Artes Medical Enters Into $22.5 Million Revenue Financing Arrangement With Cowen Healthcare Royalty Partners

Funds Sales Force Expansion and Consumer Outreach Programs

SAN DIEGO--(BUSINESS WIRE)--Jan. 30, 2008--Artes Medical, Inc. (Nasdaq:ARTE), a medical technology company whose product ArteFill(R) is the first and only FDA-approved non-resorbable injectable dermal filler for the correction of nasolabial fold or "smile line" wrinkles, today announced it has entered into a revenue financing arrangement with Cowen Healthcare Royalty Partners (CHRP), a leading healthcare investor and affiliate of Cowen Group, Inc., to immediately provide $21.5 million of financing for the Company, plus an additional $1 million in 2009 upon attainment of a revenue milestone. The financing is intended to be used to support the Company's operations, including funds necessary to expand both its dedicated sales force and consumer outreach programs. The Company has also agreed to use proceeds from the financing to payoff and terminate its existing credit facility. The transaction is expected to close in mid-February.

"We are pleased to have CHRP provide a financing to allow us to expand both our dedicated U.S. sales force and consumer outreach programs," said Diane S. Goostree, President and Chief Executive Officer. "The CHRP team provides us not only the funding to expand the ArteFill product launch but also provides us industry experience as a result of previous investments in FDA approved healthcare products."

Coincident with closing the financing, Todd C. Davis, Co-Founder and Managing Director of CHRP, will join the Company's Board of Directors. Mr. Davis was previously a Partner at Paul Capital Partners, where he was focused on the activities of the Paul Royalty Funds. Prior to that, Mr. Davis was a Partner at Apax Partners, a private equity fund. Mr. Davis has extensive healthcare operating experience, having worked in business development and general management at Elan Pharmaceuticals, and in sales and marketing at Abbott Laboratories. He is a former U.S. naval officer and holds a B.S. from the U.S. Naval Academy, and an MBA from Harvard Business School.

"ArteFill represents the type of product that we believe patients desire for long-lasting facial wrinkle correction in the fast growing injectable aesthetic market," said Todd Davis. "CHRP's mission is to invest in commercial stage healthcare products through revenue interests, structured debt and equity. We believe our investment in Artes Medical provides important funding to support the acceleration of ArteFill market adoption in the U.S. dermal filler market."

About ArteFill(R)

ArteFill is the first and only FDA-approved non-resorbable injectable dermal filler for the correction of wrinkles known as smile lines or nasolabial folds. The unique microspheres in ArteFill are not absorbed by the body and therefore provide the first-of-its-kind permanent support for long-lasting wrinkle correction in one to two treatments.

ArteFill was approved by the FDA in October 2006 based on data from the Company's 12 month controlled, randomized, double-masked, multi-center U.S. clinical trial, which compared outcomes for patients treated with ArteFill with those of patients treated with the leading bovine collagen-based filler. At the six month evaluation, which was the primary efficacy evaluation period for the clinical trial, the wrinkle correction in patients treated with ArteFill persisted and showed statistically significant improvement compared to the wrinkle correction in the patients treated with the collagen control, who returned to their pretreatment status. The ArteFill patients were also evaluated one year after treatment, demonstrating continued safety and wrinkle correction.

An ArteFill Skin Test is required before initial treatment. The most common adverse events associated with ArteFill treatment, similar to those observed with other dermal fillers, are lumpiness, persistent swelling or redness and increased sensitivity at the injection site.

ArteFill is a proprietary formulation comprised of polymethylmethacrylate, or PMMA, microspheres and bovine collagen, and is the only PMMA-based injectable product that has been approved by the FDA for the treatment of facial wrinkles. Artes Medical is the sole manufacturer of ArteFill, which is only available in the United States through Artes Medical, and Artes Medical has not entered into distribution or licensing arrangements with any third party for the distribution or sale of ArteFill, or any other PMMA-based dermal filler, outside the United States.

About Artes Medical, Inc.

Artes Medical is a medical technology company focused on developing, manufacturing and commercializing a new category of aesthetic injectable products for the dermatology and plastic surgery markets. The Company's initial product, ArteFill(R), is being marketed to men and women as a treatment option for the correction of nasolabial folds. Additional information about Artes Medical and ArteFill is available at www.artesmedical.com and www.artefill.com.

About Cowen Healthcare Royalty Partners

Cowen Healthcare Royalty Partners (CHRP), an affiliate of Cowen Group, Inc., is a healthcare private equity firm that invests principally in commercial-stage biopharmaceutical products, medical device products, and companies. CHRP seeks to (i) acquire royalty interests in commercial-stage or near commercial-stage healthcare products and (ii) invest, through royalty or synthetic royalty interests as well as debt or equity, in companies with commercial-stage, or near commercial-stage healthcare products such as pharmaceuticals, biotechnology products and medical devices. Based in Stamford, CT, the CHRP team has over 70 years of healthcare related experience including principal investing, structured finance, healthcare industry senior management, Wall Street research and consulting, as well as scientific and clinical experience. Collectively, the team has invested in excess of $750 million.

Cowen Healthcare Royalty Partners
177 Broad Street, Suite 1101
Stamford, CT 06901
(646) 562-1100
www.cowenroyalty.com

Forward-Looking Statements

This news release may contain forward-looking statements that are based on the Company's current beliefs and assumptions and on information currently available to its management. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. As a result of these risks, uncertainties and other factors, which include the Company's history of net losses, its reliance on its sole FDA-approved product, ArteFill, its limited experience in commercializing ArteFill, its ability to receive FDA approval to claim that the aesthetic benefits of ArteFill extend beyond six months and delays in the market acceptance of ArteFill, readers are cautioned not to place undue reliance on any forward-looking statements included in this press release. A more extensive set of risks and uncertainties is set forth in the Company's SEC filings available at www.sec.gov. These forward-looking statements represent beliefs and assumptions only as of the date of this news release, and the Company assumes no obligation to update these forward-looking statements publicly, even if new information becomes available in the future.

Artes Medical(R) and ArteFill(R) are registered trademarks of Artes Medical, Inc.

CONTACT: Artes Medical, Inc.
Cheryl Monblatt Allen, 858-550-9999 (investor relations)
callen@artesmedical.com or
Schwartz Communications, Inc.
Thea Lavin, 415-512-0770 (corporate media)
artes@schwartz-pr.com

SOURCE: Artes Medical, Inc.