BioSphere Medical Reports 2008 Second Quarter Financial Results

Q2 2008 Financial Highlights Compared With Q2 2007

-- Revenue for embolics and delivery systems rose 16% to $7.41
million

-- Revenue for embolics used in interventional gynecology rose
15% to $5.48 million

-- Revenue for embolics used in interventional oncology rose 27%
to $1.43 million

-- Sales to rest of world markets increase 95% to $0.60 million

-- Gastric products phase out in Europe on plan with revenue
decreasing $0.38 million to $0.20 million, a reduction of 66%

-- Record total revenue of $7.61 million, an increase of 9%
ROCKLAND, Mass.--(Business Wire)--
BioSphere Medical, Inc. (NASDAQ: BSMD) ("BioSphere") - a medical
device company that has pioneered the use of bioengineered
microspheres to treat uterine fibroids, hypervascularized tumors and
vascular malformations by a minimally invasive, image-guided medical
procedure called embolotherapy - today reported record total revenue
for the second quarter of 2008 of $7.61 million, an increase of 9%
compared with $6.97 million in the second quarter of 2007. Worldwide
revenue of embolics and delivery systems was $7.41 million, up 16%
from $6.39 million in the prior year. As previously announced, the
gastric product line in Europe is being phased out. Gastric products
revenue in Europe was $0.20 million, a decrease of 66% from $0.58
million in Q2 2007.

In the second quarter of 2008, revenue in the U.S. was $5.56
million, an increase of 11% compared with $5.01 million in the second
quarter of 2007. Revenue in Europe, Mid-East and Africa (EMEA) for
embolics and delivery systems was $1.25 million for the second quarter
of 2008, up 17% from $1.07 million for the same period in 2007. In
markets outside of the United States and EMEA, rest of world (ROW)
revenue was $0.60 million for the second quarter of 2008, up 95% from
$0.31 million for the same period in 2007, due primarily to shipments
to China and Brazil.

Gross margin rose to $5.62 million, or 73.9% of revenue, for the
second quarter of 2008, compared with gross margin of $5.05 million,
or 72.4% of revenue, for the second quarter of 2007.

Operating expense for the second quarter of 2008 was $6.89
million, compared with $5.55 million for the second quarter of 2007.
The reasons for the increase are the addition of senior-level
executives in research and development, the expansion of the U.S.
sales force and increased marketing spending for UFE programs.

Operating loss for the second quarter of 2008 was $1.26 million,
compared with $0.50 million for the second quarter of 2007.

Other income, expense and preferred dividends in Q2 2008 were an
expense of $0.04 million, compared with other income of $0.09 million
in Q2 2007, reflecting lower interest rates on invested cash.

Net loss applicable to common stockholders for the second quarter
of 2008 was $1.30 million, or $0.07 per basic and diluted share,
compared with a net loss applicable to common stockholders of $0.41
million, or $0.02 per basic and diluted share, in the same period last
year.

For the six months ended June 30, 2008, revenue was $14.83
million, up 9% from $13.56 million for the same period last year.
Revenue from embolics and delivery systems was $14.05 million, up 14%
compared with $12.34 million in the same period last year. Gross
margin rose to $10.79 million, or 72.8% of revenue, for the first half
of 2008, compared with gross margin of $9.54 million, or 70.4% of
revenue, for the first half of 2007. The net loss for the six months
ended June 30, 2008 was $2.85 million, or $0.16 per share, compared
with a net loss of $1.58 million, or $0.09 per share, for the
comparable period in 2007.

At June 30, 2008, BioSphere had cash, cash equivalents and
marketable securities of $20.3 million.

Richard Faleschini, BioSphere Medical's President and Chief
Executive Officer, said, "Our business in the U.S. is progressing,
with the previously announced six expansion sales territories
contributing meaningful revenue this quarter and performing
approximately as we expected. Our prescripted U.S. sales activities
that we believe can fill the U.S. revenue pipeline are getting
traction at the account level, and we are expecting to see the sales
growth associated with that revenue pipeline in the second half of the
year. We also believe the targeted campaign we are launching with
Beverly Johnson, as highlighted later in this press release, will
increase women's awareness about fibroids and motivate them to seek
the care of a healthcare professional who will help them fully
understand their treatment options and act on their preferences and
choices. Meanwhile, our interventional oncology franchise demonstrated
continued strong year-over-year growth. This business grew 27% this
quarter and now represents almost 19% of total revenue, up from
approximately 16% in the same period last year. We are also pleased
with the growth of our business outside the United States. Both EMEA
and ROW contributed to our growth. EMEA embolics and delivery systems
grew 17% this quarter compared with the same quarter a year ago, and
the ROW business was up 95% this quarter, due primarily to shipments
to China and Brazil. We continue to view our OUS business as a way to
diversify the sources of our revenue, and believe it to be a growth
driver for us in the future, especially in China and Brazil. Our OUS
revenue is still only 27% of our total revenue, and we believe we can
continue to increase the percentage of our total revenue that is
generated from outside the United States. Overall, we are quite
encouraged by our results this quarter and look for the current
momentum to continue going forward."

Significant highlights, activities and developments in the second
quarter of 2008 and subsequent weeks included:

-- Second quarter 2008 worldwide sales of embolics used in
interventional gynecology, or UFE, rose 15% to $5.48 million
compared with the second quarter of 2007, which includes U.S.
sales of $4.36 million, an increase of 9%, and sales outside
of the U.S. of $1.12 million, an increase of 44%.

-- Second quarter 2008 worldwide sales of embolics used in
interventional oncology rose 27% to $1.43 million compared
with the second quarter of 2007, which includes U.S. sales of
$0.93 million, an increase of 20%, and sales outside of the
U.S. of $0.50 million, an increase of 41%.

-- Second quarter 2008 worldwide sales of delivery systems rose
6% to $0.39 million compared with the second quarter of 2007,
which includes U.S. sales of $0.17 million, an increase of
29%, and sales outside of the U.S. of $0.22 million, a decline
of 6%.

-- Publication in the July 2008 issue of the Journal of Vascular
and Interventional Radiology of a study entitled: "Economic
Evaluation of Uterine Artery Embolization versus Hysterectomy
in the Treatment of Symptomatic Uterine Fibroids: Results from
the Randomized EMMY Trial," where the authors concluded that
"the 24-month cumulative cost of uterine artery embolization
(UAE) is lower than that of hysterectomy. From a societal
economic perspective, UAE is the superior treatment strategy
in women with symptomatic fibroids".

-- BioSphere supported a supplement in the May 2008 issue of OBG
Management (circulation of approximately 37,000) entitled
"Loyalty and informed patients contribute to a healthy
bottomline: Can we talk?" This supplement illustrates that
Ob/Gyns can expect a higher degree of patient loyalty and
patient retention by openly and fully discussing all treatment
options for symptomatic uterine fibroids, including
uterus-sparing, minimally invasive uterine fibroid
embolization (UFE). The supplement is co-authored by Linda D.
Bradley, M.D., FACOG, Vice Chairman of Obstetrics, Gynecology
and Women's Health Institute and Director, Center for
Menstrual Disorders, Fibroids & Hysteroscopic Services at the
Cleveland Clinic and Leah Amir, MS, MHA, CEO and President of
Vantage View and VantageLinks LLC and Executive Director of
the Institute for Quality Resource Management.

-- BioSphere has recently retained supermodel, entrepreneur, and
actress Beverly Johnson to assist the Company in educating
women about treatment options (including UFE) for symptomatic
uterine fibroids. Ms. Johnson, who underwent a hysterectomy in
1999 to address uterine fibroids, became a spokesperson for
the National Women's Health Resource Center as part of a
campaign to educate women about alternatives to hysterectomy.
She was a keynote speaker at a BioSphere-sponsored satellite
symposium at the Society for Interventional Radiologists'
(SIR) 33rd Annual Scientific Meeting held in March 2008.

Conference Call and Webcast

The Company will host its quarterly conference call on July 24,
2008 beginning at 8:30 a.m. Eastern time. The number to dial is
888-563-6275 (US/Canada) or 706-643-3137 (International), and the
conference ID is 55173616. The live webcast will be available in the
"Investors" section of BioSphere's Web site at www.biospheremed.com. A
replay of the webcast will also be available at BioSphere's Web site.

About BioSphere Medical, Inc.

BioSphere Medical, Inc. seeks to pioneer and commercialize
minimally invasive diagnostic and therapeutic applications based on
proprietary bioengineered microsphere technology. The Company's core
technologies, patented bioengineered polymers and manufacturing
methods, are used to produce microscopic spherical materials with
unique beneficial properties for a variety of medical applications.
BioSphere's principal focus is the treatment of symptomatic uterine
fibroids using a procedure called uterine fibroid embolization, or
UFE. The Company's products continue to gain acceptance in this
rapidly emerging procedure, as well as in a number of other new and
established medical treatments.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including, without limitation, statements regarding the Company's
expectation for revenue growth in the remainder of 2008, the expected
benefits of the Company's sales force expansion and sales and
marketing strategies, and the Company's expectations regarding the
growth of its business outside of the United States. The Company may
use words such as "plans," "seeks," "projects," "believes," "may,"
"anticipates," "estimates," "should," "intends," "looking forward,"
and similar expressions to identify these forward-looking statements.
These statements are subject to risks and uncertainties and are based
upon the Company's beliefs and assumptions. There are a number of
important factors that may affect the Company's actual performance and
results and the accuracy of its forward-looking statements, many of
which are beyond the Company's control and are difficult to predict.
These important factors include, without limitation, risks relating
to:

-- the failure of the Company to successfully develop,
commercialize and achieve widespread market acceptance of its
products, including, without limitation, widespread market
acceptance of its lead product, Embosphere Microspheres, for
the treatment of UFE, its HepaSphere(TM) Microsphere and
QuadraSphere(R) Microsphere products, and its delivery system
product line;

-- the failure of the Company to increase the rate of UFE
procedures, and concomitant use of its products for UFE, with
its expanded sales force and its recently-initiated sales and
marketing strategies;

-- the failure of the Company to achieve or maintain necessary
regulatory approvals, either in the United States or
internationally, with respect to the manufacture and sale of
its products and product candidates;

-- the Company's ability to obtain and maintain patent and other
proprietary protection for its products and product
candidates;

-- the absence of, or delays or cancellations of, product orders;

-- delays, difficulties or unanticipated costs in the
introduction of new products;

-- competitive pressures and the risk of product liability
claims, either of which may impact market acceptance of
products and adversely affect the Company's operating results;

-- the inability of the Company to successfully execute on its
plans and strategies for future growth, including its plans to
grow its business in both the UFE and interventional oncology
fields and its plans for international growth;

-- the inability of the Company to raise additional funds in the
near term to finance the development, marketing, and sales of
its products;

-- general economic and market conditions both domestically and
abroad; and

-- risk factors described in the section titled "Risk Factors" in
the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2008, as filed by the Company with the
Securities and Exchange Commission, and described in other
filings made by the Company from time to time with the
Securities and Exchange Commission.

In addition, the forward-looking statements included in this press
release represent the Company's estimates as of the date of this
release. The Company anticipates that subsequent events and
developments may cause its forward-looking statements to change. The
Company specifically disclaims any obligation or intention to update
or revise these forward-looking statements as a result of changed
events or circumstances after the date of this press release.

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BioSphere Medical, Inc.
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SELECTED FINANCIAL INFORMATION

CONSOLIDATED CONDENSED BALANCE SHEETS
As of June 30, 2008 and December 31, 2007
(in thousands, unaudited)
----------------------------------------------------------------------

June 30, December 31,
2008 2007
------------ ------------
ASSETS
Cash, cash equivalents and investments $ 20,287 $ 23,579
Accounts receivable, net 4,864 4,097
Inventories 3,526 3,836
Prepaid expenses and other current assets 770 613
Property and equipment, net 1,172 1,124
Goodwill 1,443 1,443
Other assets 72 67
------------ ------------

Total assets $ 32,134 $ 34,759
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 4,465 $ 5,460
Deferred revenue 104 146
Capital lease obligations 21 44
Stockholders' equity 27,544 29,109
------------ ------------

Total liabilities and stockholders' equity $ 32,134 $ 34,759
============ ============
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CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
For the three and six months ended June 30, 2008 and 2007
(in thousands, except per share amounts, unaudited)
----------------------------------------------------------------------

Three Months
Ended Six Months Ended
June 30, June 30,
----------------- -----------------
2008 2007 2008 2007
-------- -------- -------- --------

Revenues $ 7,611 $ 6,974 $14,825 $13,559

Costs and expenses:
Cost of revenues 1,990 1,922 4,033 4,017
Research and development 770 564 1,417 1,226
Sales 2,615 1,877 5,266 3,925
Marketing 1,693 1,342 3,017 2,734
General, administrative and
patent costs 1,807 1,768 3,710 3,424
-------- -------- -------- --------

Total costs and expenses 8,875 7,473 17,443 15,326
-------- -------- -------- --------

Loss from operations (1,264) (499) (2,618) (1,767)
Other income and expenses, net 105 232 57 464
-------- -------- -------- --------

Net loss (1,159) (267) (2,561) (1,303)

Preferred stock dividends (145) (138) (289) (275)
-------- -------- -------- --------

Net loss applicable to common
stockholders $(1,304) $ (405) $(2,850) $(1,578)
======== ======== ======== ========

Net loss per common share
Basic and diluted $ (0.07) $ (0.02) $ (0.16) $ (0.09)
======== ======== ======== ========

Weighted average common shares
outstanding
Basic and diluted 17,979 17,571 17,970 17,555
======== ======== ======== ========
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BioSphere Medical, Inc.
Martin Joyce, 781-681-7925
Executive Vice President and
Chief Financial Officer
or
Investor Relations:
The Equity Group Inc.
Devin Sullivan, 212-836-9608
Senior Vice President

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