C O R P O R A T E   B A C K G R O U N D E R

For information contact:
Joni Morford, Communicore
714/721-8081
jmorford@communicore.com


ORQUEST, INC.


The worldwide orthopedic market is in the early stages of a revolution which will 
create new therapeutic options and reduce the morbidity and hospital stays 
associated with current procedures.  This revolution is being driven by the new field 
of orthobiologics which combines an understanding of tissue biology, material 
sciences and the new generation of growth factors to create breakthrough products.  
These products have the potential to enable the orthopedic surgeon to restructure 
existing therapies in a less invasive manner increasing patient satisfaction and 
reducing therapy costs.  The new approach to therapies will potentially increase the 
volume of procedures as patients with chronic pain and disability find the new 
methods more attractive with a promise of an improved quality of life.  

Orquest, Inc. was founded in 1994 to establish a new paradigm in orthobiologics by 
aggressively developing a portfolio of innovative and proprietary products using 
proven, naturally occurring biomaterials.  Orquest's strategy is to develop a 
portfolio of matrix-based products which will address targeted needs in bone and 
cartilage.  Orquest's approach is unique because it concentrates on neither growth 
factors nor grafting materials alone, but rather seeks to use its broad expertise to 
engineer products capable of integrating the most effective properties of both.  
Orquest has returned to basic tissue biology to create advanced matrices which are 
conducive to the body's natural remodeling and tissue regeneration processes.  
These matrices more closely mimic the natural environment for the cells which are 
required in the healing process and as such are also a more efficient partner for 
growth factors in promoting tissue regeneration.  

Orquest has developed two proprietary platform technologies, an implantable 
matrix technology and an injectable matrix technology.  Each forms the basis for 
multiple product opportunities, specifically designed for selected orthopedic 
indications.  Each of these technologies has been advanced to yield a specific clinical 
product targeted at a major orthopedic indication.  The Company's initial product 
Healosª is an implantable bone grafting matrix designed to reduce the morbidity 
and cost associated with current spinal fusion procedures.  The Company's second 
product Ossigelª is an injectable formulation developed to accelerate fresh fracture 
healing.  Orquest's first two products address the needs of the two fastest growing 
segments in the orthopedic market, spinal fusion and fracture management, and 
together represent a current worldwide opportunity well over $2 billion. 

Healos, Orquest's first matrix-based product mimics the inherent properties of 
natural bone.  Healos is fabricated from collagen fibrils coated with hydroxyapatite 
(the primary components of native bone), cast in a porous, open cell matrix with 
characteristics that facilitate handling and placement during surgery.  Healos was 
developed to eliminate a painful and expensive secondary surgery routinely 
performed in spinal fusion and other procedures requiring bone grafting.  This 
additional surgery involves the removal of bone material, called autograft, from the 
patient's hip.  The disadvantages of this surgery include increased surgical time, 
added cost ($3,000 - $5,000 per procedure) and risks of post-surgical complications 
such as infection and chronic hip pain.  The majority of patients have hip pain at 
the harvest site, many lasting up to a year or more following surgery.  

Surgical harvesting of autograft, the current medical standard, was performed in an 
estimated 80% of the 225,000 spinal fusion procedures in 1996.  No alternative bone 
graft material has been able to match the clinical performance of autograft - thus 
autograft continues to be used in spite of its disadvantages.  Healos was designed to 
mimic the natural bone matrix, composition and characteristics.  Like autograft, it 
promotes the natural bone healing processes and is similarly completely replaced by 
newly formed bone.  Healos is currently in clinical trials for spinal fusion with 
standard instrumentation in Europe; U.S. trials are expected to begin in late 1997.

In addition, through a strategic alliance with SpineTech, the leading interbody 
fusion cage company in the United States, Healos will be combined with the BAKª 
spinal interbody fusion cage system to facilitate spinal fusion.  Interbody fusion 
cages are the most exciting new instrumentation in spinal fusion because they offer 
the potential to convert this extensive surgical procedure to a laparoscopic, 
minimally invasive technique.  Currently interbody fusion cages must be filled with 
autograft, thus retaining one of the most undesirable features of the existing 
procedure.  By combining Healos with the interbody fusion cages, Orquest and 
SpineTech expect to realize the full potential of this new therapeutic option yielding 
significant patient and payor benefit.  Orquest and SpineTech will initiate the U.S. 
clinical trials mid 1997.  

Additionally, Hoechst Marion Roussel (HMR) and Orquest are developing a next 
generation implantable bone grafting product utilizing HMR's recombinant bone 
inductive protein and the Healos matrix technology.  In preclinical studies, this 
product has demonstrated the potential to exceed the goal of matching the 
performance of autograft through more rapid induction and remodeling of newly 
formed bone.  While this product will carry the extra cost of incorporating the 
growth factor, the Company believes it will expand bone grafting indications in 
orthopedics.  One such example is to expand the use of non-instrumented spinal 
fusion where rapid stabilization of spine is essential for fusion.  Preclinical studies are 
nearing completion under this R&D collaboration and U.S. clinical trials are 
anticipated by late 1998.

Ossigel, Orquest's second matrix-based product represents a breakthrough method 
for accelerating fracture repair.  Ossigel was developed to shorten fracture healing 
time, which is particularly a problem in the aging population.  In addition, tibial 
fractures are poorly vascularized and healing is delayed.  Prolonged healing time 
with its associated complications is the leading cause of morbidity with these 
fractures and significantly increases the cost of treatment.  Based on patient profile 
and fracture characteristics, physicians routinely diagnose individuals who will have 
prolonged or compromised healing, but to date have no alternative medical 
management options. 

Ossigel is an injectable matrix formulated from two naturally occurring materials 
found in the body, hyaluronic acid and basic fibroblast growth factor.  With a single 
administration into a fresh fracture, Ossigel significantly accelerates the fracture 
healing process by stimulating the formation of the callus.  The callus formation is 
critical as it provides early stabilization of the fracture while creating the 
environment for the healing process to occur.

In 1996, there were an estimated 24 million fractures worldwide, with 5.5 - 6.0 
million in the United States alone.  The majority of these were closed fractures (bone 
did not break through the surface of the skin) and healed normally through the use 
of fracture immobilization, such as a cast.  The normal healing time ranges from 
weeks to several months, but can sometimes take years depending on the location 
and the severity of the fracture.  An estimated 20% of all fractures have 
complications which can further delay the fracture healing resulting in patient's 
prolonged pain, incremental costs, and delays in their return to normal activities.  
Ossigel accelerates fracture healing, thereby reducing costs, potential complications 
and allowing patients to more quickly return to normal activities.  Orquest is 
completing preclinical evaluation and expects to begin Ossigel's human clinical trials 
in the United States in the second half of 1997.

The Company believes that additional matrix-based products will be necessary to 
meet the wide range of demands in the management of bone and cartilage 
conditions.  Orquest has several new proprietary matrices under development for 
targeted indications, such as cartilage regeneration.  An NIH Small Business 
Innovative Research (SBIR) grant has been awarded to Orquest to further develop a 
matrix for cartilage regeneration.  

Orquest's competitive advantage lies in its core patented technologies for 
implantable and injectable matrices for bone and cartilage regeneration.  The 
Company has been aggressively acquiring access to new technologies, including 
growth factors, through licensing and strategic partnering.  To date, the Company 
holds six pending patent applications covering its implantable and injectable matrix 
technologies, an exclusive, worldwide license to two issued and three pending 
patents covering mineralized collagen and a worldwide license (excluding the Far 
East) to use the basic fibroblast growth factor (bFGF) for orthopedic applications 
covered by a series of U.S. and European patents, the majority of which have been 
issued.

The Company's strategy is to develop a portfolio of matrix-based products which 
will address specific targeted needs in bone and cartilage.  Strategic alliances, like 
HMR and SpineTech, will provide Orquest with access to complimentary 
technologies and growth factors to develop additional products that meet these 
needs.  Commercialization of these products will be accomplished through 
partnerships in the international markets and through a combination of Orquest's 
and strategic partner's resources in the United States.

Orquest has built a strong, balanced management team with significant business and 
industry experience.  Dr. Estes, President and Chief Executive Officer, has over 20 
years in positions of increasing responsibility in the global medical device industry 
developing and establishing high technology businesses in the cardiovascular field 
with American Supply Corporation/Baxter Healthcare.  Dr. Seyedin, the Founder 
and Chairman, has over 16 years of industry experience in tissue biology with 
emphasis in bone and cartilage, including 8 years managing the bone repair 
program at Collagen Corporation.  Dr. Poser, the Vice President of Research and 
Development, is well known for his work in bone chemistry and skeletal metabolism.  
Mr. Carlson, the Vice President of Marketing, Sales and Operations, has 15 years of 
industry experience in marketing and strategic planning.  The Company's 
management, vision and technical strengths have allowed it to recognize the 
opportunities presented by the new field of orthobiologics.  The combined 
experience of the team has enabled it to rapidly create technologies, develop 
products and enter clinical trials.  


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