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07.08.2007 – 12:05

Integra LifeSciences Holdings Corporation and IsoTis, Inc.

Integra LifeSciences and IsoTis to Combine

Plainsboro, New Jersey and Irvine, California (ots/PRNewswire)

- Creating a Global Leader in Orthobiologics
Integra LifeSciences Holdings Corporation (NASDAQ: IART)
("Integra") and IsoTis, Inc. (NASDAQ: ISOT) ("IsoTis") announced
today a definitive agreement whereby Integra would acquire IsoTis in
an all cash transaction. This strategic combination, unanimously
approved by the Board of Directors of IsoTis, will create a global
leader in regenerative medicine. The transaction is expected to be
completed in the fourth calendar quarter of 2007. The transaction
offers a number of potential strategic benefits to Integra:
  • Combination creates comprehensive orthobiologics portfolio
  • Combined company to have one of the largest sales organizations focused on orthobiologics in the United States
  • Extensive channel coverage in neurosurgery, spine and extremity reconstruction markets expected to drive cross-selling opportunities and enhanced revenue growth
Upon closing, IsoTis, Inc. will become a wholly-owned subsidiary
of Integra. Integra will be one of the largest companies in the world
focused on advanced technology in orthobiologics and will have a
product portfolio that encompasses some of the largest and most
trusted orthobiologic brands, such as INTEGRA(R) Dermal Regeneration
Template, DuraGen(R) Dural Graft Matrix, Integra Mozaik(TM)
Osteoconductive Scaffold, NeuraGen(R) Nerve Guide and the Accell
family of demineralized bone matrix products, DynaGraft(R)II and
OrthoBlast(R) II. The combined company will have operations in North
America and Europe with more than 2,000 employees, including
approximately 300 sales and service professionals and over 500
employees in Europe.
Under the terms of the merger agreement, IsoTis shareholders will
receive US$7.25 in cash for each share of IsoTis common stock they
own, which represents total consideration of approximately US$51
million, plus debt to  be repaid at closing.
"This combination brings together two well-respected industry
leaders in the regenerative medicine marketplace," said Stuart Essig,
Integra's Chief Executive Officer. "Both Integra and IsoTis provide
some of the most advanced technology addressing surgeons' needs. By
combining our companies' complementary, best-in-class products and
technologies, we expect to drive enhanced revenue growth and value
creation. Integra has a track record of successfully executing on and
integrating strategic transactions and we expect to realize the
benefits of this combination in both our top line growth and earnings
per share over the long term."
Pieter Wolters, IsoTis' President and Chief Executive Officer,
said, " We believe this transaction enables both IsoTis and Integra
to reach our shared goal of improving patient outcomes in an
innovative, cost-effective manner. We are very excited about the
benefits this combination of industry leaders will provide to
shareholders, employees, business partners, physicians and patients."
Benefits of the Combination
Comprehensive orthobiologic product portfolio using best-in-class
technology. Both Integra's and IsoTis' products are recognized as
best-in-class. The combined company will be uniquely positioned to
offer a comprehensive orthobiologic product portfolio.
Extensive channel coverage. The merged company will have one of
the largest sales and service organizations focused on orthobiologics
in the United States. IsoTis distributes its products through a
network of independent distributor agents in the United States, which
Integra intends to build upon, a network of international stocking
distributors, and private label partners. Integra has direct sales
organizations focused on neurosurgery, extremity reconstruction,
spinal surgery and general surgery, with over 250 direct sales reps
in the United States and over 50 sales professionals in Europe.
Integra intends to integrate IsoTis' domestic and international sales
and marketing organization and its global network of independent
orthopedics distributors into its own sales efforts and leverage this
expanded distribution.
Cross-selling opportunities. By leveraging the combined company's
product offering and broader channel coverage, Integra and IsoTis
expect to drive cross-selling opportunities across the organization,
increasing penetration of key customer segments such as neurosurgery,
spine, extremity, trauma and reconstructive surgery. These
initiatives are expected to enhance revenue growth over the long
term.
Expanded international presence. The merged company will benefit
from a broader global platform with direct selling organizations in
North America and Europe. Today, approximately 25 percent of
Integra's and IsoTis' combined revenues are generated
internationally. The companies expect to increase growth in
international revenues by capitalizing on the increased scope and
scale created by this transaction, which will include an
international direct sales and service team of over 75 associates and
200 distribution partners selling in over 100 countries.
Cost savings. Excluding transaction related costs and charges, the
combined organization is expected to generate recurring cost savings
from enhanced efficiency in manufacturing, purchasing,
administrative, research and sales and marketing efforts.
Integra Guidance for 2008
The companies expect to initiate programs that are expected to
enhance revenue growth in the long term. Concurrent with the signing
of the merger agreement, the companies have announced a strategic
alliance whereby Integra will sell on a private label basis IsoTis'
DynaGraft(R) II and OrthoBlast(R) II demineralized bone matrix
products through its Integra NeuroSciences and Integra Extremity
Reconstruction direct sales organizations in the United States.
IsoTis has recently announced its intention to wind down its
European operations. This process has begun and IsoTis expects to
achieve pre-tax savings of approximately US$3-US$5 million per year
from these actions. After elimination of its European entities and
facilities, IsoTis will maintain research and manufacturing
operations at a single site in Irvine, California.
"While the transaction will be dilutive to reported earnings for
several quarters as we restructure the business, we expect the
restructuring activities surrounding the IsoTis acquisition to
generate projected pre-tax cost savings of approximately US$9 to
US$11 million per year for 2008 and  beyond, as compared to IsoTis'
historical 2006 results." said Stuart M.  Essig, Integra's President
and Chief Executive Officer. "Substantial savings  will come from the
reduction of public company costs, duplicative board and executive
management costs, redundant insurance costs, and reduced advisory,
legal and accounting fees. Additionally, by the end of 2008, Integra
expects to complete the integration of IsoTis', marketing, product
development, administrative and logistics functions into Integra's
existing infrastructure and generate additional cost savings."
Integra expects to incur pre-tax charges related to these
activities of approximately US$3 to US$5 million. These charges are
expected to be incurred during the fourth quarter of 2007 and the
first half of 2008, depending upon the actual closing date of the
transaction.
Upon the closing of the transaction, Integra will provide more
detailed guidance regarding the financial aspects of the transaction
and its expected impact on Integra's future financial results.
Timing and Approvals
The transaction is subject to approval of IsoTis' shareholders, as
well as other closing conditions and approvals. The transaction is
expected to close in the fourth calendar quarter of 2007.
Advisors
In connection with the transaction, Thomas Weisel Partners is
acting as exclusive financial advisor to IsoTis, and provided a
fairness opinion to the IsoTis Board of Directors. Latham & Watkins
LLP is legal counsel for IsoTis. Willkie Farr & Gallagher LLP is
legal counsel for Integra.
Integra LifeSciences Holdings Corporation, a world leader in
regenerative medicine, is dedicated to improving the quality of life
for patients through the development, manufacturing, and marketing of
cost-effective surgical implants and medical instruments. Our
products are used primarily in neurosurgery, extremity
reconstruction, orthopedics and general surgery to treat millions of
patients every year. Integra's headquarters are in Plainsboro, New
Jersey, and we have research and manufacturing facilities throughout
the world. Please visit our website at (http://www.Integra-LS.com).
IsoTis is an orthobiologics company that develops, manufactures
and markets proprietary products for the treatment of musculoskeletal
diseases and disorders. IsoTis' current orthobiologics products are
bone graft substitutes that promote the regeneration of bone and are
used to repair natural, trauma-related and surgically-created defects
common in orthopedic procedures, including spinal fusions. IsoTis'
current commercial business is highlighted by its Accell line of
products, which IsoTis believes represents the next generation in
bone graft substitution. For more information about IsoTis, Inc.,
please visit (http://www.IsoTis.com)
Integra shareholders: This news release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements include, but are not
limited to, statements concerning the closing of this transaction and
expectations for this newly acquired business and the expected impact
of this acquisition on Integra's future financial results. Such
forward-looking statements involve risks and uncertainties that could
cause actual results to differ materially from predicted or expected
results. Among other things, Integra's ability to successfully close
this transaction on the terms contemplated and integrate IsoTis'
operations into its operations could affect the impact of this
acquisition on Integra's future financial results. In addition, the
economic, competitive, governmental, technological and other factors
identified under the heading "Risk Factors" included in section IA of
Integra's Annual Report on Form 10-K for the year ended December 31,
2006 and information contained in subsequent filings with the
Securities and Exchange Commission could affect actual results.
IsoTis shareholders: Certain statements in this press release are
"forward-looking statements" within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended, including those that
refer to management's plans and expectations for, among other things,
future operations, strategies, prospects, performance and financial
condition and IsoTis' proposed acquisition by Integra. Words such as
"strategy," "expects," "plans," "anticipates," "believes," "may,"
"will," "might," "could," "would," "continues," "estimates,"
"intends," "pursues," "projects," "goals," "targets" or the negative
or other variations thereof and other words of similar meaning are
intended to identify such forward-looking statements. One can also
identify them by the fact that they do not relate strictly to
historical or current facts. Such statements are based on the current
expectations and projections of the management of IsoTis only. Undue
reliance should not be placed on these statements because, by their
nature, they are subject to known and unknown risks and can be
affected by factors that are beyond the control of IsoTis. Actual
results could differ materially from current expectations and
projections due to a number of factors and uncertainties affecting
IsoTis' business, including, but not limited to the following factors
as well as other factors described from time to time in IsoTis'
reports filed with the SEC: the effects of economic, credit and
capital market conditions on the economy in general and on medical
device and health care companies in particular; IsoTis' need to raise
additional capital to continue operations; a competitive sales and
marketing environment; the timely commencement and success of IsoTis'
clinical trials and research endeavors; delays in receiving U.S. Food
and Drug Administration or other regulatory approvals (i.e., EMEA,
CE), including the risk that the FDA determines that IsoTis' Accell
Putty and Accell TBM products are not human tissue or class II
medical devices, that IsoTis is unable to obtain 510(k) clearance for
its Accell products, that the FDA requires IsoTis to obtain premarket
approval of its Accell products prior to continuing their marketing,
that the FDA requires IsoTis to produce additional clinical data to
support approval or clearance of its products, and that the FDA
imposes compliance measures against IsoTis for the marketing of its
Accell products, including imposing fines and injunctions or causing
IsoTis to recall its Accell products; market acceptance of IsoTis'
products; the effectiveness of IsoTis' distribution channels; the
development of competing therapies and/or technologies; the terms of
any future strategic alliances; changes in laws (including increased
tax rates), regulations or accounting standards, third-party
relations and approvals, and decisions of courts, regulators and
governmental bodies; litigation outcomes and judicial actions; and
the inability to obtain, or meet, conditions imposed for required
governmental and regulatory approvals and consents. IsoTis expressly
disclaims any intent or obligation to update these forward-looking
statements except as required by law. For a more detailed description
of the risk factors and uncertainties affecting IsoTis, refer to the
Annual Report on Form 20-F for the fiscal year ended December 31,
2006 of IsoTis S.A. (the predecessor to IsoTis, Inc.), and IsoTis
S.A.'s other reports filed with the SEC, IsoTis S.A.'s reports filed
from time to time with the Swiss Stock Exchange (SWX), Euronext
Amsterdam N.V., SEDAR at http://www.sedar.com and the Toronto Stock
Exchange (TSX) and  the quarterly report on Form 10-Q for the quarter
ended March 31, 2007 and  other reports filed with the SEC from time
to time by IsoTis. Any forward- looking statements are made pursuant
to the Private Securities Litigation  Reform Act of 1995 and, as
such, speak only as of the date made. IsoTis  undertakes no
obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or otherwise.
Important Information for Investors and Stockholders
IsoTis will file a proxy statement and other relevant materials
with the SEC in connection with the proposed merger. IsoTis urges
IsoTis stockholders to read the proxy statement when it becomes
available and any other relevant documents filed by IsoTis with the
SEC because they will contain important information.
Investors and stockholders will be able to obtain the proxy
statement and other documents filed with the SEC free of charge at
the website maintained by the SEC at http://www.sec.gov. Documents
filed with the SEC by IsoTis will  be available free of charge on the
investor relations portion of the IsoTis website at
http://www.IsoTis.com.
Participants in the Solicitation
IsoTis, and its directors and executive officers may be deemed to
be participants in the solicitation of proxies from IsoTis'
stockholders in connection with the merger. The names of IsoTis'
directors and executive officers and a description of their interests
in IsoTis are set forth in IsoTis S.A.'s Annual Report on Form 20-F,
which was filed with the SEC on May 11, 2007. Investors and
stockholders can obtain more detailed information regarding the
direct and indirect interests of IsoTis' directors and executive
officers in the merger by reading the definitive proxy statement when
it becomes available.

Contact:

Contacts: Integra LifeSciences Holdings Corporation, John B.
Henneman, III, Executive Vice President, Chief Administrative
Officer, +1-609-936-2481, jhenneman@Integra-LS.com; John Bostjancic,
Vice President, Corporate Development and Investor Relations,
+1-609-936-2239, jbostjancic@Integra-LS.com; IsoTis, Inc., Rob
Morocco, Executive Vice President, Chief Financial Officer, (949)
855-7155, rob.morocco@isotis.com; Hans Herklots, Director Investor
Relations, +1-949-855-7195 (US callers), +41-21-620-6011,
hans.herklots@isotis.com