Dear Shareholders,

BioSyntech is dedicated to leading change in the orthopedic landscape through innovation and the eventual commercialization of BST-CarGel®, a minimally invasive off-the-shelf surgical alternative that has the potential to dramatically improve cartilage repair and be cost effective. The end of this fiscal year marked an important time for BioSyntech. The Company was able to build up cash reserves and is now working diligently towards reaching its pre-commercialization objectives. Our number one priority in the next 12 months will be to complete the Canadian-European pivotal trial for BST-CarGel®:

Encouraging results for our lead product

While we had hoped for a more aggressive enrollment rate for our BST-CarGel® clinical trial, we are pleased that patient enrollment to date is over 65% complete and that the number of active sites has increased to 23, from 15 at the beginning of the year. We are also proud to report that our adherence to stringent patient enrollment criteria and the maintenance of the highest quality standards have contributed to the positive interim results reported during the fourth quarter. We showed preliminary evidence that BST-CarGel® produces cartilage repair tissue of greater quality than the current surgical standard of care with comparable safety. These results are in-line with our published animal studies demonstrating similar positive outcomes, as well as anecdotal data in humans treated under Health Canada's Special Access Program. Our plan is to submit these findings along with other required analyses and data to the U.S. FDA in preparation for a pre-IDE meeting and eventual IDE submission.

We remain optimistic that the Canadian-European trial will establish BST-CarGel® as a valuable option for the repair of cartilage in the knee and position BioSyntech as a leading innovator in the orthopedic space.

Securing resources to drive growth

The past year has been a challenging one for BioSyntech. Efforts to negotiate a favourable revenue generating licensing agreement did not result in a partnership with acceptable terms. To increase its negotiation leverage the Company decided to suspend partnership discussions until interim clinical results could be analysed and its financial position strengthened. BioSyntech recently successfully improved its cash position by securing, in an especially difficult market for biotech companies, a $12.55 million convertible debenture financing which will provide the Company with sufficient capital resources to continue driving its near-term pre-commercialization objectives. Specifically, the proceeds of this financing will be used to: complete the ongoing BST-CarGel® clinical trial and to obtain clarity regarding the U.S. regulatory pathway; implement a streamlined business plan focused on maximizing value for all shareholders; involve a consultant to enhance our management team in the exploration of strategic alternatives, such as partnerships and M&A transactions; and support working capital and general corporate purposes.

Focused approach for our compelling technology

As part of the implementation of the streamlined business plan we will concentrate and focus our efforts and resources on advancing BST-CarGel® through the clinic. While we continue to believe strongly in the market opportunity of our other programs, given the current limited financial resources at BioSyntech, enrollment for the BST-DermOnTM clinical trial and development work on BST-InPodTM has been suspended at this time.

We continue to appreciate your support and we look forward to updating you on our progress as we strive towards building value for our shareholders, employees and stakeholders.

Sincerely,

Claude LeDuc
President and CEO
BioSyntech Inc.
July, 2008

This letter contains “forward‑looking information” within the meaning of applicable Canadian securities laws, which reflect the Company’s current expectation and assumptions, and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. These forward‑looking statements involve risks and uncertainties including, but not limited to, changing market conditions, the successful and timely completion of clinical studies, the establishment of corporate alliances, the impact of competitive products and pricing, new product development, uncertainties related to the regulatory approval process and other risks detailed from time‑to‑time in the Company’s ongoing filings with the Canadian securities regulatory authorities which filings can be found at www.sedar.com.  Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward‑looking statements. The Company undertakes no obligation to publicly update or revise any forward‑looking statements either as a result of new information, future events or otherwise