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Contacts: Anthony G. Viscogliosi, Viscogliosi Bros, LLC (212) 583-9700 ext. 101

SMALL BONE INNOVATIONS, INC. RECORDS LARGEST VENTURE CAPITAL TRANSACTION IN ORTHOPEDICS

Company Offering Innovative Products and Technology to Treat Trauma and Arthritis in Small Bones and Joints Raises Record Total of $42.2 million

NEW YORK – January 4, 2006 - Small Bone Innovations, Inc. (SBI) has announced the completion of its Series B financing, raising a record total of $42.2 million. Based on data provided by Venture Source, this is the largest venture capital investment ever recorded in the field of orthopedic devices.

Small Bone Innovations, Inc. was the first company to focus purely on the orthopedic care of arthritis and trauma in small bones and joints. SBI was founded by Viscogliosi Brothers, LLC (VB), a leading New York-based merchant banking firm specializing in the musculoskeletal/orthopedic sector.

The financing was co-led by NGN Capital, a $250 Million global, health care-focused venture firm, and by 3i, a world leader in private equity and venture capital that invests more than $1.5 billion annually. NGN Capital and 3i were joined by Anspach Investments, Inc., Axiom Venture Partners III L.P., TGap Venture Capital Fund, L.P. and Viscogliosi Brothers, LLC, as well as by SBI employees and a select group of individual investors, including leading orthopedic surgeons.

“Small Bone Innovations concentrates on a critical area of health care,” said Anthony G. Viscogliosi, SBI’s Chairman and CEO. “Injuries to small bones dramatically alter the quality of life. It is clear that as our population ages, more and more of us will be handicapped by diseases – like arthritis – that affect the hands and feet,” he said. “SBI brings together the leading technology and the best minds in the field to address the need for new approaches to small bone medical science.”

Patrick Power, the Managing Director of Investment Banking at J.P. Turner and Company LLC, praised the quality of the investors VB lined up for the financing round. “You can tell a lot about SBI’s prospects by the list of investors who have lined up for the Series B financing,” he said. “It’s a Who’s Who of global health care and medical technology investors. Small bone science has now reached ‘critical mass’ with the investment community,” he added, “and the Viscogliosi brothers are once again leading the way in both investment and innovation.”

Kenneth S. Abramowitz, a Managing General Partner and co-founder of NGN Capital, said NGN Capital was pleased to participate in the Series B financing: “SBI represents an outstanding growth opportunity in orthopedics. The company has the people, the products, and the strategy to make it the undisputed leader in its field.”

Allan Ferguson, the Boston-based head of Global Venture Capital and head of U.S. Business for 3i, said, “I was pleased to work with my colleagues in Paris, Lyon and Munich on this venture, which clearly underscores the international dimensions of this enterprise. It’s worth noting that SBI’s products are already being sold in 28 countries. As we see it, that represents the beginning of a truly global business.”

Mr. Abramowitz summed up the investors’ enthusiasm for SBI: “Small bone orthopedics is one of the fastest growing areas in health care. We think SBI is ahead of the curve, and we’re very pleased to be investing in its success.”

Small Bone Innovations’ Series B financing round was officially completed on December 16, 2005.

Forward Looking Statements:
This press release contains forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on these forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of risks and uncertainties impacting the Company’s business including increased competition; the ability of the Company to expand its operations and to attract and retain qualified professionals; technological obsolescence; general economic conditions; and other risks.
 
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