BioSphere Medical, Inc. Reports Second-Quarter 2000 Financial Results.

Business Editors & Health/Medical Writers

ROCKLAND, Mass.--(BW HealthWire)--July 25, 2000

Reports Initial Sales of Flagship Product in the U.S. Following U.S.

FDA 510(k) Clearance

BioSphere Medical, Inc. (Nasdaq: BSMD), a medical device company that is pioneering the use of bioengineered microspheres to treat tumors and vascular malformations by occluding their blood supply, today announced its financial results for the second quarter ended June 30, 2000.

"Receiving FDA 510(k) clearance for Embosphere(R) Microspheres and recording our first U.S. sales were major accomplishments on our path to global commercialization of our proprietary flagship product," said John Carnuccio, BioSphere Medical's president and chief executive officer. "These successes in the United States were paralleled by increased sales and an expansion of our distribution channels and sales organization in Europe, and the initiation of our sales and marketing efforts in Asia."

For the three months ended June 30, 2000, BioSphere Medical's net revenues were $815,000, compared with net revenues of $713,000 in the corresponding period last year. The company reported a net loss from continuing operations of $2,147,000, or $0.23 per share for the second quarter of 2000. This compares with a net loss from continuing operations of $1,025,000, or $0.12 per share, in the second quarter of 1999.

For the six months ended June 30, 2000, BioSphere Medical's net revenues were $1,589,000, compared with net revenues of $993,000 in the corresponding period last year. The company reported a net loss from continuing operations of $3,623,000, or $0.40 per share. This compares with a net loss from continuing operations of $1,564,000, or $0.19 per share in the corresponding period last year.

Second-quarter Highlights

"Our key second-quarter accomplishment was shipping the first orders for Embosphere(R) Microspheres in the United States, following our receipt of FDA 510(k) clearance in April," Carnuccio said. "We also prepared for the full-scale U.S. launch of Embosphere(R) Microspheres by recruiting a vice president of marketing and building our direct sales force. In addition, we prepared a comprehensive new marketing campaign that we are launching this summer."

Carnuccio said, "Sales of Embosphere(R) Microspheres began in the United States even before the formal product launch. In Europe, demand has also increased as we have expanded our distribution channels on that continent. We believe this growth demonstrates that our product offers distinct advantages compared to competitive products in this growing worldwide market."

Looking beyond general embolization toward meeting the growing interest in uterine artery embolization (UAE) among patients and physicians in the U.S., BioSphere Medical initiated Phase I clinical trials of Embosphere(R) Microspheres for UAE treatment of uterine fibroids in January 2000 under an Investigational Device Exemption (IDE) granted by the FDA. "We have completed all of the UAE procedures planned in Phase I," Carnuccio said, "and are now into the one-year monitoring period. We also are in active discussions with the FDA regarding design for the pivotal Phase II study."

Continued Carnuccio, "Uterine fibroids affect more than 25 million women in the U.S., and about six million of these women are symptomatic. More than 200,000 undergo hysterectomies for fibroids, while many others have the fibroids removed surgically. Industry sources have stated that worldwide demand for UAE will grow substantially during the next five years. We believe that BioSphere Medical is well positioned to capture a share of this and other emerging embolization markets."

Among the other emerging markets for embolotherapy is targeted liver embolization (TLE) as a therapy for liver cancer, which kills more than 1.2 million people every year. Most of these deaths occur in Asia, where there is a high incidence of Hepatitis B, which can cause liver cancer. In the U.S., approximately 4 million people are positive for the Hepatitis C virus. Of these, projections indicate 10-15 percent will develop liver cancer in the coming years. "We believe that many of these patients could benefit from TLE with Embosphere(R) Microspheres or our newly acquired HepaSphere SAP(TM) Microspheres product, for which we obtained a license in Japan during the first quarter," Carnuccio said. "We are currently in the initial stages of applying for regulatory approval to market our microspheres in Asia."

"We believe that our second quarter accomplishments, especially our 510(k) clearance, are shaping the development of embolotherapy worldwide," Carnuccio said. "Patients and physicians around the world are becoming increasingly aware of the benefits of embolotherapy, and we are focused on rapidly commercializing our technology and capitalizing on this exciting market opportunity."

About BioSphere Medical

BioSphere Medical, Inc., based in Rockland, Massachusetts, is a medical device company focused on embolotherapy, the treatment of tumors and vascular malformations by occluding blood flow. The Company is pioneering the use of patented and proprietary bioengineered microspheres as a new class of embolics.

This press release contains forward-looking statements that involve risks and uncertainties, including those relating to the future sale of the Company's products and the long-term growth of the Company. Among the important factors that could cause actual events to differ materially from those indicated by forward-looking statements in this release are the failure of the Company to achieve or maintain necessary regulatory approvals, either in the United States or internationally, with respect to the manufacture and sale of its products; to successfully develop and commercialize the Embosphere(R) Microspheres and HepaSphere SAP(TM) Microsphere technologies for uterine artery embolization, targeted liver embolization and other applications; to provide patent and other proprietary protection for the Company's products; the absence of or delays and cancellations of, product orders; the delay in the introduction of new products; competitive pressures; the inability of the Company to raise additional funds, if needed, to finance the development, marketing, and sales of its products; general economic conditions; as well as those risk factors detailed in the Company's Annual Report on Form 10-K for the year ended December 31, 1999 and other periodic reports filed by the Company with the Securities and Exchange Commission.

                        BioSphere Medical, Inc.
                    SELECTED FINANCIAL INFORMATION
               (in thousands, except per share amounts)

            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
   For the three months and six months ended June 30, 2000 and 1999
               (in thousands, except per share amounts)
                              (unaudited)

                            Three Months Ended      Six Months Ended
                                  June 30,              June 30,
                              2000       1999       2000       1999

Product revenue, net        $    815   $    713   $  1,589   $    993

Costs and expenses:
    Cost of product
     revenue                     404        428        686        574
    Research and
     development                 564        182      1,113        199
    Selling, general
     and administrative        2,118      1,141      3,668      1,744

    Total costs and
     expenses                  3,086      1,751      5,467      2,517

Loss from continuing
 operations                   (2,271)    (1,038)    (3,878)    (1,524)
    Other income/(expense)       104         16        255         (5)
Net loss before taxes and
 minority interest            (2,167)    (1,022)    (3,623)    (1,529)
    Income tax                     -         (2)         -        (20)
Net loss before minority
 interest                     (2,167)    (1,024)    (3,623)    (1,549)
    Minority interest             20         (1)         -        (15)
Net loss from continuing
 operations                 $ (2,147)  $ (1,025)  $ (3,623)  $ (1,564)
    Loss from discontinued
     operations                    -       (103)         -       (539)
Net loss                    $ (2,147)  $ (1,128)  $ (3,623)  $ (2,103)

Net loss per common share
    Basic and diluted net
     loss per share from
     continuing operations  $  (0.23)  $  (0.12)  $  (0.40)  $  (0.19)

    Basic and diluted net
     loss per share from
     discontinuing
     operations             $      -   $  (0.01)  $      -   $  (0.06)

    Basic and diluted net
     loss per share         $  (0.23)  $  (0.13)  $  (0.40)  $  (0.25)

Weighted average common
 shares outstanding
    Basic and diluted          9,250      8,456      9,087      8,456


                 CONDENSED CONSOLIDATED BALANCE SHEETS
               As of June 30, 2000 and December 31,1999
                              (unaudited)

                                        June 30,          December 31,
                                          2000               1999
    ASSETS

Cash and cash equivalents              $     6,929        $     5,368
Accounts receivable, net                       672                645
Inventories                                    639                389
Prepaid and other current assets               151                 51
Property and equipment, net                    551                322
Goodwill, net                                1,108                713
Other assets                                   646                  8

       Total assets                    $    10,696        $     7,496

    LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable and accrued expenses  $     2,726        $     1,963
Minority interest acquisition
 obligation                                    406                945
Notes payable and long term debt               138                  -
Stockholders' equity                         7,426              4,588

       Total liabilities and
        stockholders' equity           $    10,696        $     7,496