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 News Release - January 18, 2006

Archus Orthopedics, Inc. Completes $35 Million Series C Financing

REDMOND, Wash., Jan. 18 (HSMN NewsFeed) -- Archus Orthopedics, Inc. today announced that it has closed a Series C financing with total proceeds of $35 Million. Johnson & Johnson Development Corporation ("JJDC"), in cooperation with DePuy Spine, made the principal investment in this financing. Other participants included the company's current investors, MPM Capital, InterWest Partners and Polaris Venture Partners. While specific details were not disclosed, the investment by JJDC establishes a framework for future collaboration between Archus and DePuy Spine.

Archus is conducting a U.S. clinical trial of its Total Facet Arthroplasty System(TM) "TFAS(TM)", a novel, patented spinal implant designed to treat spinal stenosis, a condition in which degenerative changes in the facet joints result in compression of spinal nerves producing neurological symptoms in the legs. Traditionally, patients with spinal stenosis undergo decompressive laminectomy surgery, which is often accompanied by spinal fusion. The TFAS(TM) replaces the degenerative facet joints with a prosthetic joint implant intended to restore stability and normal motion to the spine, eliminating the need for fusion. Archus is currently the only company with FDA approval to conduct clinical trials of a facet replacement device in the United States.

"It is a natural fit for Archus, the leader in facet arthroplasty, to work with DePuy Spine, the leader in disc arthroplasty," said Jim Fitzsimmons, chairman and chief executive officer, commenting on the JJDC investment and planned collaborations. "We are delighted to have JJDC as an investor and very excited about capitalizing on the tremendous synergistic opportunities with DePuy Spine."

The spine joint is composed of a disc between each vertebra that acts as a shock absorber and two posterior facet joints that offer stability and regulate segmental motion. Historically, patients with significant degenerative disc or facet disease undergo surgical interventions that often involve fusion of one vertebra to another. Fusion alters the normal biomechanics of the spine, which can create new problems at adjacent vertebral segments, often requiring re-operation.

DePuy Spine currently markets the only lumbar artificial disc approved for use in the United States. In addition to the TFAS(TM), Archus is also developing facet replacement technology intended to work in harmony with artificial disc replacement. It is hoped that the two technologies together will result in the opportunity for true total reconstruction of degenerative spine segments, much like a total hip or a total knee replacement procedure.

"Forty years, degenerative hips were fused," noted Fitzsimmons. "We are clearly experiencing a paradigm shift in spine care from fusion to motion restoration and joint replacement, which is why spine the fastest growing segment of the orthopedic market," he added.

About Archus Orthopedics

Founded in July 2001, Archus Orthopedics is a privately held company developing a family of reconstructive implants to treat a variety of spine disorders resulting from degenerative changes in the facet joints. Archus has received venture capital funding from MPM Capital, InterWest Partners and Polaris Venture Partners.

Source: Archus Orthopedics

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