to pursue certain
clinical endpoints. It may be more difficult for the Company to demonstrate the
efficacy of FOCALSEAL-S surgical sealant in the United States trial than in the
European trial, which could result in delays or adversely affect the success of
the clinical trial.

    There can be no assurance that FOCALSEAL-S surgical sealants will receive
marketing approval from the FDA or that any of the Company's other products will
prove to be safe and effective in United States or international clinical trials
under applicable regulatory guidelines. In addition, clinical trials may
identify significant technical or other obstacles to be overcome prior to
obtaining necessary regulatory or international approvals. If the FOCALSEAL-S
surgical sealant product and the Company's other products under development do
not prove to be safe and effective in clinical trials or if the

                                       24
<PAGE>

Company is otherwise unable to commercialize these products successfully, the
Company's business, financial condition and results of operations will be
materially and adversely affected.

    UNCERTAINTY OF ABILITY TO ATTRACT AND RETAIN KEY MANAGEMENT, EMPLOYEES AND
CONSULTANTS.  The Company is highly dependent on the principal members of its
management and scientific staff. The loss of services of any of these personnel
could impede the achievement of the Company's development objectives.
Furthermore, recruiting and retaining qualified scientific personnel to perform
research and development work in the future will also be critical to the
Company's success. There can be no assurance that the Company will be able to
attract and retain personnel on acceptable terms given the competition among
biotechnology, pharmaceutical and healthcare companies, universities and
non-profit research institutions for experienced scientists. In addition, the
Company relies on members of its Scientific Advisory Board and a significant
number of consultants to assist the Company in formulating its research and
development strategy. All of Focal's consultants and the members of the
Company's Scientific Advisory Board are employed by employers other than the
Company, and may have commitments to, or advisory or consulting agreements with,
other entities that may limit their availability to the Company.

    POTENTIAL PRODUCT LIABILITY OR PRODUCT RECALL EXPOSURE; LIMITED INSURANCE
COVERAGE.  The use of any of the Company's potential products in clinical
trials, and the sale of any approved products, may expose the Company to
liability claims resulting from the use of its products or to product recalls.
Product liability claims might be made directly by consumers, health care
providers or by distributors or others selling such products. Focal has obtained
product liability insurance coverage, subject to certain policy limits, for its
clinical trials. The Company has expanded its insurance coverage to include the
sale of commercial products if marketing approval is obtained for products in
development. However, insurance coverage is becoming increasingly expensive, and
no assurance can be given that the Company will be able to maintain insurance
coverage at a reasonable cost or in sufficient amounts to protect the Company
against losses due to liability. There can also be no assurance that the Company
will be able to obtain commercially reasonable product liability insurance for
any products approved for marketing. A successful product liability claim or
series of claims brought against the Company or a product recall could have a
material adverse effect on its business, financial condition and results of
operations.

ITEM 2.  PROPERTIES

    Focal currently occupies approximately 54,000 square feet of manufacturing,
laboratory and administrative space in Lexington, Massachusetts under a lease
which expires in September 2004. Focal has an option to extend this lease for
several additional five-year periods. The Company believes that this facility is
sufficient to meet the Company's production and other requirements through at
least 2004.

ITEM 3.  LEGAL PROCEEDINGS

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

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    None.

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