Synovis Life Technologies to Purchase Assets of Pegasus Biologics

Acquisition Provides Soft Tissue Repair Products in Orthopedics and Wound Care
Markets;

Pegasus` Equine Pericardial Technology Complements Synovis Technology
ST. PAUL, Minn.--(Business Wire)--
Synovis Life Technologies, Inc. (Nasdaq: SYNO), has entered into a definitive
purchase agreement through a wholly owned subsidiary to acquire substantially
all the assets of Pegasus Biologics, Inc., a privately held medical device
company based in Irvine, Calif., focused on the development of advanced
biological solutions for soft tissue repair. The purchase price is $12.1 million
in cash and resulted from a sealed bid auction process. Synovis expects to close
the transaction on or before July 15, 2009, utilizing current cash reserves.

Approximately 10,000 patients had been treated with Pegasus` equine pericardial
products in various orthopedic and complex wound applications from March 2006 to
May 2009, when Pegasus effectively ceased operations after attempts to raise
additional operating capital were unsuccessful due to the overall economic
climate. Previously, Pegasus had obtained more than $38 million in venture
equity and debt. In 2008, Pegasus generated $9.1 million in revenue and had
approximately 75 employees at year-end. Synovis plans to maintain Pegasus`
manufacturing operations in Irvine and will operate the acquired assets as a
separate division.

"Growth through acquisition, in addition to organic growth, is a strategic
priority for Synovis," said Richard W. Kramp, Synovis Life Technologies
president and chief executive officer. "We are very pleased to have the
opportunity to combine the talent, technology and products of Pegasus with our
own and to enter two additional high potential markets. Pegasus is an especially
strong fit for Synovis; the company has complementary technologies and soft
tissue repair products ─ already FDA cleared and CE Marked ─ giving Synovis
access to the large and growing orthopedic and wound care markets. Pegasus
products are consistent with our mission of providing surgical solutions that
minimize risks, improve patient outcomes and reduce healthcare costs."

Synovis plans to market the acquired products with a combination of direct sales
people recruited from the recently disbanded Pegasus sales force, and
independent sales distribution, and to focus this sales team solely on the
acquired products. Synovis expects to regain Pegasus` 2008 revenue levels in
fiscal 2010 and to make immediate and meaningful reductions in operating
expenses from those historically incurred by Pegasus. However, Synovis also
anticipates the new division will incur operating losses between $1 million and
$2 million in the fourth quarter of fiscal 2009 and potentially $5 million in
fiscal 2010, while reaching breakeven during fiscal 2011 and being accretive
after that. Kramp said, "As we move forward, we see opportunities to leverage
our infrastructure and certain operating expenses to reduce costs, as well as
the potential to achieve gross margins similar to our current gross margins.
Given the compressed timeline of the auction process, these future estimates are
preliminary and could change materially as we integrate the new business."

Kramp continued, "We have the knowledge and resources to drive the Pegasus
technologies and products to a significant place in their respective markets,
and this transaction is an important investment in our long-term growth. Our
immediate priorities for this acquisition are to appoint leadership and rebuild
the sales staff for our newest division while reconnecting with physician
customers."

Established Technologies

Pegasus Biologics has more than five years experience with its core
technologies. It has exclusive worldwide licenses for its flexible cross linking
and sterilization processes which stabilize and sterilize biological tissue for
use in orthopedic, wound, oral/dental, spine and neurological, breast, abdominal
and thoracic applications. These technologies have been accepted by the market
and have the potential to yield additional pioneering applications in the
future.

Pegasus has commercialized two primary products:

* The OrthADAPT Bioimplant received FDA marketing clearance in 2005 and was
launched the following year. This collagen soft tissue scaffold was developed
with Pegasus` patented technologies. OrthADAPT was rapidly gaining acceptance in
orthopedic surgical applications, including rotator cuff and Achilles tendon
repair, where there is a clinical need to reinforce the repair.
* The Unite Biomatrix collagen wound dressing received FDA marketing clearance
in 2006 and offers a new treatment alternative for chronic wounds, such as
diabetic foot ulcers, pressure ulcers and chronic wounds - worldwide healthcare
concerns. This advanced biologic solution provides a durable, collagen structure
that can be applied to the wound easily and maintains its integrity while
promoting healing.

In addition to the OrthADAPT and Unite products, Pegasus received FDA marketing
clearance in May 2009 for its OrthADAPT PR product. This combination product,
composed of equine pericardial collagen and woven PEEK fabric, offers the
healing benefit of the collagen scaffold and the strength of woven high tensile
suture material. OrthADAPT PR is the world`s first biologically based device
specifically engineered for arthroscopic delivery for rotator cuff repair and
represents a potentially revolutionary advance for this surgical procedure.
Synovis intends to continue a recently started clinical study of the OrthADAPT
PR product.

Conference Call and Webcast

Synovis Life Technologies will discuss this transaction in a live conference
call and webcast today, July 7, at 4 p.m. CT. To access the conference call,
dial (888) 679-8037 and enter access number 91241035 at least 10 minutes prior
to the call. If you prefer to listen to an audio replay of the conference call,
dial (888) 286-8010 and enter access number 76682749. The audio replay will be
available beginning at 7 p.m. CT on Tuesday, July 7, through 5 p.m. CT on
Friday, July 10.

To listen to the live webcast, go to the investor information section of the
company`s Web site, www.synovislife.com, and click on the webcast icon. A
webcast replay will be available beginning at 7 p.m. CT, on Tuesday, July 7.

About Synovis Life Technologies

Synovis Life Technologies, Inc., based in St. Paul, Minn., is a diversified
medical device company that develops, manufactures and markets medical devices
for the surgical treatment of disease. The company`s products include
implantable biomaterials for soft tissue repair, devices for microsurgery and
surgical tools - all designed to reduce risks and/or facilitate critical
surgeries, improve patient outcomes and reduce healthcare costs. For additional
information on Synovis Life Technologies and its products, visit the company`s
Web site at www.synovislife.com.

Forward-looking statements contained in this press release are made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. The statements can be identified by words such as "should", "could",
"may", "will", "expect", "believe", "anticipate", "estimate", "continue", or
other similar expressions. Certain important factors that could cause results to
differ materially from those anticipated by the forward-looking statements made
herein include the timing of product introductions, the ability of our expanding
direct sales force to grow revenues, outcomes of clinical and marketing trials
as well as regulatory submissions, the number of certain surgical procedures
performed, the ability to identify, acquire and successfully integrate suitable
acquisition candidates, the cost and outcome of intellectual property
litigation, any operational or financial impact of the current global economic
downturn, current market conditions affecting its investments and any claims for
indemnification related to the sale of the interventional business, as well as
the other factors found in the company`s reports to the Securities and Exchange
Commission, including our Annual Report on Form 10-K, as amended by Form 10-K/A
(Amendment No. 1) for the year ended October 31, 2008.

For Synovis Life Technologies:
Padilla Speer Beardsley Inc.
Nancy A. Johnson, 612-455-1745
or
Marian Briggs, 612-455-1742
or
Synovis Life Technologies, Inc.
Richard Kramp, 651-796-7300
President and CEO
or
Brett Reynolds, 651-796-7300
CFO

Copyright Business Wire 2009