DEFLUX Introduced as Q-Med's First Product in USA.

Business Editors & Medical Writers

UPPSALA, Sweden--(BUSINESS WIRE)--Sept. 25, 2001

Q-Med's (NASDAQ:QEKG)(OMX:QMED) product DEFLUX has today been approved in the USA for the treatment of vesico-ureteral reflux (VUR) in children - the first product of its kind to receive approval.

"DEFLUX is Q-Med's first product to be approved for sale in the USA. Furthermore, it is the first product to be approved for endoscopic treatment of VUR on the American market," says Q-Med's President Bengt Agerup.

Q-Med's product DEFLUX has today been approved by the US regulatory authority, the Food and Drug Administration (FDA), for the treatment of children who have a reverse flow of urine from the bladder to the kidneys, so-called vesicoureteral reflux (VUR, Reflux).

Condition and treatment

About one percent of all children do not have the normal valve function which prevents urine from running back from the urinary bladder up towards the kidneys. This condition, Reflux, can lead to irreversible kidney damage. Reflux is classified into five grades, I being the mildest and V the most severe. DEFLUX has been approved for treatment of Reflux grades II-IV.

DEFLUX is injected into the wall of the urinary bladder in order to create a slightly raised area at the opening of the ureter, and this prevents the urine from running back from the urinary bladder. The intervention is simple. The child is put to sleep and the injection only takes a few minutes. The whole procedure in the operating theater from being put to sleep to waking up takes about fifteen minutes.

Using DEFLUX, many children can be spared a major operation or the inconvenience of many years of treatment with antibiotics. Long-term follow-up suggests that up to 70 percent of the children need no further treatment for their reflux.

The product

DEFLUX consists partly of NASHA (Non-Animal Stabilized Hyaluronic Acid) and partly of dextranomer. Hyaluronic acid is a natural sugar that is to be found in all the organs in the body. Dextranomer is a well known form of cross-linked sugar with a long degradation time. The NASHA gel acts as a vehicle for the dextranomer beads, which also promote the natural formation of connective tissue. The volume-creating effect lasts for at least five years*.

The market

VUR occurs in approximately 1 percent of all children and approximately half of them require some form of treatment. Based on birth statistics this indicates that there are approximately 40,000 new cases each year in Europe and almost as many in the USA. DEFLUX is today sold in more than 10 markets, mainly in Europe.

In the USA there has previously been no approved product for endoscopic treatment of children with Reflux. Q-Med estimates that the US market is worth approximately USD 30 million a year.

The alternatives to endoscopic treatment are constant treatment with antibiotics or an operation. With the approval of DEFLUX the American market will get a third, much more cost efficient, alternative for treatment of Reflux.

Sales

The cost of treating children with Reflux is fully covered by the social insurance systems in the great majority of countries. DEFLUX is sold through the company's own subsidiaries and local distributors. The customer group consists of a relatively small number of highly specialized doctors. In the USA, Q-Med operates under the name of Q-Med Scandinavia, Inc. Sales and marketing will be carried out using the company's own resources, but a specialized firm will take care of the physical distribution in the whole country.

Quality requirements

A precondition for approval of a product in the USA is the fulfilment of the FDA's quality requirements in accordance with GMP, Good Manufacturing Practice. The FDA inspected Q-Med's Uppsala facility in the middle of June. The results of this inspection were very positive and there were no adverse comments.

Note: Q-Med operates in the US under the name of Q-Med Scandinavia, Inc.

Article approved for publication in "Journal of Urology", volume 166 in the November issue.

Q-Med is a rapidly growing and profitable biotechnology and medical device company that develops, produces and markets medical implants. All products are based on the company's patented technology for the production of NASHA - Non-Animal Stabilized Hyaluronic Acid. Q-Med's operations focus on four areas, Esthetics, Orthopedics, Uro-Gynecology, and Cell Therapy and Encapsulation. The products RESTYLANE, RESTYLANE Fine Lines and PERLANE are used for the filling out of lips and facial wrinkles and today account for the majority of sales. The development of MACROLANE for body contouring, e.g. breast augmentation, is ongoing. DUROLANE, Q-Med's product for the treatment of osteoarthritis of the knee-joint, has been approved in Europe since May 2001. DEFLUX is a product which has been approved in Europe and in USA for the treatment of vesicoureteral reflux (malformation of the urinary bladder) in children. It is estimated that ZUIDEX for treatment of stress urinary incontinence in women will be available in Europe in early 2002. Since July 2000 Q-Med has held a majority interest in the American biotechnology company Ixion Biotechnology, Inc., which carries out research in cell therapy for diabetes. Q-Med today has just over 230 employees, with 170 at the company's production facility and head office in Uppsala, 20 at Ixion and the remainder in wholly owned foreign subsidiaries. The Q-Med share has been listed on the O-list of the OM Stockholm Stock Exchange since December 1999.

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