Kyphon Inc. And Dr. Harvinder Sandhu Forge Relationship

SUNNYVALE, Calif., Jan. 17 /PRNewswire-FirstCall/ -- Kyphon Inc. today announced that it has reached agreement with Dr. Harvinder S. Sandhu, a well-respected New York orthopaedic spine surgeon, to form an exclusive consulting relationship covering various fields of minimally invasive spine diagnosis and therapy, including treatment of spinal disc disorders and diagnosis of various spine conditions.

As part of its relationship with Dr. Sandhu, Kyphon has also agreed to acquire an exclusive license to Dr. Sandhu's early invention rights concerning a directional bone tamp for treating vertebral compression fractures. As a result of its exclusive license agreement with Dr. Sandhu, Kyphon will record a one-time charge of $20 million in its financial statements for the period ending December 31, 2005. This charge consists of a cash payment of $5 million made to Dr. Sandhu in November 2005 and a contractual obligation to make a series of milestone payments totaling up to an additional $15 million beginning in 2006. The license agreement also includes a typical provision for a capped royalty stream on any future developed product that practices Dr. Sandhu's technology. The remaining terms of the exclusive license remain confidential. The Company is scheduled to announce its full-year and fourth quarter 2005 financial results on February 1, 2006.

"Dr. Sandhu has an excellent reputation as an accomplished surgeon and innovator in treating spinal conditions and we are delighted to be able to expand our relationship with him," stated Richard Mott, president & chief executive officer of Kyphon. "We believe his expertise and perspective in minimally invasive spine therapies will be of significant value to Kyphon in the development of technologically advanced products and procedures."

"I am very pleased to be able to work with a company of Kyphon's caliber and commitment to improving patient outcomes through minimally invasive spine technologies," said Dr. Sandhu. "I look forward to having a long lasting, collaborative and mutually beneficial relationship with this innovative company."

About Kyphon Inc.

Kyphon develops and markets medical devices designed to restore spinal function using minimally invasive technologies. The company's KyphX line of products are used in balloon kyphoplasty, a minimally invasive procedure to treat spinal fractures caused by osteoporosis or cancer. For more information, visit Kyphon's Web site at http://www.kyphon.com .

This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward looking statements include, but are not limited to, those that use words such as "believes," "expects," "anticipates," "targets," "intends," "plans," "projects," and words of similar effect, and specifically include the company's future financial projections and anticipated business direction and performance. Forward-looking statements are based on management's current preliminary expectations and are subject to risks, uncertainties and assumptions, which may cause the company's actual results to differ materially from the statements contained herein. Information on potential risk factors that could affect Kyphon, its business and its financial results are detailed in the company's periodic filings with the Securities and Exchange Commission (SEC), including, but not limited to, those risks and uncertainties listed in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Factors Affecting Future Operating Results," which can be found in Kyphon's quarterly report on Form 10-Q for the quarter ended September 30, 2005, filed with the SEC on November 2, 2005 and in Kyphon's annual report on Form 10-K for the year ended December 31, 2004 filed with the SEC on March 2, 2005. Kyphon undertakes no obligation to release publicly any revisions to any forward-looking statements contained herein to reflect events or circumstances after the date hereof.

NOTE: Kyphon and KyphX are registered trademarks of Kyphon Inc.

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CONTACT: Julie D. Tracy, Vice President, Investor Relations & CorporateMarketing of Kyphon, +1-408-548-6500, or jtracy@kyphon.com

Web site: http://www.kyphon.com/