Artimplant expands into new product areas and conducts rights issue guaranteed by investors to 92 percent

· In recent two and half years, Artimplant has carried out activities and reached goals that were set when the turn-around started in late 2002, among them the two license agreements that were signed in December, 2004. The company has now created a foundation for increased revenue potential. · Artimplant initiates a strategic expansion of the product platform to new orthopedic applications, and the commercially attractive surgical areas Odontology and Craniomaxillofacial (CMF) as well as Reconstructive and Plastic. · The main goal for 2005 is to sign three new license agreements in orthopedics and two license agreements in Odontology and CMF. · To carry out the expansion with financial clout, the Board of Directors has decided to conduct a rights issue to raise approximately, and as a maximum, 89 million SEK, before transaction costs. Two (2) shares of series A and B respectively, entitle a shareholder to subscribe to one (1) new share of series B (1:2). The share issue is secured with up to 92 percent through guarantee commitments and intentional declarations by existing stockholders and external investors. The share issue is conditional to the authorization at the Annual General Meeting, May 2, 2005. · Issue proceeds will be used primarily to speed up commercialization of new products, and to counter the short-term uncertainty regarding the pace with which existing products in current licensing agreements are launched. Background and purpose History At the end of year 2002, Artimplant conducted a share issue with the aim of restructuring the company, and at the same time, a substantial plan was introduced to commercialize the technology platform ARTELON with focus on orthopedics. All the points of the plan that was presented have been realized. Costs are reduced by more than half. A new CEO, a new leadership team and a new organization were established. A system for development of products with sufficient market potential and short time to market was introduced together with a plan for regulatory approvals. The wholly owned clinic in Gothenburg has been divested. Product sales to clinics in Scandinavia have started and intensive discussions with potential partners for licensing have been performed. A new business model was launched during the last quarter of 2002. Thereafter the company and operations have been restructured so that Artimplant has practically become a new company. As a consequence of the activities during the recent two years and regulatory approvals in both EU and the United States, Artimplant delivered on its promised commercial breakthrough by the end of 2004. The company signed two licensing agreements in December; one with Small Bone Innovation, Inc. (former Avanta Orthopedics, Inc.) regarding Artelon® CMC-I Spacer, now being launched globally, the other a development and license agreement with Biomet, Inc. regarding a product for ligament augmentation in sports medicine. Next step in commercializing ARTELON – new products and new therapy areas for sustained revenues A foundation is now established for Artimplant to take the next step in its commercial development: to establish Artelon as a standard in biomaterials for medical applications where market conditions are favorable and clinical needs are prominent. Focus will be set to step by step expanding the product platform in orthopedics on one hand, and the new attractive markets for odontology and craniomaxillofacial surgery (CMF), and reconstructive and plastic surgery on the other hand. As a consequence of Artimplant’s earlier and comprehensive ground work in R&D, the pace in developing new products in orthopedics and the new market segments can be stepped up considerably. At the same time, development costs have been reduced significantly due to the fact that the company now can utilize earlier investments and knowledge gained in in-house R&D. In a not too distant future, Artimplant anticipates to possess a product portfolio consisting of some ten different products, which in turn will increase revenue potential. This will be achieved without significantly increasing the current cost base. The new therapy areas or market segments have been chosen based on several factors. Synergies between orthopedics and the new application areas are considered to be considerable, not at least clinically. The prospects for short regulatory paths are good. An increasing number of doctors demand new synthetic biomaterials with the specific properties of ARTELON. Furthermore, the market potential and the competitive landscape in the respective market segments are considered to be favorable for a penetration of products based on ARTELON. Orthopedics In orthopedics, Artimplant is further developing the spacer concept with a new generation for thumb base arthritis. Simultaneously, the company is expanding the same concept to other joints in extremities. Additional products will be developed for extremities by way of completing the suture family and tailoring products for different kinds of ligament and tendon reconstruction. Bone defects including cartilage destruction in joints presents a substantial clinical problem. Preclinical studies with ARTELON in such indications show good results. Odontology och CMF Artimplant expands product development and market positioning to Odontology and CMF. The step aims at increasing the market potential for ARTELON. Fibers, porous matrixes, films and granules present a fairly large number of potential applications in oral and CMF surgery. Data from earlier studies can be used to reasonably fast bring products to market. Examples are Artelon® Membrane and Artelon® Bone Scaffold – two new products that are being developed for oral surgery. Near at hand is product development to improve esthetics in dental implant treatment, and to increase the number of patients that are suitable for dental implants. The global market for CMF implants is estimated to amount to approximately 3,500 MSEK. The estimated market for odontological reconstructive implants amounts to approximately 4,900 MSEK. According to conservative calculations, Artimplant estimates that around 650,000 surgical procedures are performed annually in which Artelon® Membrane and Artelon® Bone Scaffold respectively could be of use. Reconstructive and plastic surgery Reconstructive and plastic surgery is a therapy area close to odontology and CMF. Artimplant is evaluating a number of interesting projects for product development in collaboration with partners. Several prospective indications in both hard and soft tissue are at hand, where different forms of ARTELON have big potential, e.g. porous matrixes as soft bone void fillers for reconstruction of damaged tissue in the face, or fiber constructs for reconstruction, augmentation and functional improvements when repairing severe damages after for example trauma or cancer. Project ideas in esthetic surgery are also being evaluated. Artimplant’s goals for 2005 · Revenue generation from 4-5 products · First revenues from Odontology area · Increase sales in the Nordic region through increasing number of customer clinics · Three more product development agreements in orthopedics · Two license agreements in Odontology and CMF · Regulatory submissions in line with defined targets/agreements · Capitalize on and strengthen collaborations with existing partners Purpose for the issue · To counter the short-term uncertainty regarding the pace with which existing products in current licensing agreements are launched. · To exploit the commercial impetus created by the new license agreements · To provide additional resources in commercializing products in orthopedics · To expand product development and commercialization in odontology and CMF, and reconstructive and plastic surgery. · To execute selective investments in machine equipment for increased production of fiber and porous matrixes for higher quality and yield. · To secure a strong financial position in negotiations with potential partners The share issue decision The Artimplant Board of Directors has decided to conduct a rights issue amounting to approximately 89 MSEK before transaction costs, where two existing shares of series A and B entitle shareholders to subscribe to one new share of series B. The subscription price will be 4.50 SEK per share. Conditional to the new rights issue is authorization by the AGM. For more information, see Announcement and Notice Convening the AGM that will be publicly available April 4, 2005. Annual General Meeting is held May 2, 2005. In case the issue will be fully subscribed, Artimplant will issue 19,748,264 new shares of series B. After a fully subscribed share issue, Artimplant will have a total of 59 244 791 outstanding shares (685,500 of series A, and 58,559,291 of series B). For timeplan, see below. Guarantee, etc. A consortium of current shareholders and new investors has through guarantees and intentional declarations committed to subscribe to shares corresponding to 82 MSEK in the proposed rights issue. The amount corresponds to a total guarantee of 92 percent of the issue. The guarantee will be explained in detail in the forthcoming prospectus that will be available around May 9, 2005. Timeplan for the rights issue April 18, 2005 Annual Report for 2004 available to Artimplant shareholders May 2, 2005 Annual General Meeting to authorize rights issue May 4, 2005 The share is traded excluded of right to participate in issue May 9, 2005 Prospectus for the rights issue available to Artimplant shareholders 10 maj 2005 Record date for participation in rights issue 13 maj – 31 maj 2005 Trading in subscription rights 13 maj – 3 juni 2005 Subscription period Trading in shares subscribed and payed for will be available during the period May 13, 2005 until around May 23, 2005. For more information, Artimplant is referring to the prospectus that will be available around May 9, 2005. ABG Sundal Collier is Artimplant’s financial advisor in this rigths issue. For more information, please contact: Tord Lendau, CEO, phone +4631 746 56 00 or +4670 836 9403, tord.lendau@artimplant.se ARTIMPLANT Artimplant’s mission is to develop novel biodegradable materials and implants that meet the needs of patients, physicians and healthcare providers in orthopedics and other therapy areas. The company works together with global partners as a center of excellence in this development. Artimplant’s vision is to become the partner of choice in biomaterials for hard and soft tissue repair in multiple therapy areas. Artimplant is a public company, listed on the Stockholm Exchange, O-list.