First spinal surgery in the U.S. using Osteotech's MagniFuse PC bone graft technology performed

Osteotech, Inc. (Nasdaq: OSTE), a leader in the emerging field of biologic products for regenerative healing, announced today that MagniFuse PC (Posterior Cervical) Bone Graft, a new tissue-based product built upon the Company's proprietary MagniFuse bone graft technology platform, has been used for the first time in a spinal surgery in the United States.

Utilizing MagniFuse PC, Dr. Orin Atlas, an orthopedic spine surgeon and chief of spine surgery at Virtua-Burlington Medical Center in Mt. Holly, New Jersey, performed a posterior cervical fusion. Posterior cervical fusion is a surgical procedure to stop motion between two or more vertebrae that may be causing neck pain or damage to the nerves that extend into the upper extremities. "In using MagniFuse for the first time, I found the product to be unique from a biologic perspective and easy to work with from a surgical placement perspective," commented Dr. Atlas. "MagniFuse required minimal hydration and the self-contained delivery system made it easily conformable to the defect once implanted at the surgical site. This graft has a completely unique delivery system and is unlike any other product on the market."

"Over the past 12 months we have worked diligently to prepare our MagniFuse product family for commercialization," said Sam Owusu-Akyaw, Osteotech's President and Chief Executive Officer. "As we have continued to develop MagniFuse, we have incorporated feedback from surgeons that has allowed us to hone the procedure-specific characteristics and clinical utility of the initial new products we are bringing to the spine market. We believe our MagniFuse products will solve many of the implantation challenges that are inherent to both particle- and viscous-based bone graft products such as existing growth factor, stem cell and premium synthetic products. Additionally, based upon its ease-of-use, unique delivery and containment characteristics, MagniFuse products may enable surgeons to advance their grafting techniques."

MagniFuse, which has received clearance from the United States Food and Drug Administration, is Osteotech's new, patented bone graft technology platform that supports a family of products utilized when injury or disease creates a need for bone fusion or new bone growth. The MagniFuse technology platform has a number of distinguishing characteristics:

• Delivered in a unique, resorbable self-contained delivery system, MagniFuse products provide an optimized scaffold that creates a highly exposed surface area comprised of 100% bone material that is shaped and oriented to provide guided bone healing and that may encourage stronger and more rapid mature bone formation.
• Based upon Osteotech's proprietary processing and manufacturing technologies, MagniFuse's patented formulation is derived from allograft source material that contains a higher concentration of multiple natural human growth factors.
• MagniFuse's self-contained delivery system also allows for targeted bone formation because it reduces graft site migration once implanted.
• MagniFuse is also visible in radiographs, thus providing evidence of its proper placement post-surgery.

These characteristics and others solve many of the challenges associated with currently marketed products including stem cells, growth factors and premium synthetics.

"Based upon current pricing of products in our competitive landscape, we believe MagniFuse products may offer economic benefits that will be of interest to hospital administrators and surgeons," continued Mr. Owusu-Akyaw. "We are very excited to begin the first phase of our strategic launch of MagniFuse, during which we will begin to collect data on the human clinical experiences that we believe will further validate our scientific approach and therapeutic efficacy. We would expect to see MagniFuse products utilized in at least 25 procedures by the time of the North American Spine Society meeting in November. Based upon early feedback, we believe the usage curve will continue to increase as we move toward phase two of our launch in 2010."