Collagen Corporation Comments on Share Price Activity; Company responds to recent Supreme Court industry rulings.

PALO ALTO, Calif.--(BUSINESS WIRE)--July 10, 1996--Collagen Corporation today commented on the recent decline in its share price over the last few weeks.

The company believes that its share price may have been affected by a general market reaction to recent court decisions regarding medical device product liability issues. The company also noted that over-the-counter ("OTC") stocks in general have trended downward in recent sessions. The company knows of no material reason for volatility in its share price.

Recently the Supreme Court instructed the Seventh Circuit Court to re-review a case, Mitchell v. Collagen Corp., which, in 1995, was decided in Collagen's favor based on federal preemption of state law claims. In addition, the Supreme Court denied the company's petition for review of the Ninth Circuit Court's decision in Kennedy v. Collagen Corporation, another federal preemption case, in which preemption was denied. The Supreme Court's decisions are not an opinion by the Court on the merits of either case. Both of these actions by the Supreme Court are believed by the company to be prompted by the Court's recent decision in Medtronic v. Lohr in which the Supreme Court ruled against 510(k) preemption claims. Other appeals courts, including the First Circuit Court in January, 1993 and the Fifth Circuit Court later that year, have allowed federal preemption in cases involving medical devices, including those of Collagen Corporation.

A significant difference between the Mitchell v. Collagen and the Medtronic v. Lohr cases, is the method in which the subject medical device was approved by the U.S. Food and Drug Administration ("FDA"). All of Collagen Corporation's products are Class III Medical Devices, which require exhaustive review by the FDA, via the premarket approval ("PMA") process, for safety and efficacy. The product involved in the Medtronic case was approved by the FDA via the 510(k) process, which is a less rigorous process and which reviews whether the product is "substantially equivalent" to a previously approved technology. The 510(k) process does not involve an FDA review of a product for its safety and efficacy.

Simply stated, federal preemption provides for certain liability claims to be "preempted" because the FDA's review of medical devices protects the manufacturers of those products from common law claims under the Medical Device Amendments of 1976 ("MDA"), which were created to provide a uniform, consistent federal oversight mechanism for all medical devices marketed in the United States.

"Collagen Corporation believes the difference between whether a product is approved by the FDA via the 510(k) process or the premarket approval process is very significant," stated Howard D. Palefsky, chairman and chief executive officer of Collagen Corporation. "We believe this difference is why several appeals courts have already handed down decisions in favor of preemption for medical devices approved by the FDA via the PMA process. Collagen Corporation stands behind the safety of its products and remains fully committed to defending their safety and efficacy. It is inherent to the industry we are in that we have faced the need to defend lawsuits since the company first chose to sell medical products. We have vigorously defended every significant product liability case, based on the excellent safety and scientific record of our products. Over the last ten years, we have won all four product liability cases that have been taken to a jury."

Collagen Corporation is a technology-based company that develops, manufactures and markets biomedical devices for the treatment of defective, diseased, traumatized or aging human tissue.

CONTACT: Collagen Corporation

David Foster, 415/856-0200

or

Edelman Public Relations 

Jon Greer, 415/433-5381