Biostage Files for FDA Orphan Drug Designation for Cellspan(TM) Esophageal Implant

Orphan Drug Designation Provides Range of Benefits Including Seven-Year Market Exclusivity

HOLLISTON, Mass., June 29, 2016 /PRNewswire/ -- Biostage, Inc. (Nasdaq: BSTG), a biotechnology company developing bioengineered organ implants to treat cancers and other life-threatening conditions of the esophagus, bronchus and trachea, today announced it has submitted an application with the U.S. Food and Drug Administration seeking orphan drug designation for its Cellspan Esophageal Implants.

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The Orphan Drug Act of 1983 provides a range of incentives to encourage research and development investment in treatments for rare medical conditions. These incentives include seven-year market exclusivity commencing on product approval; tax credits; assistance in regulatory proceedings - fast-track registrations; and full exemption from the FDA's drug registration fees.

To receive orphan drug designation, a company must demonstrate that the condition addressed by the drug or biologic affects less than 200,000 persons in the U.S. The company must also provide the FDA with sufficient information to establish a medically plausible basis for expecting the product will be an effective treatment.

Biostage CEO Jim McGorry commented, "This submission is the first step in our effort to secure orphan status for our Cellspan esophageal implant, which we believe has the potential to be a valuable option in the treatment of esophageal cancer. The Biostage team is executing on the key initiatives required to advance into human clinical trials for our esophageal implant product candidate, and we remain on track with our plan to conclude its pre-clinical development, to publish our large-animal study results and to execute our related Good Laboratory Practices (GLP) studies during Q3 and into Q4."

Mr. McGorry continued, "Our plan and goal is to file an Investigational New Drug application (IND) with the FDA by the end of the current year. Assuming approval on a normal time-frame, we believe that by this time next year our Cellspan esophageal implant should be in a human clinical pilot study."

About Biostage, Inc.:www.biostage.com

Biostage is a biotechnology company developing bioengineered organ implants utilizing the company's new Cellframe(TM) technology which combines a proprietary biocompatible scaffold with a patient's own stem cells to create Cellspan(TM) organ implants. Cellspan implants are being developed to treat life-threatening conditions of the esophagus, bronchus and trachea with the hope of dramatically improving the treatment paradigm for patients. Based on its preclinical data, Biostage has selected life-threatening conditions of the esophagus as the initial clinical application of its technology.

Cellspan implants are currently being advanced and tested in a collaborative preclinical study. This testing is intended to expand the base of preclinical data in support of Biostage's goal of filing an Investigational New Drug (IND) application with the U.S. FDA in late 2016. The IND will seek approval to initiate clinical trials for its esophageal implants in humans.

Forward-Looking Statements:

Some of the statements in this press release are "forward-looking" and are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These "forward-looking" statements in this press release include, but are not limited to, statements relating to the development expectations and regulatory approval of any of our products, including those utilizing our Cellframe technology, by the FDA, EMA, MHRA or otherwise, which expectations or approvals may not be achieved or obtained on a timely basis or at all; or success with respect to any collaborations, clinical trials and other development and commercialization efforts of our products, including those utilizing our Cellframe technology, which such success may not be achieved or obtained on a timely basis or at all. These statements involve risks and uncertainties that may cause results to differ materially from the statements set forth in this press release, including, among other things, our ability to obtain and maintain regulatory approval for our products; plus other factors described under the heading "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 or described in our other public filings. Our results may also be affected by factors of which we are not currently aware. The forward-looking statements in this press release speak only as of the date of this press release. Biostage expressly disclaims any obligation or undertaking to release publicly any updates or revisions to such statements to reflect any change in its expectations with regard thereto or any changes in the events, conditions or circumstances on which any such statement is based.

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