
	June 30, 2006				December 31, 2005
Assets
Current assets:
Cash and cash equivalents		$	58,469,504			$	33,427,708
Certificate of deposit			1,000,000				1,000,000
Receivables – trade			366,271				380,911
Receivables – other			77,456				130,935
Inventory			4,178,968				3,647,594
Prepaid expenses			529,023				1,282,674
Total current assets			64,621,222				39,869,822
Receivables – related party			106,831				106,831
Property and equipment, net			3,742,930				3,691,331
Capitalized patent license fees, net			8,445,760				8,964,551
Deposits			10,000				10,000
Total assets		$	76,926,743			$	52,642,535
Liabilities, redeemable, convertible preferred stock and stockholders’ equity (deficit)
Current liabilities:
Accounts payable		$	2,571,231			$	1,268,954
Accrued expenses:
Payroll, employee benefits and payroll taxes			745,540				648,835
Other accrued expenses			1,222,317				673,861
Current portion of capital lease obligations			7,230				—
Deferred liability			1,250,000				2,750,000
Deferred revenue			709,841				974,021
Total current liabilities			6,506,159				6,315,671
Accrued rent – related party			259,863				259,156
Long term portion of capital lease obligations			33,832				—
Deferred liability			2,500,000				2,500,000
Deferred revenue			13,854,531				14,206,534
Total liabilities			23,154,385				23,281,361
Commitments and contingencies
Series A Redeemable, Convertible Preferred Stock, $0.001 par value; 3,246,408 shares authorized; 0 and 3,246,408 shares issued and outstanding as of June 30, 2006 and December 31, 2005, respectively			—				8,546,030
Series B Redeemable, Convertible Preferred stock, $0.001 par value; 1,147,427 shares authorized; 0 and 1,147,427 shares issued and outstanding as of June 30, 2006 and December 31, 2005, respectively			—				5,478,455
Series C Redeemable, Convertible Preferred stock, $0.001 par value; 5,178,305 shares authorized; 0 and 5,178,305 shares issued and outstanding as of June 30, 2006 and December 31, 2005, respectively			—				36,721,125
Stockholders’ equity (deficit):
Common stock, $0.001 par value; 37,500,000 shares authorized; 15,567,370 shares issued and outstanding as of June 30, 2006; 16,906,500 shares authorized, 1,073,020 shares issued and outstanding as of December 31, 2005.			15,567				1,609
Preferred stock, $0.001 par value; 15,000,000 shares authorized; no shares issued and outstanding as of June 30, 2006 and December 31, 2005, respectively.			—				—
Additional paid-in capital			84,027,676				2,183,689
Deferred stock compensation			—				(989,767	)
Accumulated deficit			(30,270,885	)			(22,579,967	)
Total stockholders’ equity (deficit)			53,772,358				(21,384,436	)
Total liabilities, redeemable, convertible preferred stock and stockholders’ equity (deficit)		$	76,926,743			$	52,642,535


	For the three months ended June 30,								For the six months ended June 30,
	2006				2005				2006				2005
Revenues:
Collaborative research and development		$	215,276			$	1,297,503			$	215,276			$	2,580,748
Sublicense fee			176,974				—				352,003				—
Product sales			660,508				—				800,428				—
Royalty income			74,016				—				144,722				—
Grants and other			6,790				—				12,800				—
Total revenues			1,133,564				1,297,503				1,525,229				2,580,748
Costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown separately below)			625,020				—				766,372				—
Research and development (a)			2,314,875				1,919,019				4,952,488				2,824,893
General and administrative (b)			1,840,046				793,826				2,773,986				1,238,162
Depreciation and capital lease amortization			191,850				29,009				374,361				59,009
Patent license fee amortization			534,650				98,746				1,046,689				195,700
			5,506,441				2,840,600				9,913,896				4,317,764
Loss from operations			(4,372,877	)			(1,543,097	)			(8,388,667	)			(1,737,016	)
Interest income, net			501,755				224,052				830,462				385,946
Loss on disposal of equipment			(687	)			—				(687	)			—
Loss before income taxes			(3,871,809	)			(1,319,045	)			(7,558,892	)			(1,351,070	)
Income taxes			—				—				—				—
Net loss			(3,871,809	)			(1,319,045	)			(7,558,892	)			(1,351,070	)
Preferred stock accretion			(29,319	)			(92,162	)			(132,026	)			(160,178	)
Net loss attributable to common stockholders		$	(3,901,128	)		$	(1,411,207	)		$	(7,690,918	)		$	(1,511,248	)
Basic and diluted net loss per share attributable to common stockholders		$	(0.42	)		$	(0.89	)		$	(1.41	)		$	(0.96	)
Weighted average shares used to compute basic and diluted net loss per share attributable to common stockholders			9,231,932				1,579,155				5,468,302				1,579,155
Related party disclosures:
(a) – Research and development includes professional fees to related parties of:		$	—			$	—			$	75,000			$	37,418
(b) – General and administrative includes rent expense to related parties of:		$	178,248			$	—			$	279,516			$	—


	–	Completed IPO in May 2006, selling 4.6 million shares of common stock with gross proceeds of $36.8 million and net proceeds of $31.6 million.


	–	Completed enrollment in U.S. and Canadian pilot clinical studies with lead orthopedic product candidate GEM OS1 Bone Graft for the treatment of foot and ankle fusions. As a result of the preliminary data obtained, the Company received authorization from the Canadian government to expand the study from the original 20 patients up to 60 patients with the potential for filing for product registration in Canada in 2007.


	–	Completed enrollment in Swedish pilot clinical study with GEM OS1 for the treatment of distal radius (wrist) fractures. A preliminary overview of the GEM OS1 pilot studies is scheduled for release later this year, with more detailed results planned for release early in 2007.


	–	Received market approval from Health Canada for GEM 21S Growth-factor Enhanced Matrix for the treatment of periodontally-related bone defects and gingival recession.