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Regenerative Medicine

 News Release - July 6, 2006

Ortec Issues Update on Its Three Technology Platforms for Regenerative Medicine and Stem Cells

Details Business Strategy for Developing and Commercializing Newly Acquired Haptides(TM) and Fibrin Microbeads Biomaterial Technologies

NEW YORK, July 6 (HSMN NewsFeed) -- Ortec International, Inc. (OTC Bulletin Board: ORTN ), a company focused on advancing regenerative medicine through the development of cellular technology and advanced biomaterial products, today issued an operational update and commented on key corporate goals and objectives for the balance of 2006.

Ron Lipstein, Vice Chairman and CEO of Ortec, stated, "Many exciting developments have occurred at Ortec over the past few months, most notably of which is our having acquired two additional cutting edge technology platforms, which now provide us with three platforms through which we can generate growth: OrCelŪ, our cellular product for accelerated skin regeneration for chronic and acute wound care; the Haptides(TM) technology, a cell attachment peptide for tissue repair and regeneration; and Fibrin Microbeads (Fibrin MB), a biomaterial matrix for use in isolation of Mesenchymal type adult stem cells and stem cell therapy. During the past two months, the Company's management has been focused on defining and implementing corporate strategies and objectives, which as successfully executed, we believe, will highlight the value of our three technology platforms and consequently further raise the value profile of Ortec International. With three cutting edge technologies addressing growing, under-penetrated markets with limited competition, we believe Ortec's value profile is quite favorable. Over the course of the coming quarters, I look forward to sharing additional details related to our ongoing progress as we proceed with the execution of our exciting and promising growth strategies," concluded Lipstein.

ORCELŪ UPDATE

Within the next month, Ortec plans to submit a Humanitarian Device Exemption (HDE) supplement to the FDA to obtain marketing approval for use of cryopreserved OrCelŪ in the treatment of Recessive Dystrophic Epidermolysis Bullosa (RDEB), the most severe type of Epidermolysis Bullosa (EB). RDEB is a devastating congenital skin disorder characterized by painful ulcers and widespread, permanent scarring resulting in the deformity of hands and feet. As a result, many RDEB patients require surgeries to allow greater use of their extremities resulting in need for replacement skin.

The FDA has advised Ortec that it could approve, without the need for additional data, an HDE supplement allowing for the use of cryopreserved OrCelŪ in those RDEB patients undergoing hand reconstruction as well as to cover donor sites created during the surgery (the area where skin was removed from another part of the patient's body). In February 2001, the FDA previously granted Ortec an HDE for this indication to market the non frozen version of OrCelŪ.

Within the next six weeks, Ortec expects to complete the confirmatory trial designed to confirm the superiority of cryopreserved OrCelŪ in the treatment of difficult-to-heal venous leg ulcers in comparison to the standard of care therapy. During the third quarter, Ortec expects to move forward with integrating the clinical data from the current trial with the efficacy data from the 12-week pivotal trial previously submitted to the FDA as part of Ortec's PMA. Ortec continues to expect to submit a supplemental PMA to the FDA in the fourth quarter of this year.

HAPTIDES(TM) UPDATE

Since acquiring the Haptides(TM) cell attachment technology in April 2006, Ortec has concentrated on implementing a pro-active product development and outlicensing commercialization strategy. This technology, which is a fibrin-based natural human peptide sequence with superior cell attraction properties, is simple and inexpensive to manufacture; offers a good safety profile in that it is non-immunogenic, non-inflammatory and non-toxic; and has demonstrated preclinical validation of its ability to enhance cell attachment. The Company's initial application of the Haptides(TM) technology is to the active biomaterial collagen. Our findings have shown that Haptides(TM) modified collagen improved cell attachment and growth In Vitro by 40-50%, and In Vivo implantation studies continued to show promising results as well. These findings provide the basis for our belief that Haptides(TM) modified collagen can be developed as an enhanced injectable dermal filler for the very significant and growing cosmetic tissue augmentation market.

Ortec believes that a micronized Haptide-enhanced accelluar injectable dermal filler can have major competitive advantages over leading products available today, by providing the same immediate enhanced cosmetic effect as current products, but with the added advantage of providing the ability for those improved results to last significantly longer. According to the American Society for Aesthetic Plastic Surgeons and Medical Insight, Inc., the global dermal filler market is growing at 25% per year. Valued at $442 million in 2005, this market is projected to grow to $1.5 billion by 2011.

Ortec currently projects an approximate 18-month milestone driven development plan to allow for this novel soft tissue augmentation product to be in a FDA clinical trial. The following are the projected milestones and objectives leading up to an IDE submission to the FDA, which upon approval by the FDA would allow for initiation of a human clinical trial.

* GMP Process & Safety
-- Biocompatibility/Toxicology - COMPLETED
-- Micronization Process Development - INITIATED
-- Pre-filled Syringe Product Development

* Preclinical Efficacy
-- Rat Subcutaneous Implantation Study - COMPLETED
-- Rat Subcutaneous Injection Study
-- Pig Intradermal Injection Study

* Clinical Trial
-- IDE Submission to the FDA - Within 18 months

In addition, Ortec is focused on achieving several other key objectives in 2006 with its Haptides(TM) technology, including evaluating other product opportunities for Haptized collagen in the areas of chronic wound healing, periodontal regeneration and as a matrix for Mesenchymal type adult stem cell differentiation and delivery. Further, Ortec plans to evaluate the application of the Haptides(TM) technology to implantable materials, including dental and orthopedic implants.

Earlier this month, Ortec was notified by the U.S. patent office that the claims of its patent application, "Novel Haptotactic Peptides" related to its Haptides(TM) technology platform, have been allowed. The patent incorporating these claims is expected to be issued by the end of 2006. Ortec is currently evaluating the opportunity for additional patent claims and filings around the Haptides(TM) technology.

Ortec has initiated preliminary discussions with companies focused on the orthopedic, dental, and cosmetic markets, which have expressed interest in potentially partnering with Ortec to structure co-development and licensing agreements for its Haptides(TM) technology platform.

FIBRIN MICROBEADS UPDATE

Also acquired in the acquisition completed in April 2006, Fibrin Microbeads (Fibrin MB) are cross linked, heat-treated Fibrin beads that can be used to isolate matrix-dependent cells, including Mesenchymal-type Adult Stem Cells. Ortec believes Fibrin MB represents valuable and unique intellectual property, with five U.S. patents issued and a notice of allowance recently received for a European patent, and is a technology which has significant advantages over comparable technology positioning it to be the product of choice in adult stem cell based therapeutics.

The Fibrin MB stem cell technology, the Company believes, is a flexible, comprehensive one solution approach for adult stem cell therapy. Fibrin MB have the unique potential to provide the clinician the ability to isolate stem cells from multiple sources including blood, which is the least invasive tissue source that previously was not considered to be a viable source of a sufficient quantity of stem cells for therapeutic application. Additionally, Fibrin MB have the flexibility to deliver the isolated stem cells therapeutically as an initial cell product or as an expanded or differentiated stem cell product. Fibrin MB may also ultimately be used to reimplant the stem cells to the patient. All the current autologus adult stem cell methods we are aware of do not have the ability to provide this comprehensive solution to adult stem cell therapy.

In preclinical tests, Fibrin MB has successfully demonstrated the ability to isolate stem cells, yielding four to eight times the current standard from rat and mouse bone marrow, and a good yield from GCSF-mobilized human blood. The technology has also proven effective with adipose tissue derived stem cells. Moreover, it has shown the ability to allow those stem cells to expand five to ten-fold after five to seven days' in culture. In terms of differentiation, Fibrin MB has demonstrated human cells' conversion to bone, cartilage and fat and shown a differentiation commitment by five to seven days, and full differentiation by 14 days.

Ortec's milestone driven development plan for this novel stem cell product currently provides for the ability to initiate an FDA clinical trial in bone regeneration within approximately 18 months and includes the following objectives and milestones. A preclinical trial evaluating Fibrin MB for bone regeneration has recently been initiated.

* GMP Process and Safety
-- Fibrin MB Process Development
-- Biocompatibility/Toxicology Testing

* Preclinical Efficacy
-- Preclinical Animal Models - Long Bone, Craniofacial - Initiated
-- Optimize stem cell isolation from blood - Initiated;
-- Use blood derived stem cells for Bone Regeneration

* Clinical Trial
-- Stem Cell Clinical Recovery Process
-- IDE submission to the FDA - Within 18 months.

Ortec also has initiated discussions with potential strategic partners to explore collaborations and licensing arrangements for its Fibrin MB technology platform.

CORPORATE OVERVIEW

Ortec recently formed a Stem Cell and Regenerative Medicine Scientific Advisory Board and appointed noted stem cell expert Daniel Marshak Ph.D. as its Chairman. Currently, Ortec has identified candidates it may wish to add to its advisory board and has initiated discussions with some of those candidates. Ortec plans to announce new appointments to the board during the next few months.

In consideration of receiving shareholder approval to effect a reverse stock split of the Company's Common Stock ranging between 1:5 and 1:15 at its recent annual meeting of stockholders, Ortec's Board of Directors has been assessing prevailing market and business dynamics to determine appropriate timing and sizing strategies for the planned share restructuring of the Company. We expect to provide updated information to Company shareholders in regard to the reverse split within the next 30 days.

About Ortec International, Inc.

Ortec International, Inc. (ORTN) is a company focused on advancing regenerative medicine and stem cell therapy through the development and commercialization of innovative products by combining advanced cell technology and advanced biomaterials. Ortec's lead product is OrCelŪ (Bilayered Cellular Matrix). Ortec's current focus is the application of OrCelŪ to heal chronic and acute wounds. OrCelŪ is composed of a collagen sponge seeded with allogeneic epidermal and dermal cells. These cells secrete growth factors and cytokines normally found in acute human wounds and are believed to have a beneficial role in promoting tissue repair.

A pivotal clinical trial evaluating a cryopreserved version of OrCelŪ in the treatment of venous leg ulcers has been completed and a Pre Market Approval (PMA) application has been filed. Ortec has recently completed patient enrollment in a confirmatory trial and the data from this trial are expected to be integrated with the results of the pivotal clinical trial and submitted as a clinical supplement to its PMA filing. Ortec has already obtained FDA approvals for use of a non-frozen version of OrCelŪ in the treatment of Epidermolysis Bullosa and donor sites in burn patients. In addition, the FDA has granted Ortec approval to initiate a pivotal (Phase III) trial evaluating OrCelŪ for the treatment of diabetic foot ulcers.

Ortec recently acquired two fibrin derived advanced biomaterial technologies, Fibrin MB and Haptides(TM). Fibrin MB has the potential to play a significant role in advancing stem cell therapy having demonstrated the ability to efficiently recover adult stem cells and allow for their growth, differentiation, and potential reimplantation into the patient. Haptides(TM) utilize proprietary synthetic peptides that mimic the mechanism of cell attachment to fibrin. These peptides have demonstrated the ability to significantly enhance cell attraction and attachment providing the potential to use Haptides(TM) in the development of product opportunities applicable to the cosmetic tissue augmentation, wound healing, orthopedics, and drug delivery markets.

For more information, visit Ortec's website at http://www.ortecinternational.com.

This news release may contain "forward-looking statements" for the purposes of the United States Securities and Exchange Commission's "safe harbor" provisions under the Private Securities Litigation Reform Act of 1995 and Rule 3B-6 under The Exchange Act. Without limitation, statements regarding expected FDA approvals, clinical trial results, product performance, expectations with respect to sales, gross margins, research and development expenditures, earnings per share, capital expenditures, collaborations, or other expansion opportunities would be "forward-looking statements." These statements may be identified by words such as "expects," "anticipates," "intends," "estimates," "believes" or similar expressions in connection with any discussion of future financial and operating performance. The forward-looking statements contained herein involve risks and uncertainties that may cause results to differ materially from the Company's expectations including but not limited to, global economic trends, competitive pricing or product developments, government legislation and/or regulations, technology, manufacturing, legal and patent issues, suppliers, capital availability, personnel changes, cancellation or delays in renewal of contracts, and lack of suitable raw materials or packaging materials. Investors are cautioned to review risk factors in the Company's filings with the United States Securities and Exchange Commission.


Source: Ortec International

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