Kips Bay Medical Provides Business Update

  Kips Bay Medical Provides Business Update

Business Wire

MINNEAPOLIS -- September 4, 2013

Manny Villafaña, Chairman and Chief Executive Officer of Kips Bay Medical,
Inc. (NASDAQ:KIPS), a medical device company focused on manufacturing and
commercializing its external saphenous vein support technology, eSVS® Mesh,
for use in coronary artery bypass grafting surgery (CABG), provided the
following business update to Kips Bay shareholders and the financial

Dear shareholders and friends:

I felt it would be good to provide a business update to all of our
shareholders via a press release so that everyone can understand the
activities underway at Kips Bay Medical.

First of all, we continue to have successful implants throughout the world. We
now estimate that we have 500+ commercial implants in Europe and the Middle
East since the commercialization of our product began in June of 2010. Over
this time, there have been no reportable adverse events related to our device.

Additionally, with the U.S. Food and Drug Administration (FDA) approval to
begin feasibility trials here in the United States, we have begun working with
some of the leading cardiac research centers in the United States. We have
had, or are in the process of, patient enrollment at the following centers:
Northeast Georgia Heart Center of Gainesville, GA; the Mayo Clinic of
Rochester, MN; Emory University Hospital Heart and Vascular Center in Atlanta,
GA; and the Texas Heart Institute in Houston, TX. Furthermore, we have
additional U.S. sites that are working to be ready to join our feasibility
trial in the event that we receive approval from the FDA to add more clinical
trial sites in the United States. The Lenox Hill Hospital in New York has
received its required internal approval and has signed a clinical trial
agreement with us, and we are presently working with the Cleveland Clinic, in
Cleveland, Ohio, to complete their internal review and approval process. And,
of course, this is in addition to our work overseas where we have five centers
enrolling patients and three more getting ready to begin. We now have 30
patients enrolled in the feasibility trial.

Once we have completed the patient follow-up and data analysis from our
feasibility trial, which we hope to finish within the next 12 months, we
intend to use those results as the basis for obtaining an approval from the
FDA to begin a pivotal trial in the United States.

We are moving our sales & marketing activities in Europe to the next stage.
Over the last 2 years, we have been appropriately focused on educating the
cardiac surgeons, and this has been very well received. We believe that our
estimated 500+ patient implants to-date, particularly in light of the
difficult economic circumstances in Europe, demonstrates a sincere interest in
our product. We now focus on driving the adoption rate of our product. We are
emphasizing the use of our product not only in procedures where saphenous
veins are typically used, but also as an alternative for those cases, in which
the surgeon would otherwise choose to use primarily arterial conduits for the
CABG procedure. We are working to show that surgeons are able to use our eSVS
Mesh to give the vein arterial-like characteristics which can be used in
patients that require total arterialization. To help us achieve this next
stage, we have brought on board Mr. Chris Borg and Mr. Ray Holloway, two
gentlemen with strong experience in successfully driving the adoption of new
technology. Furthermore, to support this effort, my travel schedule has been
increased as we work to educate and train, not just the Chief of Surgery, but
the entire cardiac surgery support team so that everyone in the operating room
is trained on and comfortable with the use of our device, thereby driving the
adoption of our technology.

As we have discussed in the past, the economies of Europe continue to
struggle, and we find ourselves still dealing with their budget constraints
and the challenge of finding resources to apply to new medical technology.
However, we have had some success in obtaining reporting codes for hospitals
to disclose their use of the eSVS Mesh to their national healthcare systems.
Last month, we announced the issuance of a reporting code in Switzerland that
will be effective on January 1, 2014. Today we announce that Germany has also
issued a reporting code effective January 1, 2014. These codes provide a first
step toward eventually establishing reimbursement for our device.

We have other hospital and conference related activities underway as well. We
recently participated in Grand Rounds at the University of Southern
California, San Diego. We have been asked to present our story at the upcoming
Columbia University Hospital Healthcare Conference. These are in addition to
our previously announced participation in the September meeting of the World
Society of Cardiothoracic Surgeons, in Croatia and the October meeting of the
European Association of Cardiothoracic Surgeons (EACTS) meeting in Vienna,
Austria. We also have been asked to present our story at the upcoming Aegis
Healthcare Conference in which I will be the conference keynote speaker.

The key points that I want to get across to everyone are that we are doing
well, we are confident that we can enroll our eMESH I clinical feasibility
study, and we have adequate cash on hand to complete our feasibility study.
Major clinical centers are on board, both in Europe and in the U.S., which are
recruiting patients as we speak. We, of course, like you, have been
disappointed by the trading price of our stock, but we’re hoping that this
information will give you a better understanding of our activities and our
potential for success.

On behalf of Kips Bay and the Board of Directors, thank you for your continued

Manny Villafaña
Chairman & CEO

About Kips Bay Medical

Kips Bay Medical, Inc. is a medical device company focused on manufacturing
and commercializing its external saphenous vein support technology, the eSVS
Mesh, for use in coronary artery bypass grafting surgery. Kips Bay originally
acquired the eSVS Mesh technology from Medtronic, Inc. in 2007. Additional
information about Kips Bay is available at the Company’s website at

About the eSVS Mesh

The eSVS Mesh is designed to be fitted like a sleeve on the outside of
saphenous vein grafts (SVG) to strengthen SVGs used in coronary artery bypass
graft surgery. By strengthening the SVG and preventing the damaging expansion
of the vein graft, Kips Bay hopes to reduce or prevent the resulting injury
which can lead to SVG failure and potentially costly and complicated
re-interventions for patients undergoing CABG surgery. To strengthen an SVG,
the eSVS Mesh is manufactured from nitinol wire which gives the eSVS Mesh
considerable strength, while remaining highly flexible and kink-resistant.
Kips Bay is currently conducting a feasibility trial for the FDA, the
objective of which is to demonstrate the initial safety and performance of the
eSVS Mesh. Kips Bay expects to enroll up to 120 patients at eight European and
four U.S. sites and further expects to use the data from this study as the
basis for the filing of a request for an IDE to perform a larger pivotal study
which is required to demonstrate clinical effectiveness and support a request
for approval to sell the eSVS Mesh in the United States. Additional
information about the eSVS Mesh and the feasibility trial are available at
Kips Bay’s website at and in its most recent annual
report on Form 10-K and subsequent quarterly reports on Form 10-Q filed with
the U.S. Securities and Exchange Commission.

Forward-Looking Statements Safe Harbor

Statements contained in this release that relate to future events are
forward-looking statements under the Private Securities Litigation Reform Act
of 1995. Forward-looking statements are based on current expectations of
future events and often can be identified by words such as “continue,”
“estimate,” “hope,” “intend,” “expect,” “should,” “will,” “may,” “believe,”
“could,” “potential,” other words of similar meaning or the use of future
dates. Examples of forward-looking statements in this release include Kips
Bay’s expectations regarding enrollment, site activations, timing and other
aspects of its eMESH I clinical feasibility trial; the adequacy of its cash on
hand to fund its working capital, including the feasibility trial; and the
safety, performance and benefits of the eSVS Mesh. Forward-looking statements
by their nature address matters that are, to different degrees, uncertain.
Uncertainties and risks may cause Kips Bay’s actual results to be materially
different than those expressed in or implied by Kips Bay’s forward-looking
statements. For Kips Bay, such uncertainties and risks include, among others,
the status of the eMESH I clinical feasibility trial, including enrollment,
completion and the results; Kips Bay’s future operating results and financial
performance; market size and market acceptance of its eSVS Mesh technology;
the ability of Kips Bay and its distributors to commercialize and sell the
eSVS Mesh in Europe; its ability to obtain coverage and reimbursement from
third-party payors for its eSVS Mesh technology and the extent of such
coverage; the development of its distribution and marketing capabilities; and
its ability to attract and retain scientific, regulatory, and sales and
marketing support personnel. More detailed information on these and other
factors that could affect Kips Bay’s actual results are described in Kips
Bay’s filings with the Securities and Exchange Commission, including its most
recent annual report on Form 10-K and subsequent quarterly reports on Form
10-Q. Kips Bay undertakes no obligation to update its forward-looking


Kips Bay Medical, Inc.
Manny Villafaña, +1-763-235-3540
Chairman and Chief Executive Officer
Scott Kellen, +1-763-235-3540
Chief Operating Officer and Chief Financial Officer
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