Artes Medical Announces Plan for Nasdaq Listing Compliance and Agenda for Its Annual Meeting

Business Wire, Sept 2, 2008

Business Discussion

As stated in our recent Annual Report, 2007 was a year of accomplishment and challenge for the Company. The Company launched its flagship product, ArteFill[R], into the United States aesthetics market, making it the first and only FDA-approved non-resorbable dermal filler for the treatment of smile lines. The Company also established a nationwide network of more than 1,200 dermatologists, plastic surgeons and cosmetic surgeons who have received training in the proper use of ArteFill so that it has become available to a growing number of patients throughout the United States.

On the other hand, the overall level of ArteFill product sales for 2007 did not measure up to our expectations and the product's inherent potential. We have taken a hard look at the Company's initial launch strategy and have initiated changes in the way we market ArteFill in order to capitalize more fully on ArteFill's competitive advantages.

Commercial Experience. Our market research tells us that patients are searching for a safe, effective and long-lasting solution to wrinkle correction. Even as the industry continues to build around the use of temporary dermal filler products, the high patient attrition rate among temporary dermal filler patients due to "credit card fatigue" and "injection fatigue" is real and not going away anytime soon. Our market research further shows that today's women lead busy and active lives, and many want a safe and truly effective long-lasting wrinkle solution. We believe that ArteFill is uniquely positioned to address this opportunity.

We are receiving positive feedback from physicians and patients who have experienced ArteFill since launch in February 2007. Physicians continue to report strong results relating to smile line correction and patient satisfaction, with no serious adverse events reported. With over 10,000 patients now treated since ArteFill's launch, we have established an excellent safety and efficacy record that is further supported by a 5-year safety and efficacy study published in the peer-reviewed journal Dermatologic Surgery.

Physician Development Initiatives. Since market launch, the Company has trained more than 1,200 dermatologists, plastic surgeons, and cosmetic surgeons on the use of ArteFill, and it is the Company's goal to have 1,800 physicians trained by year-end 2008. We continue to focus on those physicians experienced in the field of aesthetic medicine. We are convinced that we need to continue to build this important base of physician acceptance so that, as our sales effort and consumer initiatives begin to converge, we can translate this into stockholder value.

During 2007, we built a robust practice development program designed to assist physicians in educating patients and treating them with ArteFill. We will also be initiating follow-on patient incentive programs operating in concert with physician-driven initiatives. We have seen strong interest among physicians to participate in our programs, which include other sales incentives, coupons and specialized discount programs. In addition, since FDA approval, ArteFill has been included in many leading dermatology and plastic surgery medical conferences showcasing the benefits of the product's safety, long-term efficacy and differences among various dermal filler products.