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Cardium made significant progress since first quarter 2009 financial report and highlights included (1) the sale of its InnerCool Therapies business to Royal Philips Electronics; (2) the completion of enrollment of the MATRIX 2b clinical trial of Excellarate for the potential treatment of diabetic ulcers with full data to be announced in late September 2009; and (3) the announcement of the Company's new orthobiologics initiative which is designed to build on and extend the underlying technology that has been developed by the Tissue Repair Company for soft tissue injuries such as diabetic ulcers to hard tissue applications such as bone. The Company's new orthobiologics initiative combines (i) proprietary Gene Activated Matrix(TM) or GAM(TM) delivery and ligand targeting; (ii) use of GAM to locally produce proteins capable of stimulating bone and other tissue growth; and (iii) a substantial body of pre- clinical research and development supporting the use of GAM to deliver bone growth factors. It was also reported that the Company regained its listing compliance with the NYSE Amex.

In addition, as initially reported in November 2008, Cardium instituted several important strategic actions intended to focus its overall operating structure and generate cost efficiencies. Based on these actions, cost savings have begun to be reflected in the Company's operating results. In particular, for the first six months of 2009, Cardium's loss from operations was reduced by 49.9% compared to the same period a year ago. With the recent sale of InnerCool Therapies to Philips, the Company has further substantially reduced its employee headcount.

The second quarter 2009 financial results also include substantial non-cash charges to adjust for the fair market value of certain common stock warrants required as a result of the adoption of Emerging Issues Task Force EITF 07-05 entitled "Determining Whether an Instrument (or Embedded Feature) is indexed to an Entity's Own Stock" by the Financial Accounting Standards Board. In accordance with this guidance, common stock warrants with certain price protection clauses that were previously accounted for as equity instruments are now required to be recorded as a derivative liability with quarterly adjustments of their fair value recorded on the income statement. Since the price of Cardium's common stock increased by approximately 19% during the second quarter, this resulted in a $4.8 million "Change in Fair Value of Derivative Liabilities" reflecting the substantially higher values associated with outstanding warrants to purchase the Company's stock.

InnerCool Therapies

On July 23, 2009, Cardium announced the completion of the sale of its InnerCool Therapies business to Royal Philips Electronics. The asset purchase transaction was for $11.25 million, as well as the transfer of approximately $1.5 million in trade payables. The acquisition of InnerCool by Philips represents an important step forward in Cardium's overall business strategy which is focused on the acquisition, strategic repositioning and partnering or sale of businesses. With a significantly reduced cost structure, the proceeds from the transaction will be used to enhance Cardium's balance sheet and for working capital to support the further development of the Company's biomedical investment portfolio and product development pipeline, particularly its Excellarate(TM) Tissue Repair product candidate.

Tissue Repair Company

Cardium recently provided an update on the MATRIX Phase 2b clinical study and plans to provide detailed safety and efficacy data for the Excellarate(TM) product candidate around the end of September 2009. The MATRIX trial, a prospective, randomized, double- blind, placebo-controlled study, has enrolled 124 diabetic patients with non-healing, lower extremity neuropathic ulcers. More than 90% of the patients enrolled into the MATRIX study have now completed their initial 12-week evaluation period with respect to key safety and efficacy criteria. The Company is completing data collection and review of key efficacy endpoints for this novel regenerative medicine product candidate, in preparation for a detailed report of overall safety and efficacy data that is expected to be announced around the end of September 2009.

During the course of the MATRIX trial, the Company has observed some remarkable healing responses as reported in the media by our medical centers from around the nation. The Excellarate product candidate is designed to require only one or two physician- administered treatments, in contrast to most diabetic wound healing agents or devices in use that require repeated administrations over a long term (weeks to months). Based on recently reported advancements, Excellarate is also expected to be re-formulated as an easy-to-use single syringe, which would be pre-mixed and ready to be applied to patients' wounds. The reformulation will allow Excellarate to be maintained in a physician's office using a standard refrigerator (at a temperature of about 4 degrees C) and is expected to have a shelf life of 12-18 months.

On July 30, 2009, Cardium announced its plans to develop a DNA- based orthobiologics product portfolio based on research and development by Cardium's Tissue Repair Company that will initially focus on non-union bone fractures for medically-compromised patients, and spinal fusions for patients with degenerative disc disease. Orthobiologics is a rapidly growing segment of the orthopedics market and represents biologically-active products designed to enhance musculo-skeletal repair and regeneration. The initial orthobiologics focus will be on the development of Osteorate(TM), a DNA-based non-surgical injectable bone graft gel to repair bone fractures and regenerate tissue in certain medically- compromised patient populations. Osteorate will be based on a reformulation of Cardium's DNA-based Excellarate wound healing product candidate, which is designed to stimulate localized and sustained cellular production of platelet-derived growth factor-B (PDGF-B) protein, as a treatment for patients with non-healing diabetic foot ulcers. The Gene Activated Matrix technology allows for a broad spectrum of formulations which would include, but not be limited to, collagen, demineralized bone matrices, allograft and synthetic graft materials.

Financial Report

For the second quarter ended June 30, 2009, the Company reported a loss from operations of $2.3 million, compared to $4.6 million for the same quarter in 2008, representing a 48% reduction from year ago levels, as a result of various strategic actions initiated in the fourth quarter 2008.