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To Our Shareholders

August 2008

We would like to take this opportunity to provide you with an update regarding our recent operational and fund raising activities. Although the slowing economy and credit crunch put significant pressure on our efforts to raise funds, thanks to our dedicated employees and patient vendors, we were able to continue operations long enough to raise the necessary funding. This was the key success factor which enabled MedaSorb to continue the testing and research and development of our technology without any delays as we simultaneously worked to fund the Company.

$4.45 Million Series B Financing
In June of this year, MedaSorb Technologies Corporation announced the closing of a $4.45 million private placement of its Series B 10% Cumulative Convertible Preferred Stock. The proceeds will be used for our Sepsis Study currently underway in Germany. In addition, the funding will support MedaSorb as it pursues the CE Mark application.

The private placement was led by the NJTC Venture Fund, and included other new institutional investors Cahn Medical Technologies, LLC and Adelson Partners, LLC, as well as previous Series A Investors, Alpha Capital and Ellis International. The amount raised includes $175,000 in principal debt that was converted into the placement. Our new investors provide MedaSorb with broader access to capital as the Company grows, and presents the Company with opportunities to commercialize and monetize our products.

German Clinical Study
Over the past year we achieved several major milestones:

  1. In July of 2007 we filed with the German ethics committee for approval to initiate a clinical study.
  2. In August 2007 we receiveli approval from Germany's Central Investigational Review Board to enroll up to 80 patients in the study, which would make this the largest clinical study ever launched by MedaSorb.

  3. In September 2007 we conducted a Clinical Investigators meeting in Germany with prospective clinical institutions.
  4. In December 2007 we signed our first clinic to participate in the study, followed by three additional clinics within the same hospital network in February 2008.
  5. Six patients have been enrolled in the study as of this writing.

We are pleased with the forward momentum we have achieved with the sepsis clinical study in Germany. We have initiated five sites to date and our intention is to expand the number of clinical sites to 10 or more. Ideally, we would like to have a minimum of 30 treated patients and 30 control patients in this randomized/controlled study. We anticipate the study will run approximately 9 - 12 months, although no assurance can be given in that regard. We remain optimistic that the removal of toxins in the blood will result in a positive outcome for the patient and a large market opportunity.

We have also started the process to obtain the CE mark, a requirement to market medical devices in Europe. The CE mark is contingent upon meeting certain International quality standards and positive clinical study results. If the company is successful in receiving the CE mark, it could allow us to launch our product in Europe in the next 18 - 24 months, although there can be no assurance that we will obtain regulatory approval for our products.

About Sepsis and CytoSorb™
Sepsis is a major cause of mortality, killing approximately 1,400 people worldwide every day. The estimated incidence of sepsis is 1.0 million patients per year in the U.S., with a similar incidence rate in the major European countries. In the U.S. the estimated annual cost of treating patients with sepsis is $18 billion. MedaSorb's CytoSorb™ device has been designed to achieve broad-spectrum removal of cytokines, preventing or reducing the accumulation of high concentrations in the bloodstream of sepsis patients. We believe that our technology presents a new therapeutic approach in the treatment of sepsis. Limited studies of our CytoSorb™ device have provided us with data consistent with our belief that CytoSorb™ has the ability to remove these toxins found in the blood.

On behalf of our Board of Directors, we would like to thank our partners, employees and shareholders for your continued confidence and support.

Sincerely,

Al Kraus

 


 
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