Austin-Based Medical Carbon Research Institute, LLC. Becomes On-X Life Technologies, Inc.

$32 Million Financing through Debt Conversion and New Equity from Investor Group led by Paul Capital Healthcare and PTV Sciences to Further Grow On-X Life Technologies, Inc.

AUSTIN, Texas -- Medical Carbon Research Institute L.L.C. (MCRI([TM])), the innovative carbon technology and cardiovascular surgery products company, today announced that it has become On-X([R]) Life Technologies, Inc. (On-X LTI). The transition in corporate structure and name occurred as part of a recapitalization and financing plan that eliminated most of the Company's debt and provided additional capital to further grow the business. Under the terms of the financing agreement, New York-based Paul Capital Healthcare, Austin-based PTV Sciences and several other existing investors provided $32 million through a combination of debt, revenue interest and royalty conversion as well as a new equity capital infusion into the Company.

"This new funding will permit the Company to expand its market presence by investing in sales and marketing, and adding new technologies as well as complimentary cardiovascular surgery products to its product portfolio. There are so many exciting new patient benefiting technologies being developed in this 'space,' we intend to leverage our existing market position and participate where appropriate in these new opportunities," states Clyde Baker, On-X LTI president and CEO.

Baker continued, "We are gratified by the well-documented record of superior clinical performance of the On-X heart valve. It provides patients with treatment alternatives unavailable with older design mechanical valves. The clinical performance has made possible the significant growth in revenue and profitability achieved by our team in a market of large and very committed competitors."

"Paul Capital Healthcare has been a long-term partner of MCRI and we are pleased to continue supporting the Company as it expands its commercial efforts. This transaction underscores the flexibility of our financing model and our commitment to our portfolio companies as well as our ability to assist companies at different stages of development," said Jean-Pierre Naegeli, a partner at Paul Capital Healthcare.

"Finding a significant opportunity within the healthcare space here in our backyard of Austin is very special. We look forward to participating in the growth of On-X LTI," remarks Matt Crawford, a partner at PTV Sciences.

In the past year, the Company has received another very important approval from the US Food and Drug Administration. Based upon existing clinical data and the submitted protocol, the FDA in an unprecedented decision determined that a clinical trial of the On-X valve at reduced anticoagulation levels is clinically reasonable. The patient groups in the PROACT (Prospective Randomized On-X Clinical Trial) study include a non-warfarin group of low-risk aortic valve replacement patients and two low-dose warfarin groups of higher risk aortic and mitral valve replacement patients. The study is being conducted in 40 clinical sites comprised primarily of university-based medical institutions in the United States.

More about the On-X Prosthetic Heart Valve

The On-X valve is the result of a breakthrough in medical grade carbon technology: On-X([R]) pure pyrolytic carbon. In addition to providing a more thrombo-resistant surface, the comparatively high strength of pure On-X carbon enabled On-X LTI to make significant valve design changes that resulted in a prosthetic that acts more like a natural valve in its treatment of blood. It is well documented that the On-X valve does not produce the turbulence and blood damage commonly produced by other mechanical heart valve prostheses and therefore significantly reduces the potential for life-threatening blood clots.

First implanted in 1996, recent clinical evidence suggests that patients implanted with the On-X heart valve may be able to forego or reduce the dosages of anticoagulation therapy traditionally required by mechanical heart valve recipients.

The FDA approved the On-X aortic and mitral valves for commercial use in the United States on May 30, 2001, and March 6, 2002, respectively. More than 50,000 On-X valves have been implanted since 1996.

About Cardiovascular Disease and Heart Valve Replacement 

Cardiovascular disease is the number one cause of death worldwide. The American Heart Association reports that 95,000 surgeries were performed in the United States to repair or replace malfunctioning or diseased heart valves in 2003. According to a June 2004 report issued by Millennium Research Group, life-threatening heart valve disease, including stenosis and regurgitation, affected approximately five million people in the United States in 2003. Millennium Research Group predicts the heart valve market will generate more than $650 million by 2008 due to advances in minimally invasive techniques, the increasing incidents of cardiovascular disease and the aging population.

About Paul Capital Partners and Paul Capital Healthcare

Paul Capital Partners manages nearly $5 billion in equity capital commitments for its three investment platforms that include healthcare direct investments (including royalty and revenue interests in healthcare products), Private Equity Secondaries and Top Tier Fund-of-Funds. The firm has offices in New York, San Francisco, Paris, London and Toronto. Paul Capital Healthcare is one of the largest dedicated healthcare funds globally, with $1.4 billion in equity capital commitments and debt facilities under management. Paul Capital Healthcare has made investments in the pharmaceutical, biotechnology, and medical device sectors valued at more than $850 million. These investments are focused on commercial stage companies and products, and consist of investments in the form of royalties, revenue interests, debt and equity. For more information, visit www.paulcapitalhealthcare.com.

About PTV Sciences

PTV Sciences was founded in 2003 to invest in growth opportunities in life and materials science. PTV Sciences invests in companies across the United States where Texas resources can be leveraged to create disruptive technology and compelling investment opportunities. Much like the untapped reserves which created the modern day oil and gas industry in 1901, the Texas region and the Southern U.S. has a wealth of untapped resources in its academic institutions and research centers. The Firm has the benefit of the direct experience and infrastructure support of the principals, who over the last century have been investing in and building sustainable, successful companies in healthcare, energy, financial services, agriculture and real estate. PTV Sciences focuses on building industry leading companies and investing in extraordinary people in the following sectors: Life Science: Medical Devices, Biotechnology, Pharmaceuticals and Diagnostics Materials Science: Bio-materials, Electronics, Advanced Materials and Nanotechnology.

About On-X Life Technologies, Inc.

On-X Life Technologies, Inc. (On-X LTI) develops heart valve replacements that significantly improve the quality of life for patients. The On-X valve design was awarded a 2002 Medical Device Excellence Award in the Implant and Tissue-Replacement Products category. On-X LTI also provides OEM services utilizing its patented On-X carbon to manufacturers of other medical products, including orthopedic joint and spine implant devices. MCRI, now On-X Life Technologies, was founded in 1994 by a team of heart valve material and design scientists and engineers lead by pioneer Jack Bokros, PhD. Capitalizing on more than 30 years of heart valve design experience the team developed and continues to manufacture the On-X Prosthetic Heart Valve. The valve is approved for use within the US and throughout the world. On-X LTI is headquartered in Austin, Texas, and maintains wholly owned subsidiaries, MCRI Inc. and MCRI Deutschland GmbH, in Hannover, Germany. More information is located at www.onxvalves.com and www.heartvalvechoice.com.

MCRI[TM], On-X([R]) Prosthetic Heart Valve and On-X([R]) carbon are trademarks of On-X LTI, registered in the US Patent and Trademark Office and corresponding foreign filings. All other trademarks mentioned herein belong to their respective companies.