##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-Q
 
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarter ended March 31, 2007
 Commission File Number: 001-33151
 HANSEN MEDICAL, INC.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    14-1850535(State of Incorporation)
    
    (I.R.S. Employer Identification No.)
 380 North Bernardo Avenue, Mountain View, CA 94043  (Address of Principal Executive Offices)
 (650) 404-5800  (Registrants telephone number, including area code)
 
 þ o
  o o þ
 o þ




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##### 



INDEX
 PART I  FINANCIAL INFORMATIONItem 1. Condensed Consolidated Financial Statements (unaudited)Condensed Consolidated Balance Sheets at March 31, 2007 and December 31, 2006
    
    
    1Condensed Consolidated Statements of Operations for the three months ended March 31, 2007 and 2006 and for the period from September 23, 2002 (Date of Inception)
through March 31, 2007
    
    
    2Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2007 and 2006 and for the period from September 23, 2002 (Date of Inception)
through March 31, 2007
    
    
    3Notes to Condensed Consolidated Financial Statements
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    9Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    13Item 4. Controls and Procedures
    
    
    13Item 4T. Controls and Procedures
    
    
    14PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    14Item 1A. Risk Factors
    
    
    14Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    35Item 3. Defaults Upon Senior Securities
    
    
    36Item 4. Submission of Matters to a Vote of Security Holders
    
    
    36Item 5. Other Information
    
    
    36Item 6. Exhibits
    
    
    37Signatures
    
    
    38EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2




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PART 1. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 HANSEN MEDICAL, INC.
(A development stage company)
 
 Condensed Consolidated Balance Sheets
 (Unaudited)
 (In thousands, except share and per share data)
 March 31,
    
    
    December 31,2007
    
    
    2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    72,646
    
    
    $
    88,911Short-term investments
    
    
    9,800
    
    
    
    989Accounts receivable
    
    
    1,294
    
    
    
    Inventories
    
    
    916
    
    
    
    290Prepaids and other current assets
    
    
    976
    
    
    
    754Total current assets
    
    
    85,632
    
    
    
    90,944Property and equipment, net
    
    
    1,786
    
    
    
    1,706Restricted cash
    
    
    90
    
    
    
    90Long-term deposits
    
    
    45
    
    
    
    50Total assets
    
    $
    87,553
    
    
    $
    92,790LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    859
    
    
    $
    1,163Accrued liabilities
    
    
    2,043
    
    
    
    1,474Deferred revenues
    
    
    1,294
    
    
    
    Current portion of long-term debt
    
    
    1,958
    
    
    
    1,914Total current liabilities
    
    
    6,154
    
    
    
    4,551Long-term debt, net of current portion
    
    
    2,802
    
    
    
    3,309Other long-term liabilities
    
    
    137
    
    
    
    158Total liabilities
    
    
    9,093
    
    
    
    8,018Commitments (Note 3)Stockholders equityPreferred stock, par value $0.0001:Authorized: 10,000,000Issued and outstanding: none
    
    
    
    
    
    
    Common stock, par value $0.0001:Authorized: 100,000,000Issued and outstanding: 21,666,840 at March 31, 2007 and 21,505,563
at December 31, 2006
    
    
    2
    
    
    
    2Additional paid-in capital
    
    
    146,334
    
    
    
    144,130Deferred stock-based compensation
    
    
    (262
    )
    
    
    (346
    )Accumulated other comprehensive income
    
    
    16
    
    
    
    Deficit accumulated during development stage
    
    
    (67,630
    )
    
    
    (59,014
    )Total stockholders equity
    
    
    78,460
    
    
    
    84,772Total liabilities and stockholders equity
    
    $
    87,553
    
    
    $
    92,790
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HANSEN MEDICAL, INC.
(A development stage company)
 
 Condensed Consolidated Statements of Operations
(Unaudited)  (In thousands, except per share data)
 Period fromSeptember 23,2002 (Date ofInception)Three months ended
    
    
    throughMarch 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2007Operating expenses:Research and development
    
    $
    5,072
    
    
    $
    3,763
    
    
    $
    46,818General and administrative
    
    
    4,526
    
    
    
    1,434
    
    
    
    22,972Total operating expenses
    
    
    9,598
    
    
    
    5,197
    
    
    
    69,790Loss from operations
    
    
    (9,598
    )
    
    
    (5,197
    )
    
    
    (69,790
    )Interest income
    
    
    1,118
    
    
    
    373
    
    
    
    3,414Interest and other expense
    
    
    (136
    )
    
    
    (265
    )
    
    
    (1,254
    )Net loss
    
    $
    (8,616
    )
    
    $
    (5,089
    )
    
    $
    (67,630
    )Basic and diluted net loss per share
    
    $
    (0.40
    )
    
    $
    (3.70
    )Shares used to compute basic and diluted net loss
per share
    
    
    21,443
    
    
    
    1,374
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HANSEN MEDICAL, INC.
(A development stage company)
 
 Condensed Consolidated Statements of Cash Flows
 (Unaudited)
 (in thousands)
 Period FromSeptember 23, 2002Three months ended
    
    
    (Date of Inception)March 31,
    
    
    Through2007
    
    
    2006
    
    
    March 31, 2007Cash flows from operating activitiesNet loss
    
    $
    (8,616
    )
    
    $
    (5,089
    )
    
    $
    (67,630
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    292
    
    
    
    95
    
    
    
    1,667Stock-based compensation
    
    
    1,773
    
    
    
    192
    
    
    
    4,969Amortization of preferred stock warrants
    
    
    15
    
    
    
    15
    
    
    
    90Change in carrying value of warrant liability
    
    
    
    
    
    
    96
    
    
    
    341Common stock issued and vested for intellectual property and license agreement
    
    
    
    
    
    
    175
    
    
    
    257Preferred stock issued and expensed for asset purchase and license agreement
    
    
    
    
    
    
    
    
    
    
    3,610Changes in operating assets and liabilities:Accounts receivable
    
    
    (1,294
    )
    
    
    
    
    
    
    (1,294
    )Inventories
    
    
    (626
    )
    
    
    
    
    
    
    (916
    )Prepaids and other current assets
    
    
    (222
    )
    
    
    (136
    )
    
    
    (944
    )Other long-term assets
    
    
    (3
    )
    
    
    
    
    
    
    (3
    )Accounts payable
    
    
    (48
    )
    
    
    (20
    )
    
    
    858Accrued liabilities
    
    
    633
    
    
    
    156
    
    
    
    1,785Deferred revenue
    
    
    1,294
    
    
    
    
    
    
    
    1,294Deferred rent
    
    
    (20
    )
    
    
    (16
    )
    
    
    125Other long-term liabilities
    
    
    12
    
    
    
    11
    
    
    
    65Net cash used in operating activities
    
    
    (6,810
    )
    
    
    (4,521
    )
    
    
    (55,726
    )Cash flows from investing activitiesPurchase of property and equipment
    
    
    (372
    )
    
    
    (655
    )
    
    
    (3,452
    )Proceeds from sales and maturities of short-term investments
    
    
    
    
    
    
    3,761
    
    
    
    51,387Purchase of short-term investments
    
    
    (8,795
    )
    
    
    (1,507
    )
    
    
    (61,170
    )Restricted cash
    
    
    
    
    
    
    (2
    )
    
    
    (90
    )Net cash provided by (used in)
investing activities
    
    
    (9,167
    )
    
    
    1,597
    
    
    
    (13,325
    )Cash flows from financing activitiesProceeds from loans payable
    
    
    
    
    
    
    380
    
    
    
    7,000Repayments of loans payable
    
    
    (470
    )
    
    
    (380
    )
    
    
    (2,197
    )Proceeds from issuance of common stock, net of issuance costs
    
    
    (317
    )
    
    
    
    
    
    
    78,381Proceeds from issuance of redeemable convertible preferred stock, net
    
    
    
    
    
    
    
    
    
    
    57,706Proceeds from exercise of common stock options
    
    
    68
    
    
    
    48
    
    
    
    406Proceeds from employee stock purchase plan
    
    
    432
    
    
    
    
    
    
    
    432Repurchase of unvested shares
    
    
    (1
    )
    
    
    
    
    
    
    (31
    )Net cash provided by (used in)
financing activities
    
    
    (288
    )
    
    
    48
    
    
    
    141,697Net increase (decrease) in cash and
cash equivalents
    
    
    (16,265
    )
    
    
    (2,876
    )
    
    
    72,646Cash and cash equivalents at beginning of period
    
    
    88,911
    
    
    
    15,561
    
    
    
    Cash and cash equivalents at end of period
    
    $
    72,646
    
    
    $
    12,685
    
    
    $
    72,646Supplemental schedule of non-cash investing and financing activitiesConversion of preferred stock to common stock
    
    
    
    
    
    
    
    
    
    
    61,316Reclassification of preferred warrants to common warrants
    
    
    
    
    
    
    
    
    
    
    549Issuance of redeemable convertible preferred stock warrants
    
    
    
    
    
    
    
    
    
    
    208Deferred stock-based compensation, net of cancellations
    
    
    
    
    
    
    (51
    )
    
    
    1,165
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HANSEN MEDICAL, INC.
(A development stage company)
 
 Notes to Condensed Consolidated Financial Statements
(Unaudited)
 1. Summary of Significant Accounting Policies
 Description of Business
   Basis of Presentation
   Principles of Consolidation
  Use of Estimates
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Comprehensive Loss
  Three months endedMarch 31,2007
    
    
    2006Net loss
    
    $
    (8,616
    )
    
    $
    (5,089
    )Change in unrealized gain/loss on investments
    
    
    16
    
    
    
    (11
    )Comprehensive loss
    
    $
    (8,600
    )
    
    $
    (5,100
    )
 Net Loss Per Share
   Three months endedMarch 31,2007
    
    
    2006Net loss
    
    $
    (8,616
    )
    
    $
    (5,089
    )Weighted-average common shares outstanding
    
    
    21,603
    
    
    
    1,657Weighted-average unvested common shares subject to repurchase
and unvested restricted common stock
    
    
    (160
    )
    
    
    (283
    )Shares used to calculated basic and diluted net loss per share
    
    
    21,443
    
    
    
    1,374Basic and diluted net loss per share
    
    $
    (0.40
    )
    
    $
    (3.70
    )
  Three months endedMarch 31,2007
    
    2006Redeemable convertible preferred stock
    
    
    
    
    
    
    12,355Stock options outstanding
    
    
    2,293
    
    
    
    1,072Warrants to purchase redeemable convertible
preferred stock
    
    
    
    
    
    
    59Warrants to purchase common stock
    
    
    59
    
    
    
    Unvested common shares subject to repurchase
    
    
    151
    
    
    
    155Unvested restricted common stock
    
    
    
    
    
    
    117
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Recent Accounting Pronouncements
   2. Balance Sheet Components
 Inventories (in thousands)
 March 31,
    
    
    December 31,2007
    
    
    2006Raw materials
    
    $
    467
    
    
    $
    225Work in process
    
    
    92
    
    
    
    65Finished goods
    
    
    357
    
    
    
    Total
    
    $
    916
    
    
    $
    290
 3. Commitments
 Operating Lease
  FutureMinimumLeaseYears
ended December 31,
    
    PaymentsRemaining nine months in 2007
    
    $
    2772008
    
    
    188Total
    
    $
    465
 4. Long-term Debt
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Remaining nine months in 2007
    
    $
    1,7492008
    
    
    2,3322009
    
    
    1,2495,330Less: Amount representing interest
    
    
    (527
    )4,803Less: Unamortized discount
    
    
    (43
    )4,760Less: Current portion
    
    
    (1,958
    )Long-term portion
    
    $
    2,802
 5. Stock-based Compensation
  Three months endedMarch 31,2007
    
    
    2006Research and development
    
    $
    720
    
    
    $
    69Selling, general and administrative
    
    
    1,053
    
    
    
    123Total
    
    $
    1,773
    
    
    $
    192
  Outstanding OptionsWeightedShares
    
    
    
    
    
    
    AverageAvailable
    
    
    Number of
    
    
    Exercisefor Grant
    
    
    Shares
    
    
    PriceBalances, December 31, 2006
    
    
    1,998
    
    
    
    1,922
    
    
    $
    4.12Shares reserved
    
    
    860
    
    
    
    
    
    
    
    Options granted
    
    
    (530
    )
    
    
    530
    
    
    $
    18.16Options exercised
    
    
    
    
    
    
    (121
    )
    
    $
    0.56Options cancelled
    
    
    38
    
    
    
    (38
    )
    
    $
    1.14Unvested shares repurchased
    
    
    3
    
    
    
    
    
    
    $
    0.56Balances, March 31, 2007
    
    
    2,369
    
    
    
    2,293
    
    
    $
    7.60
  6. Income Taxes
  7




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7. Subsequent Events
 ®
  8




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 The following discussion should be read in conjunction with the condensed consolidated
financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q .
 Except for the historical information contained herein, the matters discussed in this
Managements Discussion and Analysis of Financial Condition and Results of Operations, are
forward-looking statements that involve risks and uncertainties. In some cases, these statements
may be identified by terminology such as may, will, should, expects, could, intends,
might, plans, anticipates, believes, estimates, predicts, potential, or continue,
or the negative of such terms and other comparable terminology. These statements involve known and
unknown risks and uncertainties that may cause our results, levels of activity, performance or
achievements to be materially different from those expressed or implied by the forward-looking
statements. Factors that may cause or contribute to such differences include, among others, those
discussed in this report in Part II, Item 1A Risk Factors. Except as may be required by law, we
undertake no obligation to update any forward-looking statement to reflect events after the date of
this report.
 OVERVIEW
     ®
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Financial Overview
 Revenue
  Research and Development Expenses
  Selling, General and Administrative Expenses
  Results of Operations
 Comparison of the three months ended March 31, 2007 to the three months ended March 31, 2006
 Research and development expenses
 10




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Selling, general and administrative expenses
 Interest income
 Interest and other expense
 Liquidity and Capital Resources
  Net Cash Used in Operating Activities
  Net Cash Provided by (Used in) Investing Activities
  11




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Net Cash Provided by (Used in) Financing Activities
  Operating Capital and Capital Expenditure Requirements
    
    
    The success of our research and development efforts;
    
    The expenses we incur in selling and marketing our products;
    
    The costs and timing of future regulatory clearances;
    
    The revenue generated by sales of our current and future products;
    
    The rate of progress and cost of our clinical trials and other development activities;
    
    The emergence of competing or complementary technological developments;
    
    The costs of filing, prosecuting, defending and enforcing any patent claims and other
intellectual product rights, or participating in litigation-related activities;
    
    The terms and timing of any collaborative, licensing or other arrangements that we may
establish; and
    
    The acquisition of businesses, products and technologies, although we currently have no
commitments or agreements relating to any of these types of transactions.
 Critical Accounting Policies and Estimates
  12




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Contractual Obligations
 Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Recent Accounting Pronouncements
   
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
 ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
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Changes in Internal Control Over Financial Reporting
  Limitations on the Effectiveness of Controls
  
 ITEM 4T. CONTROLS AND PROCEDURES
  
 PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
 Any investment in our stock involves a high degree of risk. You should consider carefully the risks
and uncertainties described below before you decide whether to purchase our common stock. The risks
and uncertainties described below are not the only ones facing us. Additional risks and
uncertainties, not presently known to us, or that we currently see as immaterial, may also harm our
business. If any of the following risks actually occurs or any of the additional risks not
presently known to us occur, our business could be materially harmed and our financial condition
and results of operations could be materially and adversely affected.
 Risks Related to Our Business
 We are a development stage company with a limited history of operations.
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We do not currently have sales, marketing and distribution experience and capabilities, which could
impair our ability to achieve profitability.
  
    
    our ability to recruit, train and retain adequate numbers of qualified sales and
marketing personnel;
    
    the ability of sales personnel to obtain access to or persuade adequate numbers of
hospitals to purchase our products or physicians to use our products;
    
    costs associated with hiring, maintaining and expanding an independent sales and
marketing organization; and
    
    government scrutiny and labeling restrictions with respect to promotional activities in
the healthcare industry.
  We have limited experience in manufacturing and assembling our products and may encounter problems
at our manufacturing facilities or otherwise experience manufacturing delays that could result in
lost revenue.
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If we fail to obtain or maintain necessary FDA clearances and CE marks for our medical device
products, or if such clearances are delayed, we will be unable to commercially distribute and
market our products.
    If physicians and hospitals are not convinced that our products are a safe and effective
alternative to existing technologies used in atrial fibrillation and other cardiac ablation
procedures, we may not be commercially successful.
  16




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We expect to derive substantially all of our revenues from sales of our Sensei system and Artisan
control catheters. If hospitals do not purchase our system, we may not generate sufficient revenues
to continue our operations.
  We have incurred substantial losses since inception and anticipate that we will incur continued
losses for the foreseeable future.
  We may incur significant liability if it is determined that we are promoting off-label use of our
products in violation of federal and state regulations in the United States or elsewhere.
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The training required for physicians to use our Sensei system could reduce the market acceptance of
our system and reduce our revenue.
  18




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Because our markets are highly competitive, customers may choose to purchase our competitors
products, which would result in reduced revenue and harm our financial results.
 ®
   
    
    significantly greater name recognition;
    
    longer operating histories;
    
    established relations with healthcare professionals, customers and third-party payors;
    
    established distribution networks;
    
    additional lines of products, and the ability to offer rebates or bundle products to
offer higher discounts or incentives to gain a competitive advantage;
    
    greater experience in conducting research and development, manufacturing, clinical
trials, obtaining regulatory clearance for products and marketing approved products; and
    
    greater financial and human resources for product development, sales and marketing, and
patent litigation.
  We will likely experience extended and variable sales cycles, which could cause significant
variability in our results of operations for any given quarter.
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The use of our products could result in product liability claims that could be expensive, divert
managements attention and harm our reputation and business.
  
    
    decreased demand for our products;
    
    injury to our reputation;
    
    diversion of managements attention;
    
    withdrawal of clinical trial participants;
    
    significant costs of related litigation;
    
    substantial monetary awards to patients;
    
    product recalls or market withdrawals;
    
    loss of revenue; and
    
    the inability to commercialize our products under development.
 We may be unable to complete the development and commercialization of our existing products under
development or other products without additional funding.
  
    
    the success of our research and product development efforts;
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
    
    the expenses we incur in selling and marketing our products;
    
    the costs and timing of future regulatory clearances;
    
    the revenue generated by sales of our current and future products;
    
    the rate of progress and cost of our clinical trials and other development activities;
    
    the emergence of competing or complementary technological developments;
    
    the costs of filing, prosecuting, defending and enforcing any patent claims and other
intellectual property rights, or participating in litigation-related activities;
    
    the terms and timing of any collaborative, licensing or other arrangements that we may
establish; and
    
    the acquisition of businesses, products and technologies, although we currently have no
commitments or agreements relating to any of these types of transactions.
  Our reliance on third-party manufacturers and on suppliers, and in one case, a single-source
supplier, could harm our ability to meet demand for our products in a timely manner or within
budget.
  
    
    suppliers may fail to comply with regulatory requirements or make errors in
manufacturing components that could negatively affect the efficacy or safety of our
products or cause delays in shipments of our products;
    
    we may not be able to respond to unanticipated changes and increases in customer
orders;
    
    we may be subject to price fluctuations due to a lack of long-term supply arrangements
for key components with our suppliers;
    
    we may experience delays in delivery by our suppliers due to changes in demand from us
or their other customers;
    
    we may lose access to critical services and components, resulting in an interruption in
the manufacture, assembly and shipment of our systems;
    
    our suppliers manufacture products for a range of customers, and fluctuations in demand
for products these suppliers manufacture for others may affect their ability to deliver
components to us in a timely manner;
    
    our suppliers may wish to discontinue supplying goods or services to us beyond the
development phase for risk management reasons, such as intellectual property reasons or
medical products liability reasons;
    
    we may not be able to find new or alternative components for our use or reconfigure our
system and manufacturing processes in a timely manner if the components necessary for our
system become unavailable; and
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
    
    our suppliers may encounter financial hardships unrelated to our demand for components,
which could inhibit their ability to fulfill our orders and meet our requirements.
   Our products and related technologies can be applied in different applications, and we may fail to
focus on the most profitable areas.
  If we fail to obtain or acquire imaging and visualization technology, or successfully collaborate
with a strategic partner to provide such technology on terms favorable to us, or at all, our Sensei
system may not be able to gain market acceptance and our business may be harmed.
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Software defects may be discovered in our products.
  
    
    loss of revenue;
    
    delay in market acceptance of our products;
    
    damage to our reputation;
    
    additional regulatory filings;
    
    product recalls;
    
    increased service or warranty costs; and/or
    
    product liability claims relating to the software defects.
 Our costs could substantially increase if we receive a significant number of warranty claims.
  Hospitals or physicians may be unable to obtain coverage or reimbursement from third-party payors
for procedures using our Sensei system, which could affect the adoption or use of our Sensei system
and may cause our revenues to decline.
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We may lose our key personnel or fail to attract and retain additional personnel.
   If we do not effectively manage our growth, we may be unable to successfully develop, market and
sell our products.
  
    
    implementing appropriate operational and financial systems and controls;
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
    
    expanding manufacturing capacity and increasing production;
    
    developing our sales and marketing infrastructure and capabilities;
    
    identifying, attracting and retaining qualified personnel in our areas of activity; and
    
    training, managing and supervising our personnel worldwide.
  We intend to sell our Sensei system internationally and are subject to various risks relating to
such international activities which could adversely affect our international sales and operating
performance.
  
    
    required compliance with existing and changing foreign regulatory requirements and laws;
    
    export or import restrictions and controls relating to technology;
    
    pricing pressure;
    
    laws and business practices favoring local companies;
    
    longer payment cycles;
    
    the effects of fluctuations in foreign currency exchange rates;
    
    shipping delays;
    
    difficulties in enforcing agreements and collecting receivables through certain foreign
legal systems;
    
    political and economic instability;
    
    potentially adverse tax consequences, tariffs and other trade barriers;
    
    international terrorism and anti-American sentiment;
    
    difficulties in penetrating markets in which our competitors products are more established;
    
    difficulties and costs of staffing and managing foreign operations; and
    
    difficulties in enforcing intellectual property rights.
  Our business may be harmed by a natural disaster, terrorist attacks or other unanticipated
problems.
  We may be liable for contamination or other harm caused by materials that we handle, and changes in
environmental regulations could cause us to incur additional expense.
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Changes to existing accounting pronouncements or taxation rules or practices may affect how we
conduct our business and affect our reported results of operations.
 Share-Based Payment, Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees.
  Risks Related to Our Intellectual Property
 If we are unable to protect the intellectual property contained in our products from use by
third parties, our ability to compete in the market will be harmed.
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Third parties may assert that we are infringing their intellectual property rights.
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We may not be able to maintain or obtain all the licenses from third parties necessary for the use
of our Sensei system, which may cause our revenues to decline.
   The medical device industry is characterized by patent litigation and we could become subject to
litigation that could be costly, result in the diversion of managements attention, require us to
pay damages and discontinue selling our products.
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We may be subject to damages resulting from claims that our employees or we have wrongfully used or
disclosed alleged trade secrets of their former employers.
  Additional Risks Related to Regulatory Matters
 If we fail to comply with the extensive government regulations relating to our business, we
may be subject to fines, injunctions and other penalties that could harm our business.
  
    
    design, development and manufacturing;
    
    testing, labeling and storage;
    
    clinical trials;
    
    product safety;
    
    marketing, sales and distribution;
    
    premarket clearance or approval;
    
    record keeping procedures;
    
    advertising and promotions;
    
    post-market surveillance, including reporting of deaths or serious injuries and
malfunctions that, if they were to recur, could lead to death or serious injury; and
    
    product export.
  
    
    issuing public warning letters to us;
    
    imposing fines and penalties on us;
    
    issuing an injunction preventing us from manufacturing or selling our products;
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
    
    bringing civil or criminal charges against us;
    
    delaying the introduction of our products into the market;
    
    delaying pending requests for clearance or approval of new uses or modifications to
existing products;
    
    recalling, detaining or seizing our products; or
    
    withdrawing or denying approvals or clearances for our products.
 If we fail to obtain regulatory clearances in other countries for products under development, we
will not be able to commercialize these products in those countries.
   We may fail to comply with continuing postmarket regulatory requirements of the FDA and other
authorities and become subject to substantial penalties, or marketing experience may show that our
device is unsafe, forcing us to recall or withdraw it permanently from the market.
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Our suppliers or we may fail to comply with the QSR and California Department of Health Services
requirements, which could hurt our ability to commercially distribute and sell our products and may
subject us to fines, injunctions, and penalties.
   If we fail to comply with healthcare regulations, we could face substantial penalties and our
business, operations and financial condition could be adversely affected.
  
    
    the federal healthcare program Anti-Kickback Law, which prohibits, among other things,
persons from soliciting, receiving or providing remuneration, directly or indirectly, to
induce either the referral of an individual, for an item or service or the purchasing or
ordering of a good or service, for which payment may be made under federal healthcare
programs such as the Medicare and Medicaid programs;
    
    federal false claims laws which prohibit, among other things, individuals or entities
from knowingly presenting, or causing to be presented, claims for payment from Medicare,
Medicaid, or other third-party payors that are false or fraudulent, and which may apply to
entities like us which provide coding and billing advice to customers;
    
    the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA,
which prohibits executing a scheme to defraud any healthcare benefit program or making
false statements relating to healthcare matters and which also imposes certain
requirements relating to the privacy, security and transmission of individually
identifiable health information;
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
    
    federal self-referral laws, such as STARK, which prohibits a physician from making a
referral to a provider of certain health services with which the physician or the
physicians family member has a financial interest, and prohibits submission of a claim
for reimbursement pursuant to a prohibited referral; and
    
    state law equivalents of each of the above federal laws, such as anti-kickback and
false claims laws which may apply to items or services reimbursed by any third-party
payor, including commercial insurers, and state laws governing the privacy of health
information in certain circumstances, many of which differ from each other in significant
ways and often are not preempted by HIPAA, thus complicating compliance efforts.
  The application of state certificate of need regulations and compliance with federal and state
licensing requirements could substantially limit our ability to sell our products and grow our
business.
  Risks Related to Ownership of Our Common Stock
 We expect that the price of our common stock will fluctuate substantially, possibly resulting
in class action securities litigation.
  
    
    the receipt, denial or timing of regulatory clearances or approvals of our products or
competing products;
    
    changes in policies affecting third-party coverage and reimbursement in the United
States and other countries;
    
    ability of our products to achieve market success;
    
    the performance of third-party contract manufacturers and component suppliers;
    
    our ability to develop sales and marketing capabilities;
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
    
    our ability to manufacturer our products to commercial standards;
    
    the success of any collaborations we may undertake with other companies;
    
    our ability to develop, introduce and market new or enhanced versions of our products
on a timely basis;
    
    actual or anticipated variations in our results of operations or those of our
competitors;
    
    announcements of new products, technological innovations or product advancements by us
or our competitors;
    
    developments with respect to patents and other intellectual property rights;
    
    sales of common stock or other securities by us or our stockholders in the future;
    
    additions or departures of key scientific or management personnel;
    
    disputes or other developments relating to proprietary rights, including patents,
litigation matters and our ability to obtain patent protection for our technologies;
    
    trading volume of our common stock;
    
    changes in earnings estimates or recommendations by securities analysts, failure to
obtain analyst coverage of our common stock or our failure to achieve analyst earnings
estimates;
    
    developments in our industry; and
    
    general market conditions and other factors unrelated to our operating performance or
the operating performance of our competitors.
  Securities analysts may not initiate or continue coverage for our common stock or may issue
negative reports, and this may have a negative impact on the market price of our common stock.
  Our principal stockholders, directors and management own a large percentage of our voting stock,
which allows them to exercise significant influence over matters subject to stockholder approval.
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We have not paid dividends in the past and do not expect to pay dividends in the future, and any
return on investment may be limited to the value of our common stock.
  Some provisions of our charter documents and Delaware law may have anti-takeover effects that could
discourage an acquisition of us by others, even if an acquisition would be beneficial to our
stockholders.
  
    
    permit our board of directors to issue up to 10,000,000 shares of preferred stock, with
any rights, preferences and privileges as they may designate, including the right to
approve an acquisition or other change in our control;
    
    provide that the authorized number of directors may be changed only by resolution of
the board of directors;
    
    provide that all vacancies, including newly created directorships, may, except as
otherwise required by law, be filled by the affirmative vote of a majority of directors
then in office, even if less than a quorum;
    
    divide our board of directors into three classes;
    
    require that any action to be taken by our stockholders must be effected at a duly
called annual or special meeting of stockholders and not be taken by written consent;
    
    provide that stockholders seeking to present proposals before a meeting of stockholders
or to nominate candidates for election as directors at a meeting of stockholders must
provide notice in writing in a timely manner, and also specify requirements as to the form
and content of a stockholders notice;
    
    do not provide for cumulative voting rights, therefore allowing the holders of a
majority of the shares of common stock entitled to vote in any election of directors to
elect all of the directors standing for election, if they should so choose;
    
    provide that special meetings of our stockholders may be called only by the chairman of
the board, our chief executive officer or by the board of directors pursuant to a
resolution adopted by a majority of the total number of authorized directors; and
    
    provide that stockholders will be permitted to amend our amended and restated bylaws
only upon receiving at least 66 2/3% of the votes entitled to be
cast by holders of all outstanding shares then entitled to vote generally in the election
of directors, voting together as a single class.
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Sales of a substantial number of shares of our common stock in the public market, or the perception
that they may occur, may depress the market price of our common stock.
   We incur significant costs as a result of operating as a public company, and our management is
required to devote substantial time to new compliance initiatives.
   
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  (b) Uses of Proceeds from Sale of Registered Securities
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
    
    Approximately $18.0 million for sales, marketing and general administrative activities;
    
    Approximately $10.0 million for research and product development activities;
    
    Approximately $8.0 million for capital equipment and tenant improvements; and
    
    The remainder to fund working capital and other general corporate purposes.
  (c) Purchases of Equity Securities
  Total Number of
    
    Maximum NumberTotal
    
    Average
    
    Shares Purchased as
    
    of Shares that MayNumber of
    
    Purchase
    
    Part of Publicly
    
    Yet Be PurchasedShares
    
    Price Paid Per
    
    Announced Plans or
    
    Under the Plans orPeriod
    
    Purchased
    
    Share
    
    Programs
    
    ProgramsJanuary 1, 2007 - January 31, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    February 1, 2007 - February 28, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    March 1, 2007 - March 31, 2007
    
    
    2,625
    
    
    $
    0.56
    
    
    
    
    
    
    
    
 
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
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ITEM 6. EXHIBITS
  ExhibitNumber
    
    Description3.1(1)
    
    Amended and Restated Certificate of Incorporation of the Registrant.3.2(2)
    
    Amended and Restated Bylaws of the Registrant.4.1(3)
    
    Specimen Common Stock Certificate.4.2(3)
    
    Amended and Restated Investor Rights Agreement, dated November 10,
2005, between the Registrant and certain of its stockholders.10.20(2)+
    
    2007 Executive Compensation Information.31.1
    
    Certification of the Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of the Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1**
    
    Certification of the Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.32.2**
    
    Certification of the Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
 
 (1)
    
    Previously filed as an exhibit to Registrants Annual Report on Form 10-K, filed on March 28,
2007 and incorporated herein by reference.(2)
    
    Previously filed as an exhibit to Registrants Current Report on Form 8-K, filed on February
16, 2007 and incorporated herein by reference.(3)
    
    Previously filed as an exhibit to Registrants Registration Statement on Form S-1, as
amended, originally filed on August 16, 2006 and incorporated herein by reference.+
    
    Indicates management contract or compensatory plan.**
    
    The certifications attached here to as Exhibits 32.1 and 32.2 accompany this Quarterly Report
on Form 10-Q are not deemed filed with the Securities and Exchange Commission and is not to be
incorporated by reference into any filing of Hansen Medical, Inc. under the Securities Act of
1933, as amended, or the Exchange Act (whether made before or after the date of the Form
10-Q), irrespective of any general incorporation language contained in such filing. 37




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SIGNATURES
  Dated:
May 14, 2007
    
    By:
    
    /s/ Frederic H. Moll, M.D.Frederic H. Moll, M.D.Chief Executive Officer(Principal Executive Officer)
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ExhibitNumber
    
    Description3.1(1)
    
    Amended and Restated Certificate of Incorporation of the Registrant.3.2(2)
    
    Amended and Restated Bylaws of the Registrant.4.1(3)
    
    Specimen Common Stock Certificate.4.2(3)
    
    Amended and Restated Investor Rights Agreement, dated November 10,
2005, between the Registrant and certain of its stockholders.10.20(2)+
    
    2007 Executive Compensation Information.31.1
    
    Certification of the Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of the Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1**
    
    Certification of the Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.32.2**
    
    Certification of the Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
 
 (1)
    
    Previously filed as an exhibit to Registrants Annual Report on Form 10-K, filed on March 28,
2007 and incorporated herein by reference.(2)
    
    Previously filed as an exhibit to Registrants Current Report on Form 8-K, filed on February
16, 2007 and incorporated herein by reference.(3)
    
    Previously filed as an exhibit to Registrants Registration Statement on Form S-1, as
amended, originally filed on August 16, 2006 and incorporated herein by reference.+
    
    Indicates management contract or compensatory plan.**
    
    The certifications attached here to as Exhibits 32.1 and 32.2 accompany this Quarterly Report
on Form 10-Q are not deemed filed with the Securities and Exchange Commission and is not to be
incorporated by reference into any filing of Hansen Medical, Inc. under the Securities Act of
1933, as amended, or the Exchange Act (whether made before or after the date of the Form
10-Q), irrespective of any general incorporation language contained in such filing. 39