LOUISVILLE, Colo., Aug. 5 /EMWNews/ -- Replidyne, Inc.

(Nasdaq: RDYN) today announced its financial results for the second quarter

and six months ended June 30, 2008.



    Replidyne reported a net loss of $18.7 million for the quarter ended

June 30, 2008, or a net loss per basic and diluted common share of $0.69

per share, compared to net income of $45.5 million, or $1.71 per basic

common share or $1.65 per common share on a fully diluted basis, for the

second quarter ended June 30, 2007. Replidyne reported a net loss of $27.7

million for the six months ended June 30, 2008, or a net loss per basic and

diluted common share of $1.02 per share, compared to net income of $36.9

million, or $1.39 per basic common share or $1.34 per common share on a

fully diluted basis, for the six months ended June 30, 2007. Net income for

the second quarter and six months ended June 30, 2007 was due to revenue

recognized upon termination of the Company's former commercialization and

collaboration agreement for faropenem medoxomil (faropenem) with Forest

Laboratories that ended in May 2007 resulting in the one-time recognition

of previously deferred revenue. Cash, cash equivalents and short-term

investments at June 30, 2008 totaled $64.7 million.



    "This second quarter we have taken several direct actions to structure

our operations to conserve our cash position," said Kenneth J. Collins,

Replidyne's President and CEO. "These actions have included the difficult

decisions to return the faropenem license to the licensor, conclude our

development efforts on the faropenem program and restructure our workforce.

We believe these actions were important steps in our effort to conclude our

ongoing strategic alternatives process."



    During the second quarter of 2008, Replidyne announced that it had

decided to terminate its license agreement with Asubio Pharma Co., Ltd.

(Asubio Pharma) for faropenem. In conjunction with this decision, Replidyne

also announced that it had terminated its supply agreement with Asubio

Pharma and Nippon Soda Co., Ltd. (Nippon Soda) for production of faropenem.

As a result, the Company recorded research and development expense of $4.2

million in the quarter, comprising a license termination fee of $3.6

million to Asubio Pharma and reimbursement of engineering costs of $0.6

million to Nippon Soda in accordance with the terms of the agreements.

Replidyne also paid Nippon Soda $0.9 million for delay compensation under

the supply agreement, which had been recorded in 2007.



    In April 2008, Replidyne announced it had discontinued enrollment in a

placebo-controlled phase III clinical trial testing faropenem in patients

with acute exacerbation of chronic bronchitis (AECB) and restructured its

operations. In June 2008, Replidyne further restructured its operations. As

a result of these actions the Company has reduced its headcount by 23

employees and incurred approximately $2.5 million of related expense,

comprising $2.1 million of employee severance expenses and $0.4 million of

expenses related to closure of its facility in Milford, Connecticut.



    Research and development expenses in the second quarter of 2008 were

$14.4 million compared to $8.4 million in the corresponding quarter of

2007. Faropenem related expense in the quarter totaled $10.5 including $4.2

million for the termination of the faropenem license with Asubio Pharma and

related reimbursement of engineering costs to Nippon Soda and costs for

patient monitoring and data base analysis required for the Phase III study

testing faropenem in patients with AECB that was discontinued in April

2008. Replidyne will incur further expense related to this clinical trial

to complete required patient monitoring and data base analysis until the

final clinical report is filed with the U.S. Food and Drug Administration,

which is expected during the third quarter of 2008. Also related to

faropenem, Replidyne recorded $2.7 million of research and development

expense related to future decontamination of the MEDA Manufacturing GmbH

(MEDA Manufacturing) facility in Germany that had previously manufactured

300 mg tablets of faropenem based on MEDA Manufacturing's communicated

intention to decontaminate the facility. Replidyne believes that following

receipt of documented decontamination expenses from MEDA Manufacturing

these expenses are to be reimbursed by Forest Laboratories under the terms

of its former collaboration agreement. Additionally, research and

development expense included increased costs for preclinical activities

associated with Replidyne's discovery research programs, primarily the C.

difficile and DNA replication inhibition programs, offset by decreased

expense related to the REP8839 program that was suspended in December 2007.



    Sales, general and administrative expenses for the second quarter of

2008 were $4.7 million compared to $3.3 million in the second quarter of

2007. Replidyne recorded $1.7 million in the second quarter of 2008 as the

estimate of the outcome, within a range of possible outcomes, from its

pending arbitration with MEDA Manufacturing. This increase was partially

offset by decreases in expenses following restructuring actions implemented

in the fourth quarter of 2007 to reduce commercial and general and

administrative headcount.



    Investment income and other net for the second quarter of 2008 was $0.4

million compared to $1.5 million for the second quarter of 2007, primarily

reflecting lower cash balances available for investment in the 2008 period.



    Replidyne did not report any revenue in the second quarter of 2008.

Revenue for the second quarter of 2007 was $55.6 million. Under a February

2006 commercialization and collaboration agreement with Forest Laboratories

that terminated on May 7, 2007, Replidyne received non-refundable upfront

and milestone payments totaling $60 million that were being recognized as

revenue on a straight-line basis over approximately 15 years in accordance

with Replidyne's revenue recognition policy. Upon termination, the balance

of unamortized upfront and milestone payments of $55.2 million was fully

recognized as revenue in the second quarter of 2007. In addition, during

the second quarter of 2007 the Company recognized $0.4 million in contract

revenue for funded activity through May 7, 2007 under the agreement.

    About Replidyne, Inc.



    Replidyne is a biopharmaceutical company focused on discovering,

developing, and in-licensing innovative anti-infective products.

Replidyne's lead program is an investigational antibacterial agent REP3123

that targets Gram-positive Clostridium difficile (C. difficile) bacteria

and C. difficile Infection (CDI). Replidyne is pursuing the development of

other novel anti-infective programs based on its DNA replication inhibition

technology and its in-house discovery research. The Company's operating

strategy is directed to pursuing strategic alternatives that include the

merger or acquisition of some or all of its assets, and could reduce or

change its current focus on the development of anti-infective product

candidates.



    Safe Harbor



    This press release contains plans, intentions, objectives, estimates

and expectations that constitute forward-looking statements about

Replidyne, Inc. that involve significant risks and uncertainties. Actual

results could differ materially from those discussed due to a number of

factors including, the outcome of the Company's strategic alternatives

process; resolution by the Company of the matters raised in the Warning

Letter received from the FDA in January 2008; the success and timing of

pre-clinical studies and clinical trials; the Company's ability to obtain

and maintain regulatory approval of product candidates and the labeling

under any approval that may be obtained; plans to develop and commercialize

product candidates; the loss of key scientific or management personnel; the

size and growth of the potential markets for the Company's product

candidates and the Company's ability to serve those markets; regulatory

developments in the U.S. and foreign countries; the rate and degree of

market acceptance of any future products; the accuracy of Company estimates

regarding expenses, future revenues and capital requirements; the Company's

ability to obtain and maintain intellectual property protection for our

product candidates; the success of competing drugs that are or become

available; and the performance of third party manufacturers. These and

additional risks and uncertainties are described more fully in the

Company's most recent Form 10-K filed with the SEC under the Securities

Exchange Act of 1934. Copies of filings made with the SEC are available

through the SEC's electronic data gathering analysis and retrieval system

(EDGAR) at http://www.sec.gov. All forward-looking statements made in the

press release are made as of the date hereof and the Company assumes no

obligation to update the forward-looking statements in the document.










                               REPLIDYNE, INC.



                           CONDENSED BALANCE SHEETS

                                (In thousands)

                                 (Unaudited)



                                                    June 30,      December 31,

                                                      2008           2007

                                    ASSETS

    Current assets:

      Cash and cash equivalents                      $40,746        $43,969

      Short-term investments                          23,970         46,297

      Prepaid expenses and other current assets        1,177          2,429

        Total current assets                          65,893         92,695



    Property and equipment, net                        1,105          1,905

    Other assets                                          80             90

        Total assets                                 $67,078        $94,690



                       LIABILITIES AND STOCKHOLDERS' EQUITY



    Current liabilities:

      Accounts payable and accrued expenses          $12,201        $12,255

        Total current liabilities                     12,201         12,255



    Other long-term liabilities                            -             31

        Total liabilities                             12,201         12,286



      Commitments and contingencies



        Stockholders' equity                          54,877         82,404

        Total liabilities and stockholders' equity   $67,078        $94,690







                               REPLIDYNE, INC.



                      CONDENSED STATEMENTS OF OPERATIONS

                   (In thousands, except per share amounts)

                                 (Unaudited)



                         Three Months Ended June 30, Six Months Ended June 30,

                             2008         2007         2008         2007



    Revenue                     $-      $55,647           $-      $58,571



    Costs and expenses:



      Research and

       development          14,444        8,364       22,062       17,811



      Sales, general and

       administrative        4,666        3,280        6,619        6,815



        Total costs and

         expenses           19,110       11,644       28,681       24,626



      Income (loss)

       from operations     (19,110)      44,003      (28,681)      33,945



      Investment income

       and other, net          380        1,487          992        2,993



        Net income (loss) $(18,730)     $45,490     $(27,689)     $36,938



    Net income (loss)

     per share - basic      $(0.69)       $1.71       $(1.02)       $1.39



    Net income (loss)

     per share - diluted    $(0.69)       $1.65       $(1.02)       $1.34



    Weighted average

     common shares

     outstanding - basic    27,029       26,677       27,022       26,649



    Weighted average

     common shares

     outstanding - diluted  27,029       27,651       27,022       27,612