IsoTis Reports Third Quarter Results (1)

LAUSANNE, Switzerland and IRVINE, California, November 9 /PRNewswire/ --

-- Revenues Grow 25% to US$10.2 Million

IsoTis S.A. (SWX/Euronext: ISON) (TSX: ISO), the orthobiologics company, today reported its results for the third quarter and nine months ended September 30, 2006. Revenues were US$10.2 million for the third quarter of 2006, representing a 25% increase over revenues of US$8.1 million for the third quarter of 2005. For the first nine months of 2006, revenues were US$30.8 million, representing a 31% increase over revenues of US$23.5 million for the same period in 2005.

Revenue Analysis

IsoTis' chief distribution channels are its U.S. network of independent agents and its network of international distributors, while the remaining portion of its revenues is derived from private label agreements. In the third quarter of 2006, revenues from the U.S. network grew 19% to US$6.0 million compared to US$5.0 million in the third quarter of 2005, while in the nine months of 2006, revenues from the U.S. network grew 18% to US$18.0 million, compared to US$15.2 million in the first nine months of 2005. In the third quarter of 2006, international revenues grew 44% to US$2.4 million compared to US$1.7 million in the third quarter of 2005, while in the nine months of 2006 international revenues grew 43% to US$7.4 million, compared to US$5.2 million in the nine months of 2005.

Results Comparison & Cash Position

The loss from operations for the third quarter of 2006 was US$3.1 million, compared to US$2.3 million for the third quarter of 2005. In the nine months of 2006, the loss from operations was US$7.8 million, compared to US$7.1 million in the nine months of 2005. Net loss for the third quarter of 2006 totaled US$1.9 million or US$0.03 per diluted share as compared with a net loss of US$1.5 million or US$0.02 per diluted share for the third quarter of 2005. The net loss for the nine months ended September 30, 2006 was US$11.9 million or US$0.17 per share due in part to the US$4.6M negative impact of foreign currency movements on intercompany loans. For the nine months ended September 30, 2005 net income was US$2.4 million or US$0.03 per share which was primarily due to an US$8.6 million favorable impact of foreign currency movements on intercompany loans.

At September 30, 2006, IsoTis had cash and cash equivalents and restricted cash of US$20.0 million.

Highlights Third Quarter

-- Sale of dental assets to Keystone Dental Inc. for US$7.4 million

-- Secured US$5 million credit line with SVB Silicon Valley Bank

-- Appointed Gene Reu. as VP of Operations

-- Private label agreement with Alphatec Spine

Pieter Wolters, President and CEO of IsoTis said, "I am pleased with our performance in the third quarter. We are reporting our eighth consecutive quarter of revenue growth. With the sale of our dental assets and the credit line, we have considerably strengthened our cash position. We believe our continued growth and our improved financial position provide a solid foundation for our intention to become a U.S. company with a single listing on NASDAQ that we announced earlier this week. We believe that the NASDAQ listing, will allow us to continue to accelerate and sustain our growth. Meanwhile, we reiterate our 2006 guidance of achieving between 25% and 30% revenue growth."

Business Outlook for 2006

-- IsoTis anticipates total revenues for full year 2006 to grow by between 25% and 30%

-- IsoTis continues its product and business development efforts aimed at introducing new products

-- IsoTis intends to become a U.S. company with a single NASDAQ listing in Q1 of 2007

Conference Call

IsoTis will conduct a conference call today at 4.30 p.m. CET/10.30 a.m. ET/7.30 a.m. PT. Dial: +41-91-610-5609 (Europe); +44-207-107-0613 (UK); +1-866-865-5144 (toll free dial in US/Canada); no password required. Digital playback is available for 24 hours after the conference starting at 6.30 p.m. until November 10, 2006, 6.30 p.m. CET, dial: +41-91-612-4330 (Europe); +44-207-108-6233 (UK); +1-866-416-2558 (US/Canada); playback ID: 711#. The call will also be webcast live on the IsoTis website at www.isotis.com. The webcast will remain available on IsoTis' website through December 31, 2006.

IsoTis has a product portfolio with several innovative and proprietary natural and synthetic bone graft substitutes on the market and others in development, an established North American independent distribution network and an expanding international presence. IsoTis' main commercial operations are based in Irvine, California, and its international sales headquarters are based in Lausanne, Switzerland.

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 future operations, prospects and financial condition. Words such as "strategy," "expects," "plans," "anticipates," "believes," "will," "continues," "estimates," "intends," "projects," "goals," "targets" 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 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 due to a number of factors and uncertainties affecting IsoTis' business, including, but not limited to, failure to obtain sufficient shareholder support for the exchange offer, inability to list the IsoTis Inc, shares on NASDAQ in a timely manner, if at all, 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 (a.o. EMEA, CE), market acceptance of IsoTis' products, effectiveness of IsoTis' distribution channels, development of competing therapies and/or technologies, the terms of any future strategic alliances, the need for additional capital, 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 IsoTis' Annual Report on Form 20-F for the fiscal year ended December 31, 2005, filed with the SEC and to IsoTis' reports filed from time to time with the Swiss Stock Exchange (SWX), Euronext Amsterdam N.V., SEDAR at www.sedar.com and the Toronto Stock Exchange (TSX).

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