BioSphere Medical Reports Record $2.4 Million Second-Quarter Revenue.

Business/Technology Eitors & Medical/Health Writers

ROCKLAND, Mass.--(BUSINESS WIRE)--July 19, 2001

Net Revenues Rise 31 Percent from First Quarter of 2001;

196 Percent from Prior-Year Comparable Quarter

BioSphere Medical, Inc. (Nasdaq: BSMD), a medical device company that is pioneering the use of bioengineered microspheres to treat hypervascularized tumors and vascular malformations by occluding their blood supply, today reported its financial results for the second quarter ended June 30, 2001.

For the second quarter of 2001, BioSphere Medical reported net revenues of $2.41 million, an increase of 196 percent from $815,000 in net revenue for the comparable period in 2000. Included in the second quarter of 2001 was $250,000 in collaboration revenue. The Company reported a net loss for the second quarter of $2.28 million, or $(0.22) per basic and diluted share. This compares with a net loss of $2.15 million, or $(0.23) per basic and diluted share, for the second quarter of 2000.

For the six months ended June 30, 2001, BioSphere Medical reported net revenues of $4.26 million, an increase of 168 percent from $1.59 million in net revenue for the comparable six-month period in 2000. The Company reported a net loss for the six months ended June 30, 2001 of $4.78 million, or $(0.45) per basic and diluted share, compared with a net loss of $3.62 million, or $(0.40) per basic and diluted share, for the six months ended June 30, 2000.

Stated President and Chief Executive Officer John Carnuccio, "I am pleased to report that we have continued to meet or exceed our sales, clinical, regulatory and financial milestones."

"We believe the expansion of our direct field sales organization, combined with the distinct competitive advantage of our lead product, Embosphere(R) Microspheres, have resulted in rapid market acceptance and an increase of 36 percent in U.S. revenues over the first quarter of this year," continued Carnuccio.

"Our most recent major regulatory achievement was receiving U.S. FDA clearance for BioSphere Medical's newest product, EmboGold(TM) Microspheres. The development of EmboGold was in direct response to customer requests for a product that was easier to see and simpler to prepare and handle. We are planning to launch this value-added new product in a sterile pre-filled syringe later this quarter. Consistent with our new product strategy, we expect that EmboGold will extend our product offerings in a number of configurations, presenting our customers with choices and convenience, and enabling a more efficient and controlled embolotherapy procedure," Carnuccio continued.

"We also made operational progress, illustrated by our broadened manufacturing capabilities," said Carnuccio. "We are currently in the process of moving our European manufacturing from its current location in Louvre, France to a new facility in Roissy, near Charles DeGaulle Airport in Paris. We expect to be conducting all of our European manufacturing at the new facility by the end of the current third quarter. In connection with the EmboGold launch, we also will begin to use a U.S. contract manufacturer to produce and package the new pre-filled syringe and vials. Although we believe that we have sufficient capacity to meet demand through at least next year from our new French facility alone, our long-term plan is to diversify our manufacturing capabilities geographically."

Continued Carnuccio, "After the close of the second quarter, we completed a successful follow-on stock offering that raised in excess of $20 million."

Outlook

"We believe that we are well on track toward expanding our market presence and increasing our sales in worldwide embolotherapy markets. As a result, we are maintaining our previous revenue projections of between $9.0 million and $11.0 million for fiscal year 2001 and believe that we can sustain our gross margin at approximately 72 percent. We also expect that the proceeds of our recently-completed offering should enable us to continue to execute our growth strategy past the point where we reach profitability. As we move forward in 2002 our objectives are clear. We plan to continue to grow our existing markets and capture dominant market share within those markets, improve and expand our technology platform, and continue to seek to enhance shareholder value," concluded Carnuccio.

Second-Quarter 2001 Conference Call

BioSphere Medical will host its second-quarter conference call this morning at 10:00 a.m., Eastern Time. The call will be broadcast live on the company's Web site at http://www.biospheremed.com.

About BioSphere Medical, Inc.

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

BioSphere Medical's lead product, Embosphere Microspheres, was cleared by the FDA in April 2000 for marketing for hypervascularized tumors and vascular malformations. The Company is currently conducting clinical trials of Embosphere Microspheres for uterine fibroid embolization (UFE) in the United States under an Investigational Device Exemption (IDE) granted by the FDA. BioSphere Medical has received CE Mark approval in the European Community and approvals in Canada and Australia which allow the Company to sell Embosphere Microspheres for use in general embolization procedures, including uterine fibroid embolization.

Cautionary Statement Regarding Forward-Looking Statements - This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Company uses words such as "plans," "seeks," "projects," "believes," "may," "anticipates," "estimates," and similar expressions to identify these forward-looking statements. These statements are subject to risks and uncertainties and are based upon the Company's beliefs and assumptions. These forward-looking statements include the Company's expectations regarding the Company's revenue, gross margin and operating expense projections for fiscal 2001, the Company's projections regarding the time required to reach profitability, the ability of the Company to commercialize its products for an array of applications, including uterine artery embolization and targeted liver embolization, the Company's expectations regarding the market acceptance and benefits of its EmboGold Microspheres, the Company's plans with respect to its manufacturing capabilities, the expected benefits of cash received by the Company in its recent financing, and the market penetration of the Company's embolotherapy and non-embolotherapy products. There are a number of important factors that may affect the Company's actual performance and results and the accuracy of its forward-looking statements, many of which are beyond the Company's control and are difficult to predict. These important factors include, without limitation, risks relating to 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, commercialize and achieve widespread market acceptance of the Embosphere(R) Microspheres and HepaSphere SAP(TM) Microsphere technologies for uterine fibroid 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; delays, difficulties or unanticipated costs in the introduction of new products; competitive pressures; the inability of the Company to raise additional funds 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, 2000 filed by the Company with the Securities and Exchange Commission.

Financial statements follow . . .

            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
   For the three months and six months ended June 30, 2001 and 2000
         (in thousands, except per share amounts / unaudited)

                            Three Months Ended      Six Months Ended
                                 June 30,               June 30,
                              2001       2000        2001      2000


Product revenues           $  2,163   $    815    $  4,010   $  1,589
Collaboration revenues          250       --           250       --
  Total revenues              2,413        815       4,260      1,589

Costs and expenses:
 Cost of product revenues       589        404       1,108        686
 Research and development     1,249        564       2,198      1,113
 Selling, general and
  administrative (1)          2,959      2,118       6,075      3,398
 Stock based compensation
  to non-employees             --         --          --          270

  Total costs and expenses    4,797      3,086       9,381      5,467

Loss from operations         (2,384)    (2,271)     (5,121)    (3,878)
 Other income, net              102        104         339        255
Net loss before minority
 interest                    (2,282)    (2,167)     (4,782)    (3,623)
 Minority interest             --           20        --         --
Net loss                   $ (2,282)  $ (2,147)   $ (4,782)  $ (3,623)

Net loss per common share
 Basic and diluted net
  loss per share           $  (0.22)  $  (0.23)   $  (0.45)  $  (0.40)

Weighted average common
 shares outstanding
 Basic and diluted           10,597      9,250      10,597      9,087


    (1) Excludes compensation charge for issuance of stock options to
        non-employee advisors



                 CONDENSED CONSOLIDATED BALANCE SHEETS
               As of June 30, 2001 and December 31, 2000
                      (in thousands / unaudited)

                                   June 30,  December 31,
                                     2001       2000
ASSETS

Cash and cash equivalents          $ 9,405   $15,276
Accounts receivable, net             1,668     1,142
Inventories                            807       639
Prepaid and other current assets       283       124
Property and equipment, net          1,182       694
Goodwill, net                        1,456     1,144
Other assets                           338       287

  Total assets                     $15,139   $19,306



LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable,
 accrued expenses &
 short term debt                   $ 3,318   $ 3,045
Minority interest
 acquisition obligation                871       478
Long term debt                          94        97
Stockholders' equity                10,856    15,686

  Total liabilities and
   stockholders' equity           $ 15,139   $19,306