First Quarter Clinical and Corporate Updates

During the first part of 2009, BioMimetic Therapeutics made significant advancements in its product development programs and other critical business areas:

Augment Bone Graft

The company completed enrollment in its Augment Bone Graft 436 patient North American pivotal clinical trial in foot and ankle fusions in December 2008 and is on track with patient follow up. The primary endpoint is based on the fusion rate at six months as assessed on CT scans. The company expects to release top line data from the trial in the second half of this year.

The company is on track to file the pre-clinical and manufacturing/quality modules of its modular pre-market approval (PMA) application for Augment in the second quarter of 2009 and the final module containing the clinical data in the fourth quarter of 2009.

The company responded to a letter from Health Canada regarding what is believed to be the remaining open issues concerning its Device License Application (DLA), for commercialization of Augment Bone Graft in Canada. The company anticipates a decision on the DLA around the middle of 2009.

The company highlighted pre-clinical and clinical activities at the Orthopedic Research Society (ORS) and American Academy of Orthopedic Surgeons (AAOS) meetings in Las Vegas in February. Several posters and a podium presentation were presented by the company’s scientists and its investigators. In conjunction with the meetings, the company hosted its 2nd Annual Analyst and Investor Meeting, which focused on the growing foot and ankle surgery market and how Augment Bone Graft will address clinical needs in this area.

Augment Injectable Bone Graft

The company has decided to pursue a pivotal clinical trial comparing Augment Injectable Bone Graft to autograft in foot and ankle fusions using many of the same investigators and a similar protocol as the Augment Bone Graft pivotal study. This approach has the potential to reduce time-to-market for this product candidate by as much as two years. Augment Injectable demonstrated promising results in foot and ankle fusions in a pilot study reported in the third quarter of 2008. If authorized by the appropriate regulatory bodies, the company plans to initiate this pivotal trial later this year.

Corporate Highlights

On April 3, 2009, an affiliate of InterWest Partners, one of BioMimetic Therapeutics’ stockholders, entered into an agreement to purchase 941,177 shares of the company’s common stock at $8.50 per share, for an aggregate purchase price of about $8.0 million. The closing price of the company’s common stock on April 3, 2009 was $7.45 per share. The transaction was completed on April 7, 2009.

The company’s board of directors has approved a rights offering of up to $17 million to be made, on a pro rata basis, to the company’s existing stockholders of record as of April 21, 2009, at a price of $8.50 per share. Under the terms of the rights offering, the company will distribute, at no charge, to holders of its common stock as of the record date, non-transferable rights to purchase up to 2,000,000 shares of its common stock. The rights offering will be conducted via a registration statement, which has been filed but not yet declared effective by the Securities and Exchange Commission.

In connection with the rights offering, the company entered into a standby purchase agreement on April 4, 2009, with Novo A/S, an existing stockholder and affiliate of the company, pursuant to which Novo A/S has agreed to backstop the rights offering by agreeing to purchase up to $15 million of common stock in the offering, if this stock is not purchased by other current shareholders. Novo A/S’s participation in the rights offering as a standby purchaser requires the approval of 66 2/3% of the company’s outstanding shares of common stock excluding any shares owned by Novo, its affiliates and associates. The company intends to solicit such approval at its upcoming annual meeting of stockholders on June 18, 2009.

BioMimetic Therapeutics achieved partial liquidity on its holdings of auction-rate securities (ARS), which were valued at $48.1 million at the end of the first quarter. In April 2009, the company sold certain of its ARS investments and certain of the ARS investments were redeemed by the issuer for total proceeds of $10.9 million with a total par value of $11.9 million. Additionally, the company has filed an arbitration claim with the Financial Industry Regulatory Authority, Inc. (FINRA) against Deutsche Bank Securities, Inc. asserting various claims relating to their purchases of auction rate securities on BioMimetic Therapeutics’ behalf.

So far in 2009 we have focused on completing two of the three modules of the Augment PMA required for FDA approval. They are now nearly complete and should be filed very shortly. We also strengthened our balance sheet by completing an $8 million private placement with Interwest Partners and by the initiation of a rights offering to our other shareholders of record. We could receive up to $25 million in total gross proceeds between these transactions, which will be used to ramp up product development of our second product candidate, Augment Injectable, as well as help to fund our anticipated launch activities for Augment in Canada, said Dr. Samuel E. Lynch, president and chief executive officer of BioMimetic Therapeutics. With one recombinant protein therapeutic product successfully developed and FDA approved for bone and periodontal regeneration, a second nearing completion of pivotal clinical trials for orthopedic applications and a third ready to go into a pivotal clinical study, BioMimetic Therapeutics has established itself as a premier orthobiologics product development franchise.

Additional Financial Results

Research and development expenses totaled $5.2 million for the three months ended March 31, 2009, compared to $6.1 million for the three months ended March 31, 2008. Research and development expenses result primarily from clinical trials of the company’s orthopedic product Augment in the United States, Canada and the European Union, as well as continuing expenses associated with new and ongoing pre-clinical studies and regulatory filings. The decrease in 2009 research and development expenses was partially due to decreased professional services expenses for clinical costs, which have decreased $0.3 million in 2009 after initial start-up costs of clinical trials in 2008. In addition, contract manufacturing costs, outside consultants and milestone expenses decreased by $0.6 million.

General and administrative expenses totaled $2.4 million for the three months ended March 31, 2009, compared to $2.3 million for the three months ended March 31, 2008. These expenses consist of salaries, wages and related benefits, professional services, rent and utility costs for our facilities and minimum royalty payments per our patent licensing agreements.

2009 Financial Guidance

As of March 31, 2009, the company’s condensed consolidated balance sheet includes about $9.1 million of cash and cash equivalents and $79.7 million of short-term and long-term investments, which includes $48.1 million of investments in auction rate securities. In April 2009, the company sold certain of its auction rate securities, and certain of its auction rate securities were redeemed by the issuer, for total proceeds to the company of $10.9 million. Concurrently, the company repaid $8.3 million against its note payable to Deutsche Bank, which is secured by certain of its investments in auction rate securities as collateral, resulting in a remaining balance of the note payable of $30.8 million.