The following questions and answers address briefly some questions you may have regarding the special meeting and the proposed merger. These questions and answers may not address all questions that may be important to you as a stockholder of IsoTis. Please refer to the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to in this proxy statement. We encourage you to read this proxy statement, including the annexes, in its entirety because it explains the proposed merger, the documents related to the merger and other related matters. In this proxy statement, the terms “the Company,” “we,” “our,” “ours,” and “us” refer to IsoTis. We refer to Integra LifeSciences Holdings Corporation as Integra, and Ice MergerCorp, Inc. as Merger Sub.

This summary term sheet, together with the section of this proxy statement entitled “Questions and Answers About the Merger and the Special Meeting,” highlights selected information from this proxy statement and may not contain all of the information that is important to you as a stockholder of IsoTis or that you should consider before voting on the proposal to adopt the merger agreement and approve the merger. To better understand the merger, you should read carefully this entire proxy statement and all of its annexes, including the merger agreement, which is attached as Annex A, before voting on the proposal to adopt the merger agreement and approve the merger. Each item in this summary includes a page reference directing you to a more complete description of that item.

IsoTis is a leading orthobiologics company that develops, manufactures and markets proprietary products for the treatment of musculoskeletal diseases and disorders. IsoTis’ current orthobiologics products are bone graft substitutes that promote the regeneration of bone and are used to repair natural, trauma-related and surgically-created defects common in orthopedic procedures, including spinal fusions. IsoTis’ current commercial business is highlighted by its Accell line of products, which we believe represents the next generation in bone graft substitution.

For additional information about IsoTis and its business, see page 17 and “Where You Can Find More Information” on page 61.

Integra LifeSciences Holdings Corporation, a world leader in regenerative medicine, is dedicated to improving the quality of life for patients through the development, manufacturing and marketing of cost-effective surgical implants and medical instruments. Integra’s products, used primarily in neurosurgery, extremity reconstruction, orthopedics and general surgery, are used to treat millions of patients every year. Integra’s principal executive offices are located in Plainsboro, New Jersey.

For additional information about Integra and its business, see page 18 and “Where You Can Find More Information” on page 61.

Ice MergerCorp, Inc., a Delaware corporation and a wholly-owned subsidiary of Integra, was organized solely for the purpose of entering into the merger agreement and consummating the merger and has not conducted any business operations.

We have agreed to be acquired by Integra pursuant to the terms of the merger agreement that is described in this proxy statement and attached as Annex A. We encourage you to read the merger agreement carefully and in its entirety. It is the principal document governing the merger.

The merger agreement provides that Merger Sub will merge with and into IsoTis, with IsoTis continuing as the surviving corporation and a wholly-owned subsidiary of Integra. At the effective time of the merger, each share of our common stock outstanding immediately prior to the effective time of the merger, other than shares held by us, our wholly-owned subsidiaries, Integra or Merger Sub or by holders properly exercising appraisal rights under Delaware law, will be automatically converted into the right to receive $7.25 in cash, without interest and less any applicable withholding taxes. Any withheld amounts will be treated for all purposes as having been paid to the holder of our common stock in respect of whose shares the withholding was made.

All stock options not exercised prior to the effective time of the merger will be cancelled in the merger, with the holder of each stock option becoming entitled to receive, in full satisfaction of the rights of such holder with respect thereto, an amount in cash equal to the product of (i) the excess, if any, of $7.25 over the applicable per share exercise price of our common stock subject to such stock option, multiplied by (ii) the number of shares of our common stock subject to such stock option. All amounts payable will be paid at or as soon as practicable following the effective time of the merger, but in any event no later than ten business days following the effective time, without interest.

The special meeting of our stockholders will be held at           on          , 2007 at      local time. At the special meeting, you will be asked to vote on the proposal to adopt the merger agreement and approve the merger, and, if necessary, the proposal to adjourn the special meeting to solicit additional proxies.

Only holders of record of our common stock at the close of business on August 24, 2007, the record date for the special meeting, may vote at the special meeting. For each share of our common stock that you owned on the record date, you are entitled to cast one vote on each matter voted upon at the special meeting.

Adoption of the merger agreement and approval of the merger requires the affirmative vote of the holders of a simple majority (i.e., more than 50%) of the outstanding shares of our common stock entitled to vote at the special meeting. Approval of the proposal to adjourn the special meeting for the purpose of soliciting additional proxies, if necessary, requires the affirmative vote of the holders of a simple majority (i.e., more than 50%) of the voting stock represented in person or by proxy. On the record date, there were           shares of our common stock entitled to vote at the special meeting.

As of August 24, 2007, the record date for the special meeting, our directors and executive officers were record owners of and were entitled to vote approximately           shares of common stock, or approximately     % of our total common stock outstanding on that date excluding those shares held by Integra and its subsidiaries. These numbers do not give effect to outstanding but unexercised stock options, which are not entitled to vote at the special meeting.

Our common stock is listed on the NASDAQ Global Market under the symbol “ISOT”. On August 6, 2006, the last full trading day prior to the public announcement of the proposed merger, our common stock closed at $6.88. On          , 2007, the last full trading day prior to the date of this proxy statement, our common stock closed at $     .

We have never declared or paid cash dividends on our common stock. Our current policy is to retain earnings for use in our business. Following the merger there will be no further market for our common stock.

Our board of directors, by the unanimous vote of all directors:

Our board of directors unanimously recommends that our stockholders vote “FOR” the proposal to adopt the merger agreement and approve the merger, and “FOR” the proposal to adjourn the special meeting to solicit additional proxies, if necessary. To review the factors that our board of directors considered when deciding whether to approve the merger agreement and the transactions contemplated by the merger agreement, see “The Merger — Our Reasons for the Merger” beginning on page 24.

When considering our board of directors’ recommendation that you vote in favor of the proposal to adopt the merger agreement and approve the merger, you should be aware that members of our board of directors and our executive officers may have interests in the merger that differ from, or are in addition to, those of our other stockholders generally. For example:

Our board of directors was aware of these interests and considered them, among other matters, in reaching its decision to approve the merger agreement and to recommend that our stockholders vote in favor of the adoption of the merger agreement.

In connection with the merger, our board of directors received a written opinion from Thomas Weisel Partners LLC (“Thomas Weisel Partners”), as to the fairness, from a financial point of view, of the consideration to be received by holders of our common stock. The full text of Thomas Weisel Partners’ written opinion, dated August 6, 2007, is attached to this proxy statement as Annex B. Holders of our common stock are encouraged to read this opinion carefully and in its entirety for a description of the assumptions made, matters considered and qualifications and limitations on the scope of review undertaken by Thomas Weisel Partners. Thomas Weisel Partners’ opinion was directed to our board of directors in connection with its evaluation of the consideration, does not address any other aspect of the merger and does not constitute a recommendation to any stockholder as to how to vote or act with respect to the merger agreement.

If the merger is consummated, our common stock will no longer be listed on the NASDAQ Global Market and will be deregistered under the Securities Exchange Act of 1934 (or Exchange Act), and we will no longer file periodic reports with the United States Securities and Exchange Commission.

Conditions to the Merger (page 54)

Our, Integra’s and Merger Sub’s obligations to effect the merger are subject to the satisfaction of the following conditions:

Integra’s and Merger Sub’s obligations to consummate the merger are also subject to the satisfaction by us or waiver by them of the following conditions:

Our obligation to consummate the merger is also subject to the satisfaction by Integra and Merger Sub or waiver by us of the following conditions:

No Solicitation and Change of Recommendation Covenant (page 52)

We have agreed that we will not, and will not permit any of our subsidiaries to, nor will we authorize or permit any of our or our subsidiaries’ directors, officers, employees, investment bankers, attorneys, accountants or other advisors or representatives to, directly or indirectly:

If our board of directors receives a bona fide unsolicited written acquisition proposal by a third party prior to our obtaining stockholder approval, it may participate in discussions or negotiations with such third party directly or through its representatives if, among other things, it determines in good faith by a majority vote that such acquisition proposal would result in, or would reasonably be expected to result in, a superior proposal, it furnishes to the third party making the acquisition proposal information with respect to us and our subsidiaries pursuant to a confidentiality and standstill agreement which contains terms that are no less restrictive than those contained in the confidentiality agreement between us and Integra and such information has been or is provided to Integra on a prior or concurrent basis and, after considering the advice of outside legal counsel, the board determines that failing to take such action would reasonably be expected to result in a breach of its fiduciary duties under Delaware law.

Our board of directors may withdraw or modify or change in a manner adverse to Integra its approval or recommendation of the merger agreement, if and only if, our board of directors, after considering the advice of outside legal counsel, has determined that (i) the acquisition proposal constitutes a superior proposal and that failing to take such action would result in a breach of its fiduciary duties under Delaware law or (ii) in response to an intervening event that failing to take such action would result in a breach of its fiduciary duties under Delaware law.

Termination of the Merger Agreement (page 55)

The merger agreement may be terminated under the following circumstances:

Termination Fees and Expenses (page 56)

Each party will generally pay its own fees and expenses in connection with the merger, whether or not the merger is consummated.

We will be required to pay a termination fee of $2.25 million to Integra if:

We will also be required to reimburse Integra and its affiliates for actual and reasonably documented out-of-pocket fees and expenses incurred in connection with the merger agreement of up to a maximum of $1.5 million if (i) we do not obtain the requisite stockholder vote to adopt the merger agreement, or (ii) we or Integra terminate because the effective time does not occur by February 6, 2008 and at the time of termination, an acquisition proposal is made known or proposed to us or otherwise publicly disclosed and announced.

The receipt of cash in exchange for shares of our common stock pursuant to the merger will be a taxable transaction for United States federal income tax purposes. In general, a United States Holder (as defined in “The Merger — Material United States Federal Income Tax Consequences” on page 40) who receives cash in exchange for shares of our common stock pursuant to the merger will recognize capital gain or loss for United States federal income tax purposes equal to the difference, if any, between the amount of cash per share received and the holder’s adjusted tax basis in the share of our common stock exchanged therefor. Any such gain or loss would be long-term capital gain or loss if the holding period for the shares of our common stock exceeded one year. In addition, payments made to United States Holders in the merger will be subject to information reporting and may be subject to withholding under applicable tax laws. Any withheld amounts will be treated for all purposes as having been paid to the holder of our common stock in respect of whose shares the withholding was made. United States Holders may use amounts withheld as a credit against their United States federal income tax liability or may claim a refund of any excess amounts withheld by timely filing a claim for refund with the IRS.

A Non-United States Holder (as defined in “The Merger — Material United States Federal Income Tax Consequences” on page 40) generally will not be subject to United States federal income tax on any gain realized on the receipt of cash for shares of our common stock in the merger unless: (i) the holder is an

You should read “The Merger — Material United States Federal Income Tax Consequences” beginning on page 40 for a more complete discussion of the federal income tax consequences of the merger to holders of our common stock. Tax matters can be complicated, and the tax consequences of the merger to you will depend on your particular tax situation. We urge you to consult your tax advisor on the tax consequences of the merger to you.

THIS PROXY STATEMENT DOES NOT ADDRESS NON-UNITED STATES TAX LAW CONSIDERATIONS RELATING TO THE MERGER. YOU ARE URGED TO CONSULT YOUR TAX ADVISOR WITH RESPECT TO ANY POTENTIAL TAX CONSEQUENCES OF THE MERGER ARISING UNDER ANY APPLICABLE NON-UNITED STATES TAX LAWS.

American Stock Transfer and Trust Company is expected to act as the exchange agent for the payment of the merger consideration.

Under Delaware law, stockholders who do not wish to accept the consideration payable for their shares of common stock pursuant to the merger may seek, under Section 262 of the General Corporation Law of the State of Delaware, judicial appraisal of the fair value of their shares by the Delaware Court of Chancery. This value could be more than, less than or equal to the applicable merger consideration for such shares. This right to appraisal is subject to a number of restrictions and technical requirements. Generally, in order to properly demand appraisal, among other things:

Merely voting against, or failing to vote in favor of, the merger agreement will not preserve your right to appraisal under Delaware law. Also, because a submitted proxy not marked “AGAINST” or “ABSTAIN” will be voted “FOR” the proposal to adopt the merger agreement, the submission of a proxy not marked “AGAINST” or “ABSTAIN” will result in the waiver of appraisal rights. If you hold shares in the name of a broker, bank or other nominee, you must instruct your nominee to take the steps necessary to enable you to demand appraisal for your shares. If you or your nominee fails to follow all of the steps required by Section 262 of the General Corporation Law of the State of Delaware, you will lose your right of appraisal. See “The Merger — Appraisal Rights” on page 43 for a description of the procedures that you must follow in order to exercise your appraisal rights.

Stockholders who properly perfect their appraisal rights will receive only the judicially-determined fair value of their shares if one or more stockholders files suit in the Delaware Court of Chancery and litigates the resulting appraisal case to a decision.

Annex C to this proxy statement contains the full text of Section 262 of the General Corporation Law of the State of Delaware, which relates to your right of appraisal. We encourage you to read these provisions carefully and in their entirety.

This proxy statement contains “forward-looking statements” within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended. Statements other than statements of historical fact are forward-looking statements for purposes of federal and state securities laws, including projections of earnings, revenue or other financial items; statements regarding future economic conditions or performance; statements of belief; and statements of assumptions. Forward-looking statements may include the words “may,” “could,” “will,” “should,” “would,” “estimate,” “intend,” “continue,” “believe,” “expect,” “anticipate,” “strategy,” “plan,” “pursue,” “project,” “goal,” or “targets” or the negative or other variations thereof and other words of similar meaning are intended to identify such forward-looking statements. One can also identify them by the fact that they do not relate strictly to historical or current facts. Such statements are based on the current expectations and projections of the management of IsoTis only. Undue reliance should not be placed on these statements because, by their nature, they are subject to known and unknown risks and can be affected by factors that are beyond the control of IsoTis. These forward-looking statements, including, without limitation, those projections regarding the consummation of the merger, government consents and approvals and the outcome of the contingencies such as legal proceedings, are necessarily estimates reflecting the best judgment of our management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties. Risks and uncertainties pertaining to the following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements:

You should consider the cautionary statements contained or referred to in this section in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf. We do not undertake any obligation to release publicly any revisions to any forward-looking statements contained herein to reflect events or circumstances that occur after the date of this proxy statement or to reflect the occurrence of unanticipated events, except as we are required to do by law.

We are furnishing this proxy statement to our stockholders as part of the solicitation of proxies by our board of directors for use at the special meeting.

We will hold the special meeting at           on          , 2007, at     local time.

At the special meeting, we are asking holders of record of our common stock on August 24, 2007, to consider and vote on the following proposals:

1. The adoption of the Agreement and Plan of Merger, dated as of August 6, 2007, among IsoTis, Inc., Integra LifeSciences Holdings Corporation and Ice MergerCorp, Inc., a wholly-owned subsidiary of Integra, and approval of the merger contemplated by the merger agreement;

2. The approval of the adjournment of the special meeting, if necessary, to solicit additional proxies if there are insufficient votes at the time of the special meeting to adopt the merger agreement and approve the merger; and

3. The transaction of any other business as may properly come before the special meeting or any adjournment or postponement of the special meeting.

Our board of directors has determined that the terms of the merger agreement are advisable and in the best interests of our stockholders and has unanimously approved the merger agreement.

Our board of directors unanimously recommends that our stockholders vote “FOR” the adoption of the merger agreement and approval of the merger and “FOR” any proposal to adjourn the special meeting to solicit additional proxies, if necessary. See “The Merger — Our Reasons for the Merger.”

A quorum of stockholders is necessary to hold the special meeting. The required quorum for the transaction of business at the special meeting is the presence, either in person or represented by proxy, of the holders of a simple majority (i.e., more than 50%) of the outstanding shares of common stock entitled to vote at the special meeting. Abstentions and “broker non-votes,” discussed below, count as present for establishing a quorum.

You may vote at the special meeting if you owned shares of our common stock at the close of business on August 24, 2007, the record date for the special meeting. For each share of our common stock that you owned on the record date, you are entitled to cast one vote on each matter voted upon at the special meeting.

Adoption of the merger agreement requires the affirmative vote of the holders of a simple majority (i.e., more than 50%) of the outstanding shares of our common stock entitled to vote at the special meeting. Because the vote on the proposal to adopt the merger agreement and approve the merger is based on the total number of shares outstanding, rather than the number of actual votes cast or represented at the special meeting, failure to vote your shares, abstentions and broker non-votes will have the same effect as voting against the adoption of the merger agreement and approval of the merger. A “broker non-vote” occurs when a broker or other nominee holding shares for a beneficial owner does not vote on a particular proposal because the broker does not have discretionary voting authority or has not received instructions from the beneficial owner of the shares. Brokers and other nominees will not have discretionary authority on the proposal to adopt the merger agreement and approve the merger.

Approval of the proposal to adjourn the special meeting for the purpose of soliciting additional proxies, if necessary, requires the affirmative vote of the holders of a simple majority (i.e., more than 50%) of the shares

A list of our stockholders will be available for review for any purpose germane to the special meeting at our executive offices and principal place of business during regular business hours for a period of ten days before the special meeting and will also be available at the special meeting.

As of August 24, 2007, the record date for the special meeting, our directors and executive officers were record owners of and were entitled to vote approximately           shares of common stock, or approximately     % of our total common stock outstanding on that date excluding those shares held by Integra and its subsidiaries. These numbers do not give effect to outstanding stock options, which are not entitled to vote at the special meeting.

You may vote by proxy or in person at the special meeting.

Voting in Person

If you plan to attend the special meeting and wish to vote in person, you will be given a ballot at the special meeting. Please note, however, that if your shares are held in “street name,” which means your shares are held of record by a broker, bank or other nominee, and you wish to vote at the special meeting, you must bring to the special meeting a proxy from the record holder of the shares (your broker, bank or nominee) authorizing you to vote at the special meeting.

Voting by Proxy

All shares represented by properly executed proxies received in time for the special meeting will be voted at the special meeting in the manner specified by the stockholders giving those proxies. Properly executed proxies that do not contain voting instructions will be voted “FOR” the proposal to adopt the merger agreement and approve the merger and the proposal to adjourn the special meeting to solicit additional proxies, if necessary, provided that no proxy that is specifically marked “AGAINST” the proposal to adopt the merger agreement and approve the merger will be voted in favor of the adjournment proposal, unless it is specifically marked “FOR” the adjournment proposal.

Only shares affirmatively voted for the proposal to adopt the merger agreement and approve the merger and the proposal to adjourn the special meeting to solicit additional proxies, if necessary, and properly executed proxies that do not contain voting instructions, will be counted as votes “FOR” the proposals. Shares of our common stock held by persons attending the special meeting but abstaining from voting, and shares of our common stock for which we received proxies directing an abstention, will have the same effect as votes “AGAINST” the adoption of the merger agreement and approval of the merger and the proposal to adjourn the special meeting to solicit additional proxies, if necessary. Shares represented by proxies that reflect a “broker non-vote” will be counted for purposes of determining whether a quorum exists, but those proxies will have the same effect as votes “AGAINST” the proposal to adopt the merger agreement and approve the merger and no effect on the adjournment proposal. A “broker non-vote” occurs when a nominee holding shares for a beneficial owner has not received instructions from the beneficial owner and does not have discretionary authority to vote the shares.

Although it is not currently expected, if the proposal to adjourn the special meeting to solicit additional proxies is approved, the special meeting may be adjourned for the purpose of soliciting additional proxies to approve the proposal to adopt the merger agreement and approve the merger. Other than for the purposes of adjournment to solicit additional proxies, whether or not a quorum exists, holders of a simple majority (i.e.,

Any adjournment may be made without notice (if the adjournment is not for more than sixty days from the record date), other than by an announcement made at the special meeting of the time, date and place of the adjourned meeting. Any adjournment of the special meeting for the purpose of soliciting additional proxies will allow our stockholders who have already sent in their proxies to revoke them at any time prior to their use at the special meeting as adjourned or postponed.

A stockholder of record may revoke a proxy at any time before it is voted by filing with our corporate secretary a duly executed revocation of proxy, by submitting a duly executed proxy to our corporate secretary with a later date, by voting at a later date via Internet or by telephone or by appearing at the special meeting and voting in person. A stockholder of record may revoke a proxy by any of these methods, regardless of the method used to deliver the stockholder’s previous proxy. Attendance at the special meeting without voting will not itself revoke a proxy. If your shares are held in street name, you must contact your broker, bank or nominee to revoke your proxy.

We and our proxy solicitation firm, Georgeson Inc., are soliciting proxies for the special meeting from our stockholders. We will bear the entire cost of soliciting proxies from our stockholders, including the payment of an aggregate fee of $50,000, plus certain other fees and reasonable expenses, to Georgeson Inc. for its services. In addition to the solicitation of proxies by mail, we will request that banks, brokers and other record holders send proxies and proxy materials to the beneficial owners of our common stock held by them and secure their voting instructions, if necessary. We will reimburse those record holders for their reasonable expenses in so doing. We may use several of our executive officers and regular employees, who will not be specially compensated, to solicit proxies from our stockholders, either personally or by telephone, telegram, facsimile, special delivery letter or other electronic means.

Under the General Corporation Law of the State of Delaware, holders of our common stock who do not vote in favor of the proposal to adopt the merger agreement will have the right to seek appraisal of the fair value of their shares as determined by the Delaware Court of Chancery if the merger is consummated, but only if they submit a written demand for an appraisal prior to the vote on the adoption of the merger agreement and they comply with the provisions of Section 262 of the General Corporation Law of the State of Delaware set forth in full at Annex C to this proxy statement, including by not voting in favor of the adoption of the merger agreement. Dissenting stockholders who properly perfect their appraisal rights will receive only the judicially-determined fair value of their shares if one or more dissenting stockholders files suit in the Delaware Court of Chancery and litigates the resulting appraisal case to a decision. For more information on appraisal rights, see below under “The Merger — Appraisal Rights.”

We do not expect that any matter other than the proposal to adopt the merger agreement and approve the merger, and, if necessary, the proposal to adjourn the special meeting to solicit additional proxies, will be brought before the special meeting. If, however, other matters are properly presented at the special meeting, the persons named as proxies will vote in accordance with their best judgment with respect to those matters.

If you need assistance in completing your proxy card or have questions regarding the special meeting, please contact:

We are asking our stockholders to adopt the merger agreement and approve the merger contemplated therein. If we consummate the merger, we will become a wholly-owned subsidiary of Integra and our stockholders will have the right to receive $7.25 in cash, without interest and less any applicable withholding taxes, for each share of common stock that is outstanding immediately prior to the effective time of the merger. Any withheld amounts will be treated for all purposes as having been paid to the holder of our common stock in respect of whose shares the withholding was made.

IsoTis, Inc.

We are an orthobiologics company that develops, manufactures and markets proprietary products for the treatment of musculoskeletal diseases and disorders. Our current orthobiologics products are bone graft substitutes that promote the regeneration of bone and are used to repair natural, trauma-related and surgically-created defects common in orthopedic procedures, including spinal fusions. Our current commercial business is highlighted by our Accell line of products, which we believe represents the next generation in bone graft substitution. We also sell our traditional bone graft substitute products in the United States and internationally. Our principal offices and manufacturing facilities are located at 2 Goodyear, Irvine, California 92618, and our telephone number is (949) 595-8710.

We were originally formed in 1996 as IsoTis S.A., a Swiss entity. In 2003, IsoTis S.A. acquired GenSci OrthoBiologics, Inc., or GenSci, and shifted its focus to orthobiologics. GenSci was subsequently renamed IsoTis OrthoBiologics, Inc., or IsoTis OrthoBiologics. The results of operations of IsoTis OrthoBiologics have been included in IsoTis S.A.’s financial statements from November 1, 2003. In connection with that transaction, IsoTis S.A.’s executive management team and its offices moved from Switzerland to the facility in Irvine, California. IsoTis S.A. continued to maintain international sales and marketing headquarters in Lausanne, Switzerland. Most recently, IsoTis S.A. formed IsoTis, Inc. for the purpose of reorganizing IsoTis S.A. as a U.S. company. The reorganization was effected by means of an exchange offer commenced in December 2006. Following the closing of the transactions contemplated by the exchange offer on August 3, 2007, IsoTis, Inc.’s business and operations consist solely of the business and operations of IsoTis S.A.

Integra LifeSciences Holdings Corporation

Integra LifeSciences Holdings Corporation, a world leader in regenerative medicine, is dedicated to improving the quality of life for patients through the development, manufacturing and marketing of cost-effective surgical implants and medical instruments. Integra’s products, used primarily in neurosurgery, extremity reconstruction, orthopedics and general surgery, are used to treat millions of patients every year. Integra’s principal executive offices are located at 311 Enterprise Drive, Plainsboro, New Jersey 08536 and its telephone number is (609) 275-0500.

Founded in 1989, Integra has grown to be a leader in applying the principles of biotechnology to medical devices, particularly for neurosurgery and extremity reconstruction, and is one of the largest surgical instrument companies in the United States. In the United States, Integra sells its products for neurosurgery and extremity reconstruction directly to customers and its surgical instruments through manufacturers’ representatives and stocking distributors. Outside the United States, Integra sells its products directly in major European markets and through stocking distributors elsewhere.

Integra has approximately 400 sales and marketing employees, who sell its products in 120 countries.

Ice MergerCorp, Inc.

Ice MergerCorp, Inc., a Delaware corporation and a wholly owned subsidiary of Integra, was organized solely for the purpose of entering into the merger agreement and consummating the merger and has not conducted any business operations.

Merger Sub’s mailing address is c/o Integra LifeSciences Holdings Corporation, 311 Enterprise Drive, Plainsboro, New Jersey 08536 and its telephone number is (609) 275-0500.

Our board of directors and management, in their ongoing effort to maximize stockholder value, have periodically reviewed and assessed our business strategy, a variety of strategic alternatives and the various trends and conditions impacting our business in general. These industry trends include consolidation in the U.S. medical device industry, major competitors increasingly being able to use their size and portfolio breadth as leverage for a competitive advantage in our market and other competitive pressures such as increased pricing pressures as a result of more competitors and rapid technological change. More recently, the board had become concerned about our ability to execute our strategic plan in light of our limited financial resources, an increasingly competitive environment, our history of operating losses and disappointing developments in obtaining regulatory approval of our Accell products.

On September 12 and 13, 2006, our board of directors together with our management conducted an in-depth strategic planning review to assess our future prospects. We decided on a two-fold strategy of becoming listed on a U.S. stock exchange and conducting an initial public offering in the United States.

Until recently, shares of our predecessor company, IsoTis S.A., a Swiss corporation, were listed on SWX Swiss Exchange (ISON), Euronext Amsterdam N.V. (ISON) and the Toronto Stock Exchange (ISO). On November 6, 2006, IsoTis S.A. announced its plans to become a U.S. listed company with a single listing on the NASDAQ Global Market, for the purposes of increasing visibility to institutional investors, improving stockholder liquidity, reducing the complexity and cost of securities compliance requirements, facilitating access to capital markets and aligning the company’s listing with the location of its primary market and operations. To that end, we were formed as a wholly-owned subsidiary of IsoTis S.A. on November 3, 2006, for the purpose of reorganizing IsoTis S.A. as a U.S. company. On November 3, 2006, we applied to list our shares on the NASDAQ Global Market. On December 15, 2006, we commenced an exchange offer for all of the issued and outstanding common shares of IsoTis S.A., pursuant to which we offered to exchange one of our shares of common stock for each ten common shares of IsoTis S.A. and planned to conduct a second-step merger to acquire any shares that remained outstanding after the consummation of the exchange offer.

On December 20, 2006, Pieter Wolters, our president and chief executive officer, and Stuart Essig, the president and chief executive officer of Integra, met and discussed the possibility of a private label or distribution agreement for certain of our products.

On January 8, 2007, we announced plans to raise between $30 million and $40 million by offering newly issued NASDAQ-listed shares of our common stock to the public in an underwritten public offering. We intended to use the net proceeds from the offering to support sales, marketing and general administrative activities, clinical research and product development, and to fund working capital and other general corporate purposes.

On January 24, 2007, we initiated discussions with Merrill Lynch Capital for a term loan to provide a cash buffer for our operational needs in the event that we experienced a delay in our public offering.

On January 26, 2007, our shares were listed and began trading on the NASDAQ Global Market (ticker: ISOT).

On January 29, 2007, we filed a registration statement on Form S-1 for our initial public offering in the United States.

On February 7, 2007, we received a letter from the FDA with comments and questions regarding our 510(k) application for our Accell products. The letter raised a question as to whether the Accell products should be regulated as biologics, as tissue or as a medical device. Moreover, if regulated as a medical device, the letter questioned whether the Accell products are Class II or Class III devices. We concluded based on the FDA letter that FDA approval of our Accell products would not occur during the first quarter of 2007, as we previously anticipated, and possibly could occur significantly later.

In light of the FDA letter, we determined that our proposed public offering of common stock would be very difficult to complete because the public would likely be unable to properly assess the risk of a lengthy FDA approval process. On February 12, 2007, our board of directors authorized the withdrawal of our registration statement. On February 13, 2007, we filed a request to withdraw our Form S-1 registration statement that had been filed with the SEC on January 29, 2007.

Following these events, our board of directors and management conducted an in-depth strategic planning review to explore options for raising the capital necessary for us to continue operating our business in the short and long-term. On February 12, 2007, our board of directors approved the engagement of Thomas Weisel Partners to assist us with identifying options for an offering by private placement of our equity, equity-linked or debt securities in hopes of raising up to $20 million to $25 million to be used for working capital and other general corporate purposes, sales, marketing and general administrative activities, and research and development activities.

From February 2007 through April 2007, we had a number of discussions with Integra regarding a possible private label or distribution agreement for certain of our products.

On March 16, 2007, Thomas Weisel Partners commenced discussions with potential private placement investors. Between March 16, 2007 and May 21, 2007, we approached approximately 60 investors, 40 on a named basis. Twenty-two of these investors began performing due diligence on us.

On March 28, 2007, our management met with the FDA to discuss the FDA’s letter concerning our 510(k) application for our Accell products.

On April 19, 2007, Merrill Lynch Capital informed us that it would not provide us a term loan because of the risk of a lengthy FDA approval process for our Accell products.

On April 27, 2007, the FDA sent us a letter indicating that it deemed the Accell products to be medical devices. The FDA verbally informed us that it would continue to review our pending 510(k) application and would not require a premarket approval application.

On May 1, 2007, we re-initiated discussions with Merrill Lynch Capital for a term loan.

On May 7, 2007, as a result of unsuccessful efforts to obtain financing and our continued capital constraints, our board of directors authorized management to approach potential acquirors in order to explore the potential for a strategic transaction with these parties. On May 8, 2007, our management and Thomas Weisel Partners began contacting potential acquirors. On May 10, 2007, we entered into a confidentiality agreement and began sharing information with a potential strategic acquiror in hopes of pursuing a potential transaction, but we did not receive an indication of interest from this party.

On May 18, 2007, our board of directors held a telephonic meeting to discuss developments regarding potential private financing and strategic transactions. The board authorized our management to approach a broader group of potential buyers. In addition, we entered into a confidentiality agreement with Integra on May 18, 2007. Pursuant to this confidentiality agreement, we began providing Integra and its advisors with confidential information about our business for the purpose of Integra’s evaluation of a potential transaction.

Throughout May 2007, we approached a total of 15 potential strategic acquirors, two of whom requested management presentations from us.

On May 21, 2007, Integra made a non-binding verbal offer to acquire IsoTis in an at-market transaction. The closing price of our common stock on this date was $6.42.

On May 21, 2007, our board of directors held a telephone meeting to discuss the verbal indication of interest submitted by Integra. Following a discussion, our board of directors concluded that Integra’s proposal was insufficient and authorized management and Thomas Weisel Partners to reject the proposal. Thomas Weisel Partners advised Integra of the board’s conclusion and invited Integra to submit a revised bid, along with other potential bidders, by May 30, 2007.

On May 29, 2007, Merrill Lynch Capital and Silicon Valley Bank agreed to provide us a $20 million credit facility. The credit facility requires us to raise an additional $20 million in funding by August 31, 2007. If we fail to raise this additional financing, we will be required to pay back Merrill Lynch $7.5 million by September 1, 2007.

On May 30, 2007, Integra submitted a revised indication of interest to us. In the revised offer, Integra proposed a stock-for-stock transaction and indicated its willingness to entertain an at-market deal. However, Integra’s proposal also provided that the price of our common stock had risen to levels that made an at-market transaction less attractive to Integra, and that Integra was concerned that our current share price overestimated the underlying value of our business. Integra’s proposal also stated that it would require that we agree to pay Integra a “break-up fee” of 5% of the equity value of the transaction and also reimburse it for the expenses it incurred in connection with the transaction.

We also received a letter from a third-party potential strategic acquiror on May 30, 2007 proposing three options for a transaction with us. The first option involved our issuance of $10 million of senior secured convertible debt but the third party noted in the letter that this option would be difficult for the party to consummate. The second option involved the creation of a new 50-50 joint venture between us and the third party. The third option involved a potential partnering transaction where the third party would find another party to jointly acquire us.

On June 1, 2007, our board of directors held a telephonic meeting during which management made a presentation on the status of the financing search, as well as the proposals submitted by Integra and the third party on May 30, 2007. Representatives of Latham & Watkins LLP, our outside counsel, provided an overview of the board of directors’ fiduciary duties in the potential transactions. Following a discussion, the board determined that it was not in the best interests of us or our stockholders to rely on a private financing as a primary strategic option because it was unlikely that the company would obtain private financing on acceptable terms. Management then discussed the status of discussions with potential strategic acquirors, including the proposals submitted by Integra and the third party. The board discussed, among other things, the nature of the potential strategic acquirors, the likelihood of closing a potential transaction, the timing involved in negotiating and completing a potential transaction and a comparison of these transactions to other alternatives available to us. Based on the discussion, the board authorized management to continue its discussions with Integra and obtain additional clarity regarding the terms of a potential transaction, including price. The board concluded

On June 5, 2007, our board of directors held a special telephonic meeting to receive an update on Integra’s proposal to acquire us. Management and representatives from Thomas Weisel Partners summarized the discussions to date with Integra, including Integra’s verbal offer to increase the offer price to $7.00 per share of our common stock. As a condition to moving forward with a transaction, Integra indicated that it would require us to negotiate exclusively with Integra regarding a sale of the company. Management also advised the board that no other potential strategic acquirors who had been previously contacted were currently interested in acquiring us, other than the party that submitted a bid on May 30, 2007 which had not since submitted a revised proposal. The board then authorized management to continue negotiations with Integra, including seeking an increase in the offer price and a reduction in the duration of the exclusivity period. Management also informed the board that management continued to be unsuccessful in its efforts to obtain acceptable terms on a private financing.

On June 8, 2007, Integra submitted a revised proposal for a stock-for-stock transaction. Pursuant to the revised proposal, Integra (1) increased its offer to $7.25 per share of our common stock, subject to a collar, (2) shortened the duration of the exclusivity period from July 31, 2007 to July 15, 2007, and (3) agreed to permit us to continue our discussions with potential financing sources during the exclusivity period. Integra’s proposal also stated that it would require that we agree to pay Integra a “break-up fee” of $2.25 million and also reimburse it for the expenses it incurred in connection with the transaction.

Later that day, our board of directors held a special telephonic meeting where our management and financial advisors discussed the terms of Integra’s offer, including the proposed price, length and scope of the exclusivity period and size of the breakup fee. The board also discussed the lack of interest by other potential strategic parties in pursuing a transaction with us. The board then authorized management to enter into an exclusivity agreement with Integra on the terms presented to the board.

On June 11, 2007, we and Integra signed an exclusivity agreement extending through July 15, 2007.

On June 15, 2007, we received a due diligence request letter from Integra. From June 15, 2007 through August 6, 2007, Integra conducted an extensive due diligence review of IsoTis.

On June 18 and 19, 2007, members of our and Integra’s management met with each other and gave management presentations regarding their respective companies to each other.

On June 22, 2007, our board of directors held a special telephonic meeting to review with members of our senior management the status of the discussions with Integra and Integra’s due diligence review. Representatives of Latham & Watkins LLP provided an overview of the board of directors’ fiduciary duties in the potential transaction. At this meeting, the board and management also discussed the financing alternatives under consideration. Thomas Weisel Partners informed the board of directors of the continuing lack of interest among potential financing sources in pursuing a transaction with us. In addition, our board of directors approved the agreement and other matters required for the merger of IsoTis S.A. into IsoTis International SA, that would complete the transactions contemplated by the exchange offer and result in IsoTis S.A. becoming our wholly-owned subsidiary.

On June 26, 2007, Integra’s counsel, Willkie Farr & Gallagher LLP, distributed an initial draft of a merger agreement to us and our counsel.

On June 29, 2007, we entered into a confidentiality agreement with Integra whereby we agreed to maintain the confidentiality of information Integra would provide to us for purposes of our evaluation of a potential transaction.

On July 2, 2007, Latham & Watkins LLP, delivered a revised merger agreement to Integra and its counsel. Between July 2, 2007 and August 6, 2007, we, Integra and our respective advisors discussed the terms of the proposed merger agreement on numerous occasions. Among other terms, we discussed the

On July 2 and 3, 2007, Integra’s management made a presentation to our management, which was also attended by representatives from Thomas Weisel Partners, regarding its operations, and members of our management and Integra’s management had meetings to discuss the potential transaction and our operations.

From July 2, 2007 through August 6, 2007, members of our and Integra’s management teams held numerous discussions regarding due diligence matters communications plans and various other matters related to the potential transaction. During certain of these discussions, Integra’s management reiterated to our management that Integra was not willing to increase the offer price in excess of $7.25 per share.

On July 13, 2007, our board of directors met in person in Costa Mesa, California to review the progress of discussions with Integra, our financing alternatives, our operational plan going forward and the strategic alternatives to pursuing the potential transaction with Integra. Representatives of Latham & Watkins LLP provided an overview of the board of directors’ fiduciary duties in the potential transaction and a summary of the terms and condition of the draft merger agreement, including the various issues that remained subject to negotiation, including the deal protection, termination and termination fee provisions. Management and representatives of Thomas Weisel Partners made a presentation on the risks associated with Integra’s business and issues regarding the potential transaction with Integra. Management informed the board that it had received a draft term sheet from a potential financial investor. After a review of the proposed terms of the financing, the board concluded that the proposed financing was subject to various conditions that were not able to be satisfied by us and would not likely provide sufficient funds to maintain our operations for an extended period of time. Despite having contacted approximately 60 potential investors, we had received financing proposals from only this potential investor and the party who submitted a proposal on May 30, 2007. The board also approved, and later that day we entered into, an extension of our exclusivity agreement with Integra through July 29, 2007.

On July 23, 2007, we accomplished the final step of the transactions contemplated by the exchange offer by consummating a second-step merger, pursuant to which the remaining 9.5% of the issued and outstanding shares of IsoTis S.A. common stock were exchanged for shares of our common stock at the same exchange ratio as used in the exchange offer.

On July 24, 2007, we received a draft distribution agreement from Integra, pursuant which we would agree to manufacture certain of our products (other than our Accell products) under Integra’s label. We also received a draft option agreement from Integra pursuant to which Integra would have the option to include our Accell products in the distribution agreement. Between July 24, 2007 and August 6, 2007, we and our advisors had numerous discussions with Integra and its advisors regarding the terms and conditions of the distribution agreement and the option agreement, including our willingness to pursue such arrangements only if they contained market terms and were otherwise in the best interests of IsoTis.

On July 26, 2007, Integra proposed pursuing an all cash transaction rather than a stock transaction and indicated that it was no longer willing to pursue a stock transaction.

On July 27, 2007, our board of directors held a special telephonic meeting to receive an update on the potential transaction with Integra, at which time our management informed the board that Integra had now proposed an all cash transaction. Representatives of Latham & Watkins LLP also informed our board of its fiduciary obligations when considering the potential transaction with Integra. After a lengthy discussion, the board concluded to proceed with discussions with Integra regarding an all cash transaction. The board also authorized the extension of the exclusivity period to August 6, 2007.

Later on July 27, 2007, we entered into an extension of our exclusivity agreement with Integra through August 6, 2007.

On August 4, 2007, our board of directors held a special telephonic meeting to discuss the progress of negotiations with Integra. Prior to the meeting, our board of directors was provided with drafts of the merger agreement, the distribution agreement and the option agreement. At the meeting:

The board authorized management to finalize negotiations with Integra.

On August 6, 2007, our board of directors held a special telephonic meeting in the afternoon to consider the proposed transaction with Integra. Prior to the meeting, our board of directors was provided with substantially final drafts of the merger agreement, the distribution agreement and the option agreement. At the meeting:

After discussions with management and our financial and legal advisors, our board of directors unanimously determined it to be in our best interest and the best interests of our stockholders to enter into the merger agreement and consummate the merger on the terms set forth in the merger agreement. Our board of directors resolved unanimously to adopt the merger agreement and to approve the other transactions contemplated by the merger agreement, and resolved unanimously to recommend that our stockholders vote to adopt the merger agreement and to approve the transactions contemplated by the merger agreement. The board also unanimously approved the distribution agreement and the option agreement.

The merger agreement, the distribution agreement and the option agreement were executed by the parties on the evening of August 6, 2007.

On August 7, 2007, before the opening of the U.S. markets, we and Integra issued a joint press release announcing the execution of the merger agreement.

Our board of directors, by the unanimous vote of all directors:

Accordingly, our board of directors recommends that you vote “FOR” the adoption of the merger agreement and approval of the merger.

In reaching its determination to approve and adopt the merger agreement and the transactions contemplated thereby and to recommend that you vote in favor of the proposal to adopt the merger agreement and approve the merger, our board of directors consulted with our management, as well as our legal and financial advisors. These consultations included discussions regarding our strategic business plans, the historical prices for our common stock, our past and current business operations and financial condition, our shortage of cash needed to continue operations, our future prospects, our unsuccessful attempts to find financial and strategic partners and the potential merger with Integra. Our board of directors consulted with Thomas Weisel Partners as to the fairness, from a financial point of view, to our stockholders of the merger consideration. Based on its discussions and consultations, our board of directors also concluded that the only reasonably likely alternative to entering into the merger agreement with Integra would be bankruptcy.

Our board of directors considered a number of positive factors in its deliberations:

Our board of directors also considered potential drawbacks or risks relating to the merger, including the following:

Our board of directors also considered that certain of our directors and officers may have conflicts of interest in connection with the merger, as they may receive certain benefits that are different from, and in

After taking into account all of the factors set forth above, as well as others, our board of directors unanimously agreed that the benefits of the merger outweigh the risks and that the transactions contemplated by the merger agreement, including the merger, are advisable and in the best interests of our stockholders. Our board of directors has unanimously approved the merger agreement and the merger and recommends that our stockholders vote to adopt the merger agreement and the merger at the special meeting. Based on its discussions and consultations with its advisors, our board of directors has concluded that the only reasonably likely alternative to entering into the merger agreement with Integra (which our board of directors concluded offered our stockholders fair value for their shares) would be to seek bankruptcy protection.

The foregoing discussion is not intended to be exhaustive, but we believe it addresses the material information and principle factors considered by our board of directors in its consideration of the merger. In view of the number and variety of factors and the amount of information considered, our board of directors did not find it practicable to, and did not make specific assessments of, quantify or otherwise assign relative weights to, the specific factors considered in reaching its determination. In addition, our board of directors did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to its ultimate determination, and individual members of our board of directors may have given different weights to different factors. Our board of directors made its recommendation based on the totality of information presented to, and the investigation conducted by, the board of directors.

On July 18, 2007, we engaged Thomas Weisel Partners LLC to act as our financial advisor in connection with the merger and to render to our board of directors an opinion as to the fairness, from a financial point of view, to the holders of our common stock, of the merger consideration payable pursuant to the merger agreement. We selected Thomas Weisel Partners to act as our financial advisor in connection with the merger based on Thomas Weisel Partners’ experience, expertise and reputation, and its familiarity with our business.

On August 6, 2007, Thomas Weisel Partners delivered to our board of directors its written opinion that, as of that date, and based upon and subject to the assumptions made, matters considered and limits of review set forth in Thomas Weisel Partners’ written opinion, the merger consideration to be received by holders of our common stock pursuant to the merger agreement was fair, from a financial point of view, to such holders.

The full text of Thomas Weisel Partners’ written opinion, which sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations on the scope of the review undertaken by Thomas Weisel Partners in delivering its opinion, is attached as Annex B to this proxy statement and is incorporated herein by reference. Stockholders should read the opinion carefully and in its entirety. The following description of Thomas Weisel Partners’ opinion is only a summary of the written opinion, is qualified in its entirety by the written opinion and is not a substitute for the written opinion.

Thomas Weisel Partners directed its opinion to our board of directors in its consideration of the merger. The opinion was one of a number of factors considered by our board of directors in deciding to approve the merger. The opinion does not constitute a recommendation to our stockholders as to how they should vote with respect to the merger. The opinion addresses only the fairness, from a financial point of view, of the consideration to be received by the holders of our common stock in the merger, as of the date of the opinion. It does not address the underlying or relative merits of the merger or any related transaction and any other transactions or business strategies discussed by our board of directors or that might be available as alternatives to the merger. Further, it does not address our underlying decision to proceed with or effect the merger, or any other aspect of the merger.

In connection with rendering its opinion, Thomas Weisel Partners, among other things:

In its review and analysis and in arriving at its opinion, Thomas Weisel Partners relied upon, without any responsibility for independent verification or liability therefor, the accuracy and completeness of all of the financial and other information that was publicly available or supplied or otherwise made available to it by us, and upon assurances of our management that no relevant information was omitted or remained undisclosed to it. Thomas Weisel Partners was not engaged to, and did not independently attempt to, verify any of such information. Thomas Weisel Partners has also made the following assumptions:

Financial Forecast Assumptions

Certain of Thomas Weisel Partners’ analyses were based on our estimates as of August 3, 2007 for two cases: one which assumed that we would raise $5 million in capital to fund our ongoing operations (the “Minimally Financed Case”), and one which assumed that we would raise $20 million in capital to fund our ongoing operations (the “Fully Financed Case”). Both cases assumed positive outcomes for planned clinical studies. Thomas Weisel Partners based such analyses on the assumption that additional capital funding (and related dilution to our existing stockholders) was necessary to support both a Minimally Financed Case and a Fully Financed Case. Based on the views of our management, Thomas Weisel Partners assumed that our current stockholders would be diluted by 10%-30% in order to raise the $5 million necessary to support the Minimally Financed Case, and by 35%-65% in order to raise the $20 million necessary to support the Fully Financed Case. Thomas Weisel Partners accounted for such dilution when calculating the implied value of the merger to our current stockholders. In addition, such analyses assumed an adding back of proceeds, net of fees, of $4.5 million from the capital raised in the Minimally Financed Case and of $18.5 million from the capital raised in the Fully Financed Case. Relevant multiples and values are highlighted for each such analysis.

Selected Public Companies Analysis

Based on public and other available information, Thomas Weisel Partners calculated the implied enterprise value (which Thomas Weisel Partners defined as implied equity value plus total debt less cash and cash equivalents), implied equity value to our current stockholders and implied per share equity value to our current stockholders using multiples for selected medical technology companies of enterprise value (based on closing stock prices on August 3, 2007) to estimated revenue for 2007 and 2008 and enterprise value to estimated earnings before interest, taxes, depreciation and amortization, or EBITDA, for 2008. Estimates for the selected companies were based on publicly available investment banking research. Projected 2007 and 2008 information for us used in the analysis was based on our management estimates for both the Minimally Financed Case and the Fully Financed Case. The selected public companies analysis compared us to five companies contained in the relevant peer group. Thomas Weisel Partners did not include every company that could be deemed to be a participant in the same industry as us, or in any specific sectors of this industry. Thomas Weisel Partners believed that the five companies listed below had operations similar to some of our operations, but noted that none of these companies had the same management, composition, size or combination of businesses as us:

In addition, a subset of three of the preceding companies was selected based on the determination by Thomas Weisel Partners that such companies shared more similar growth characteristics with us than the other two companies. Accordingly, the applicable multiples of the following companies were used to calculate the implied enterprise value, the implied equity value to our current stockholders, and the implied per share equity value to our current stockholders:

Thomas Weisel Partners noted that the merger consideration to be received by the holders of our common stock in the merger was $7.25 per share, which was in the range of values implied by this analysis.

Selected Precedent Transactions Analysis

Based on public and other available information, Thomas Weisel Partners calculated the implied enterprise value, implied equity value to our current stockholders, and implied per share equity value to our current stockholders based on multiples of enterprise value to latest reported twelve months (or LTM) revenue and next twelve months (or NTM) revenue with respect to 14 selected acquisitions for the time period from 2001 to present, with transaction values from $25 million to $150 million and target revenues in excess of $15 million per annum. In each case, Thomas Weisel Partners used estimates based on public filings, news articles, press releases, public Wall Street research analysts’ reports and forecasts and other publicly available third party sources. The acquisitions reviewed in this analysis were the following:

Thomas Weisel Partners again noted that the merger consideration to be received by the holders of our common stock in the merger was $7.25 per share, which was within the range of values implied by this analysis.

No company or transaction used in the comparable company analysis or the comparable transactions analysis is identical to us or the merger. Accordingly, an analysis of the results of the foregoing is not mathematical; rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factors that could affect the public trading value of the companies to which we and the merger are being compared.

Discounted Cash Flow Analysis

Thomas Weisel Partners used free cash flow forecasts based on estimates provided by our management for the full calendar years 2007 through 2012, both for the Minimally Financed Case and the Fully Financed Case, to perform a discounted cash flow analysis. In conducting this analysis, Thomas Weisel Partners assumed that we would perform in accordance with these forecasts. Thomas Weisel Partners also assumed, based on the guidance of our management, that our ability to continue as a going concern and achieve the results reflected in the financial and operating forecasts was dependent on us raising a significant amount of new capital in the near future and that our ability to raise such capital within the necessary time frame is unlikely. Thomas Weisel Partners first estimated the discounted value of the projected cash flows using discount rates ranging from 20% to 25%, which range of discount rates was selected based upon a weighted average cost of capital analysis for us and other medical devices companies with similar operating profiles plus a small cap premium. Thomas Weisel Partners then calculated a terminal value based on EBITDA exit multiples of 8.0x-12.0x (based on the trading multiples of selected public companies). These terminal values were discounted to present value using discount rates ranging from 20% to 25%. This analysis indicated a range of implied enterprise value, to which cash and cash equivalents were added and from which debt was subtracted, to calculate a range of implied equity value. This analysis indicated a range of implied per share equity value to our current stockholders ranging from $5.11 to $8.81 for the Minimally Financed Case, and $7.05 to $18.09 for the Fully Financed Case. Thomas Weisel Partners noted that the merger consideration to be received by the holders of our common stock in the merger was $7.25 per share, which was within the range of values implied by this analysis.

Premiums Paid Analysis

Based on public information, Thomas Weisel Partners reviewed the consideration paid in 39 healthcare company acquisitions announced since January 1, 2000 with transaction values from $25 million to $150 million. Thomas Weisel Partners calculated our implied price per share based on the implied premiums paid in these transactions over:

The implied per share equity values for us below were based on a range of premiums of first quartile to third quartile. The results of this analysis are summarized in the following table:

Thomas Weisel Partners noted that the merger consideration to be received by the holders of our common stock in the merger was $7.25 per share, which was below the range of values implied by this analysis.

Bankruptcy Impact Analysis

Thomas Weisel Partners performed an analysis of the impact to share price of the following selected healthcare companies entering bankruptcy proceedings:

Using public and other available information with respect to the foregoing selected companies, Thomas Weisel Partners calculated a range of implied per share equity values to our existing stockholders based on a comparison of:

The per share equity values for us below were based on a range of percentage impacts of first quartile to third quartile. The results of the analysis are summarized in the following table:

Thomas Weisel Partners noted that the merger consideration to be received by the holders of our common stock in the merger was $7.25 per share, which was above the ranges of prices implied by this analysis.

The foregoing description is only a summary of the analyses and examinations that Thomas Weisel Partners deemed material to its opinion. It is not a comprehensive description of all analyses and examinations actually conducted by Thomas Weisel Partners. The preparation of a fairness opinion necessarily is not susceptible to partial analysis or summary description. Thomas Weisel Partners believes that its analyses and the summary set forth above must be considered as a whole and that selecting portions of its analyses and of the factors considered, without considering all analyses and factors, would create an incomplete view of the process underlying the analyses set forth in its presentation to our board of directors. In addition, Thomas Weisel Partners may have given some analyses more or less weight than other analyses, and may have deemed various assumptions more or less probable than other assumptions. The fact that any specific analysis has been referred to in the summary above is not meant to indicate that this analysis was given greater weight than any other analysis. Similarly, the order of analyses described does not represent relative importance or weight given to those analyses performed by Thomas Weisel Partners. Accordingly, the ranges of valuations resulting from any particular analysis described above should not be taken to be the view of Thomas Weisel Partners with respect to the actual value of our common stock.

In performing its analyses, Thomas Weisel Partners made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond our control. The analyses performed by Thomas Weisel Partners are not necessarily indicative of actual values or actual future results, which may be significantly more or less favorable than those suggested by these analyses. These analyses were prepared solely as part of the analysis performed by Thomas Weisel Partners with respect to the financial fairness of the consideration to be received by holders of our common stock pursuant to the merger as of the date of the opinion, and were provided to our board of directors in connection with the delivery of Thomas Weisel Partners’ opinion. The analyses do not purport to be appraisals or to reflect the price for which we might actually be sold or the prices at which any of our securities may trade at any time in the future.

As described above, Thomas Weisel Partners’ opinion and presentation were among the many factors that our board of directors took into consideration in making its determination to approve the merger agreement and the merger, and to recommend that the our stockholders approve the the merger agreement and the merger. We determined the consideration to be paid to the holders of our common stock through arms’-length negotiations with Integra. Although Thomas Weisel Partners provided advice to us during the course of these negotiations, the decision to enter into the merger agreement was solely that of our board of directors. Thomas Weisel Partners did not recommend any specific amount of consideration to us or our board of directors, or that any specific amount of consideration constituted the only appropriate consideration for the merger. We did not impose any limitations on Thomas Weisel Partners with respect to the investigation made or procedures followed in rendering its opinion.

Pursuant to a letter agreement dated July 18, 2007, we confirmed the engagement of Thomas Weisel Partners to render a fairness opinion in connection with the proposed merger. We have agreed to pay Thomas Weisel Partners for its financial advisory services a cash success fee of $1.5 million, provided that the success fee is to be reduced by $250,000 which became payable to Thomas Weisel Partners by us upon delivery of the

In the ordinary course of its business, Thomas Weisel Partners may actively trade the equity securities of us and Integra for its own account and for the accounts of its customers and, accordingly, may at any time hold a long or short position in such securities.

In connection with Integra’s due diligence review of us, we provided Integra with certain non-public business and financial information about us. We also provided our financial advisor, Thomas Weisel Partners, with these and other forecasts in connection with its financial analysis of the merger consideration and Thomas Weisel Partners considered these forecasts in preparing the financial analysis it presented to our board of directors (see “— Opinion of Thomas Weisel Partners LLC”).

We have included below the material financial projections to provide our stockholders access to certain nonpublic information that was provided to these parties in connection with the merger. The inclusion of this information should not be regarded as an indication that any recipient of this information considered, or now considers, these projections to be a reliable prediction of our future results. We did not prepare the projections with a view toward public disclosure or compliance with published guidelines of the Securities and Exchange Commission, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information or generally accepted accounting principles. Our independent registered public accounting firm has neither examined nor compiled the projections and, accordingly, does not express an opinion or any other form of assurance with respect thereto.

The projections included below are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those shown below and should be read with caution. See “Cautionary Statement Concerning Forward-Looking Information” beginning on page 13 of this proxy statement. The projections are subjective in many respects and thus susceptible to interpretations and periodic revisions based on actual experience and developments occurring since the date the projections was prepared. Although presented with numerical specificity, the projections are based upon a variety of estimates and hypothetical assumptions made by our management. Some or all of the assumptions may not be realized, and they are inherently subject to significant business, economic and competitive uncertainties and contingencies, all of which are difficult to predict and many of which are beyond our control, and such uncertainties and contingencies can generally be expected to increase with the passage of time from the dates of the projections. Accordingly, the assumptions made in preparing the projections might not prove accurate, and actual results might differ materially. In addition, the projections do not take into account any of the transactions contemplated by the merger agreement, including the merger, which might also cause actual results to differ materially.

For these reasons, as well as the bases and assumptions on which the projections were compiled, the inclusion of the projections in this proxy statement should not be regarded as an indication that the projections will be an accurate prediction of future events, and they should not be relied on as such.. No one has made, or makes, any representation regarding the information contained in the projections and we do not intend to update or otherwise revise the projections to reflect circumstances existing after the date when made or to reflect the occurrences of future events even if any or all of the assumptions are shown to be in error. You are cautioned not to rely on this information in making a decision whether to vote in favor of adoption of the merger agreement, thereby approving the merger.

The annual long-term forecasts are summarized below (dollars in millions):

Additionally, we developed alternative annual long-term forecasts that required less capital financing. This alternative forecast is summarized below (dollars in millions):

In considering the recommendation of our board of directors with respect to the merger agreement, you should be aware that our directors and executive officers may have interests in the merger and have arrangements that are different from, or in addition to, those of our stockholders generally. These interests are described below, and except as described below, our directors and executive officers have, to our knowledge, no material interest in the merger apart from those of our stockholders generally. Our board of directors was aware of these interests and considered them, among other matters, in reaching its decisions to approve the merger agreement and to recommend that our stockholders vote in favor of the adoption of the merger agreement.

Beneficial Ownership of Directors and Executive Officers

As of August 24, 2007, the record date for the special meeting, our directors and executive officers were record owners of and were entitled to vote approximately           shares of common stock, or approximately     % of our total common stock outstanding on that date excluding those shares held by Integra and its

Severance Benefits of Executive Officers

Pursuant to our historical practices, we have entered into employment agreements with each of our executive officers that provide for certain severance payments in the event that the executive officer’s employment is terminated by us without “Cause” or as a result of the executive officer’s disability or by the executive officer for “Good Reason” (each, a “qualifying termination”). Generally, the severance benefits that an executive officer would be entitled to receive upon a qualifying termination consist of a cash severance payment, accelerated vesting of all outstanding stock options and restricted stock, if any, held by the executive officer and a cash payment in lieu of health care benefits.

The amount of the cash severance payment that an executive officer would be entitled to receive upon a qualifying termination is based on (i) the executive officer’s highest monthly base salary amount multiplied by a prescribed number of months plus (ii) a portion of the executive officer’s “average annual bonus” as specified in his or her respective employment agreement. Pursuant to their employment agreements, our executive officers may become entitled to cash severance payments as follows:

Generally, without a “change in control,” if the executive officer has less than five years of service at the time of the qualifying termination, the actual amount of the cash severance payment and accelerated vesting of stock options and restricted stock may be limited based on the executive officer’s actual length of service, determined as follows:

Stockholder approval of the merger will be considered a “change in control” for purposes of the employment agreements. In the event of a qualifying termination (other than as a result of the executive officer’s disability) following a change in control, the executive officers will receive 100% of the cash severance payments described above. In addition, the amount of the cash payment in lieu of health care benefits that an executive officer would be entitled to receive upon a qualifying termination, whether or not occurring in connection with a change in control, is equal to 18 times the difference between the monthly COBRA premium for the executive officer and the executive officer’s monthly contribution towards health care benefits immediately prior to the qualifying termination.

Additionally, if any payments or benefits to which any of Messers. Wolters, Morocco, Poser, Abraham or Reu become entitled would be subject to an excise tax on “excess parachute payments” under Internal

For purposes of illustration, if each executive officer experienced a qualifying termination on August 20, 2007, each executive officer would have been entitled to receive the following severance payments (exclusive of the value of the accelerated vesting of any stock options awards and any payments to indemnify the executives for excise taxes that may be due by reason of section 4999 of the Internal Revenue Code):

The severance payments described above generally are payable in a single lump sum 30 days following the executive officer’s separation from service, but may be delayed for a period of six months if necessary to comply with certain requirements of the Internal Revenue Code.

For purposes of the employment agreements, “Cause” means the executive officer’s (a) conviction of or plea of nolo contender to a felony or any crime involving moral turpitude; (b) commission of any act of theft, embezzlement or misappropriation against us; (c) failure to substantially perform his or her duties under the employment agreement (other than such failure resulting from incapacity due to physical or mental illness) and such failure is not remedied within 30 days after written demand is made by us; or (d) material breach of his or her obligations under the employment agreement and the breach is not remedied within 30 days after written notice is delivered by us.

For purposes of the employment agreements, “Good Reason” means (a) our material breach of the salary and benefit obligations under the employment agreements, and either such breach or action is incurable or irreversible, or, if curable or reversible, has not been cured or reversed within 15 days following receipt of written notice by the executive officer; or (b) we take any of the following actions without the executive officer’s prior written consent:

Notwithstanding the foregoing, the executive officer is deemed to have waived his or her right to terminate for “good reason” with respect to a breach or action described above if the executive officer does not notify us in writing of such breach or action within 15 days of his or her actual knowledge of such breach or action.

For purposes of the employment agreements, “Average annual bonus” means the average of the annual merit bonuses paid to the executive officer during the 24-month period immediately preceding the executive officer’s termination of employment. However, if the executive officer has not been employed through the date

Treatment of Equity Compensation Arrangements

The merger agreement provides that each stock option to purchase shares of our common stock that remains outstanding at the effective time of the merger will be cashed out in the merger. For the purposes of the treatment of options to purchase our common stock, “cashed out in the merger” means that the option will be cancelled in exchange for a cash payment equal to the product of (i) the excess, if any, of $7.25 over the applicable per share option exercise price and (ii) the number of shares of our common stock subject to the option at such time, whether or not then the option is then vested and exercisable with respect to such shares. Integra will pay the amount of cash payable in respect of each stock option as soon as practicable following the effective time, but in any event no later than 10 business days following the effective time.

None of our executive officers currently hold any shares of restricted stock.

The following table shows the total number of shares of our common stock subject to outstanding options held by each of our directors and executive officers as of August 20, 2007 that are expected to be cashed out in the merger. The options have exercise prices ranging between $6.00 per share and $24.02 per share.

Potential Employment with Integra

Prior to the consummation of the merger, Integra may offer certain of our executive officers the opportunity to continue in employment or service with Integra and its affiliates.

Indemnification and Insurance

The merger agreement provides for director and officer indemnification and insurance. We describe these provisions in “The Merger Agreement — Indemnification and Insurance.”

If the merger is consummated, our common stock will be delisted from the NASDAQ Global Market and deregistered under the Exchange Act, and IsoTis will no longer file periodic reports with the United States Securities and Exchange Commission.

The following is a summary of certain material United States federal income tax consequences of the merger to holders of our common stock whose shares are converted into the right to receive cash under the merger. This summary is based on the Internal Revenue Code of 1986, as amended, or the Code, applicable Treasury Regulations, and administrative and judicial interpretations thereof, each as in effect as of the date hereof, all of which may change, possibly with retroactive effect.

This summary is limited to holders who hold shares of our common stock as capital assets. This summary also does not address tax considerations applicable to a holder’s particular circumstances or to holders that may be subject to special tax rules, including, without limitation, United States Holders (as defined below) that are:

In addition, this summary does not address tax considerations applicable to any Non-United States Holder (as defined below) that owns more than 5% of our common stock and any United States federal estate or gift tax consequences, nor any state, local or foreign tax consequences, of the merger, and this summary does not address the tax consequences to holders of our common stock who exercise appraisal rights under Delaware law. Also, if a portion of the merger consideration is withheld pursuant to any law in respect of withholding taxes, such withheld amounts will be treated for purposes of this summary as having been received by the holder in respect of whose shares the withholding was made.

THIS SUMMARY DOES NOT PURPORT TO BE A COMPLETE ANALYSIS OF THE POTENTIAL TAX CONSIDERATIONS RELATING TO THE MERGER, AND IS NOT TAX ADVICE. THEREFORE, YOU ARE URGED TO CONSULT YOUR TAX ADVISOR WITH RESPECT TO THE APPLICATION OF THE UNITED STATES FEDERAL INCOME TAX LAWS TO YOUR PARTICULAR SITUATION, AS WELL AS ANY TAX CONSEQUENCES OF THE MERGER ARISING UNDER THE FEDERAL ESTATE OR GIFT TAX RULES OR UNDER THE LAWS OF ANY STATE, LOCAL, FOREIGN OR OTHER TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.

For purposes of this discussion, a “United States Holder” means a holder of our common stock that is:

A “Non-United States Holder” is any beneficial owner of shares of our common stock who is not a United States Holder for United States federal income tax purposes.

United States Federal Income Tax Consequences for United States Holders

Consequences of the Merger

The receipt of cash in exchange for shares of our common stock pursuant to the merger will be a taxable transaction for United States federal income tax purposes. In general, a United States Holder who receives cash in exchange for shares of our common stock pursuant to the merger will recognize capital gain or loss for United States federal income tax purposes equal to the difference, if any, between the amount of cash received and the holder’s adjusted tax basis in the shares of our common stock exchanged therefor. Any such gain or loss would be long-term capital gain or loss if the United States Holder’s holding period for the shares of our common stock exceeded one year. Long-term capital gains of noncorporate taxpayers generally are taxable at a maximum federal income tax rate of 15%. Capital gains of corporate taxpayers generally are taxable at the regular income tax rates applicable to corporations. The deductibility of capital losses is subject to limitations. Gain or loss must be calculated separately for each block of common stock (i.e., shares acquired at the same cost in a single transaction) exchanged for cash in the merger.

Information Reporting and Backup Withholding

Payments made to United States Shareholders in the merger generally will be subject to information reporting. Backup withholding (currently at a rate of 28%) may apply to payments made in connection with the merger. Backup withholding will not apply, however, to a United States Holder who (a) furnishes a correct taxpayer identification number and certifies that it is not subject to backup withholding on the substitute Internal Revenue Service Form W-9 or successor form included in the letter of transmittal to be delivered to holders of our common stock prior to consummation of the merger, or (b) is otherwise exempt from backup withholding. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against such holder’s United States federal income tax liability provided the required information is furnished to the Internal Revenue Service.

United States Federal Income Tax Consequences for Non-United States Holders

Consequences of the Merger

A Non-United States Holder generally will not be subject to United States federal income tax on any gain realized on the receipt of cash for shares of our common stock in the merger unless:

Gains described in the first bullet point above generally will be subject to United States federal income tax at a flat 30% rate (or applicable lower treaty rate), but may be offset by United States source capital losses. Unless a tax treaty provides otherwise, gain described in the second bullet point above will be subject to United States federal income tax on a net income basis in the same manner as if the Non-United States Holder were a resident of the United States. Non-United States Holders that are foreign corporations also may be subject to a 30% branch profits tax (or applicable lower treaty rate). Non-United States Holders are urged to consult any applicable tax treaties that may provide for different rules.

Information Reporting and Backup Withholding

Payments made to Non-United States Holders in the merger may be subject to information reporting and backup withholding (currently at a rate of 28%). Non-United States Holders can avoid backup withholding by providing the Depositary with a properly executed IRS Form W-8BEN (or other applicable IRS Form W-8) certifying the holder’s non-United States status or by otherwise establishing an exemption, provided that the Depositary does not have actual knowledge or reason to know that the holder is a United States holder. Backup withholding is not an additional tax. Non-United States Holders may use amounts withheld as a credit against their United States federal income tax liability or may claim a refund of any excess amounts withheld by timely and duly filing a claim for refund with the IRS.

Foreign Tax Consequences

THIS PROXY STATEMENT DOES NOT ADDRESS NON-UNITED STATES TAX LAW CONSIDERATIONS RELATING TO THE MERGER. YOU ARE URGED TO CONSULT YOUR TAX ADVISOR WITH RESPECT TO ANY POTENTIAL TAX CONSEQUENCES OF THE MERGER ARISING UNDER ANY APPLICABLE NON-UNITED STATES TAX LAWS.

We and Integra have agreed to use commercially reasonable efforts to obtain all necessary consents and approvals of governmental entities and all necessary consents, approvals and waivers from any other person to consummate the merger. We have also agreed with Integra to use our respective commercially reasonable best efforts to cooperate in all respects with each other in connection with any filing or submission and in connection with any investigation or other inquiry, including any proceeding initiated by a private party.

Despite our and Integra’s general obligation to use commercially reasonable efforts in connection with any filing or submission required or action to be taken to consummate the merger, Integra is not obligated to propose or agree to accept any undertaking or condition, to enter into any consent decree, to make any divestiture, or accept any operational restriction, or take or commit to take any action that could reasonably be expected to limit (i) the freedom of action of Integra, its subsidiaries or its affiliates with respect to the operation of, or the ability to retain, us or any of our businesses, product lines or assets, or (ii) the ability to retain, own or operate any portion of Integra’s, or any of its subsidiaries’ or affiliates’, businesses, product lines or assets, or alter or restrict in any way our, Integra’s or its Subsidiaries’ or affiliates’, business or commercial practices. We have also agreed to not enter into any such agreement with respect to our or our

Holders of record of our shares of common stock who do not vote in favor of the adoption of the merger agreement or consent thereto in writing and who properly demand appraisal of their shares will be entitled to appraisal rights in connection with the merger under Section 262 of the General Corporation Law of the State of Delaware, or Section 262.

The following discussion is not a complete statement of the law pertaining to appraisal rights under Section 262 and is qualified in its entirety by the full text of Section 262 which is attached to this proxy statement as Annex C. The following summary does not constitute any legal or other advice nor does it constitute a recommendation that stockholders exercise their appraisal rights under Section 262. All references in Section 262 and in this summary to a “stockholder” or “holders of shares of our common stock” are to the record holder or holders of the shares of our common stock entitled to vote as to which appraisal rights are asserted. A person having a beneficial interest in shares of our common stock held of record in the name of another person, such as a broker, fiduciary, depositary or other nominee, must act promptly to cause the record holder to follow the steps summarized below properly and in a timely manner to perfect appraisal rights.

Under Section 262, a record holder of shares of our common stock who makes the demand described below with respect to such shares, who continuously is the record holder of such shares through the effective time of the merger, who does not vote in favor of the adoption of the merger agreement and who otherwise follows the procedures set forth in Section 262, will be entitled to have his or her shares appraised by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of the shares, exclusive of any element of value arising from the accomplishment or expectation of the merger, as determined by the court.

Under Section 262, where a merger is to be submitted for approval at a meeting of stockholders, as in the case of the adoption of the merger agreement by our stockholders, the corporation, not less than 20 days prior to the meeting, must notify each of its stockholders entitled to appraisal rights that appraisal rights are available and include in the notice a copy of Section 262. This proxy statement shall constitute the notice, and the full text of Section 262 is attached to this proxy statement as Annex C. Any holder of our common stock who wishes to exercise appraisal rights, or who wishes to preserve such holder’s right to do so, should review the following discussion and Annex C carefully because failure to timely and properly comply with the procedures specified will result in the loss of appraisal rights. Moreover, because of the complexity of the procedures for exercising the right to seek appraisal of shares of our common stock, we believe that if you consider exercising such rights, you should seek the advice of legal counsel.

Any stockholder wishing to exercise appraisal rights must deliver to us, before the vote on the adoption of the merger agreement at the special meeting on          , 2007, a written demand for the appraisal of the stockholder’s shares, and a holder of shares of our common stock must not vote in favor of the adoption of the merger agreement. A holder of shares of our common stock wishing to exercise appraisal rights must hold of record the shares on the date the written demand for appraisal is made and must continue to hold the shares of record through the effective time of the merger, since appraisal rights will be lost if the shares are transferred prior to the effective time of the merger. A proxy which is signed and does not contain voting instructions will, unless revoked, be voted in favor of the adoption of the merger agreement. Therefore, a stockholder who votes by proxy and who wishes to exercise appraisal rights must vote against the adoption of the merger agreement or abstain from voting on the merger agreement. Neither voting against the adoption of the merger agreement (in person or by proxy), nor abstaining from voting or failing to vote on the proposal to adopt the merger agreement will in and of itself constitute a written demand for appraisal satisfying the requirements of Section 262. The written demand for appraisal must be in addition to and separate from any proxy or vote on the proposal to adopt the merger agreement. The demand must reasonably inform us of the identity of the

At the effective time, the stock of any stockholder that exercises such appraisal rights shall no longer be outstanding and will automatically be cancelled and will cease to exist, and each such holder of a certificate immediately prior to the effective time will cease to have any rights with respect thereto, except the right to receive the fair value of such shares in accordance with the provisions of Section 262. We will serve prompt notice to Integra of any demands for appraisal of any shares of common stock, withdrawals of any such demands and any other related instruments served on us pursuant to Delaware law, and Integra will have the right to participate in and direct all negotiations and proceedings with respect to such demands. We will not, without the prior written consent of Integra, make any payment with respect to, or settle or offer to settle, any such demands, or agree to do or commit to do any of the foregoing.

Only a holder of record of shares of our common stock is entitled to assert appraisal rights for the shares registered in that holder’s name. A demand for appraisal in respect of shares of our common stock should be executed by or on behalf of the holder of record, and must state that the person intends thereby to demand appraisal of the holder’s shares in connection with the merger. If the shares are owned of record by a person other than the beneficial owner, including a broker, fiduciary (such as a trustee, guardian or custodian), depositary or other nominee, execution of the demand should be by or for the record owner, and if the shares are owned of record by more than one person, as in a joint tenancy and tenancy in common, the demand should be executed by or on behalf of all joint owners. An authorized agent, including an agent for two or more joint owners, may execute a demand for appraisal on behalf of a holder or record; however, the agent must identify the record owner or owners and expressly disclose that, in executing the demand, the agent is acting as agent for the record owner or owners. A record holder such as a broker who holds shares as nominee for several beneficial owners may exercise appraisal rights with respect to the shares held for one or more beneficial owners while not exercising the rights with respect to the shares held for other beneficial owners; in such case, however, the written demand should set forth the number of shares as to which appraisal is sought and where no number of shares is expressly mentioned the demand will be presumed to cover all shares of our common stock entitled to vote held in the name of the record owner. Stockholders who hold their shares in brokerage accounts or other nominee forms and who wish to exercise appraisal rights are urged to consult with their brokers to determine the appropriate procedures for the making of a demand for appraisal by such a nominee.

All written demands for appraisal pursuant to Section 262 should be sent or delivered to IsoTis, Inc., 2 Goodyear, Irvine, California 92618, Attention: Corporate Secretary.

Within ten days after the effective time of the merger, the surviving corporation must notify each holder of our common stock who has complied with Section 262, and who has not voted in favor of the adoption of the merger agreement that the merger has become effective. Within 120 days after the effective time of the merger, but not thereafter, the surviving corporation or any holder of our common stock who has so complied with Section 262 and is entitled to appraisal rights under Section 262 may file a petition in the Delaware Court of Chancery with a copy served on the surviving corporation demanding a determination of the fair value of the shares held by all dissenting holders. If a petition for appraisal is not timely filed, then the right to an appraisal for all dissenting stockholders will cease. The surviving corporation is under no obligation to and has no present intention to file a petition and holders should not assume that the surviving corporation will file a petition or that the surviving corporation will initiate any negotiations with respect to the fair value of such shares. Accordingly, the holders of our common stock who desire to have their shares appraised should initiate all necessary action to perfect their appraisal rights in respect of shares of our common stock within the time and in the manner prescribed in Section 262.

Within 120 days after the effective time of the merger, any holder of our common stock who has complied with the requirements for exercise of appraisal rights will be entitled, upon written request, to receive from the surviving corporation a statement setting forth the aggregate number of shares not voted in

Under the merger agreement, we have agreed to provide Integra prompt notice of any demands for appraisal, withdrawals of such demands and any other related instruments served pursuant to the General Corporation Law of the State of Delaware received by us pursuant to Section 262. Integra will have the right to participate in, and direct negotiations and proceedings with respect to, demands for appraisal under Section 262. We will not make any payments with respect to, or settle or offer to settle, any demands for appraisal without the written consent of Integra.

If a petition for an appraisal is timely filed by a holder of shares of our common stock and a copy thereof is served upon the surviving corporation, the surviving corporation will then be obligated within 20 days to file with the Delaware Register in Chancery a duly verified list containing the names and addresses of all stockholders who have demanded an appraisal of their shares and with whom agreements as to the value of their shares have not been reached. After notice to the stockholders as required by the Court, the Delaware Court of Chancery is empowered to conduct a hearing on the petition to determine those stockholders who have complied with Section 262 and who have become entitled to appraisal rights thereunder. The Delaware Court of Chancery may require the stockholders who demanded payment for their shares to submit their stock certificates to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings, and if any stockholder fails to comply with the direction, the Court of Chancery may dismiss the proceedings as to the stockholder.

After determining the holders of our common stock entitled to appraisal, the Delaware Court of Chancery will determine the “fair value” of their shares, exclusive of any element of value arising from the accomplishment or expectation of the merger. In determining fair value, the Delaware Court of Chancery will take into account all relevant factors. In Weinberger v. UOP, Inc., the Delaware Supreme Court discussed the factors that could be considered in determining fair value in an appraisal proceeding, stating that “proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court” should be considered, and that “[f]air price obviously requires consideration of all relevant factors involving the value of a company.” The Delaware Supreme Court stated that, in making this determination of fair value, the court must consider market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts that could be ascertained as of the date of the merger that throw any light on future prospects of the merged corporation. Section 262 provides that fair value is to be “exclusive of any element of value arising from the accomplishment or expectation of the merger.” In Cede & Co. v. Technicolor, Inc., the Delaware Supreme Court stated that such exclusion is a “narrow exclusion [that] does not encompass known elements of value,” but which rather applies only to the speculative elements of value arising from such accomplishment or expectation. In Weinberger, the Delaware Supreme Court also stated that “elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the merger and not the product of speculation, may be considered.”

Stockholders considering seeking appraisal should be aware that the fair value of their shares as so determined could be more than, the same as or less than the merger consideration that they would receive pursuant to the merger if they did not seek appraisal of their shares and that an investment banking opinion as to the fairness from a financial point of view of the consideration to be received in a merger is not necessarily an opinion as to fair value under Section 262. Although we believe that the merger consideration is fair, no representation is made as to the outcome of the appraisal of fair value as determined by the Delaware Court of Chancery and stockholders should recognize that such an appraisal could result in a determination of a value higher or lower than, or the same as, the merger consideration. The Delaware Court of Chancery will also determine the amount of interest, if any, to be paid upon the amounts to be received by persons whose shares of our common stock have been appraised. Unless the Court of Chancery in its discretion determines otherwise for good cause shown, interest on the amount determined by the Court to be the “fair value” of the shares as of the effective date of the merger will be compounded quarterly and will accrue from the effective date of the merger through the date of payment of the judgment at the rate which is 5% over the Federal Reserve discount

Any holder of shares of our common stock who has duly demanded an appraisal in compliance with Section 262 will not, after the effective time of the merger, be entitled to vote the shares subject to the demand for any purpose or be entitled to the payment of dividends or other distributions on those shares (except dividends or other distributions payable to holders of record of our common stock as of a record date prior to the effective time of the merger).

If any stockholder who demands appraisal of shares of our common stock under Section 262 fails to perfect, or successfully withdraws or loses, such holder’s right to appraisal, the stockholder’s shares of our common stock will be deemed to have been converted at the effective time of the merger into the right to receive $7.25 in cash per share, without interest and less any applicable withholding taxes. A stockholder will fail to perfect, or effectively lose or withdraw, the holder’s right to appraisal if no petition for appraisal is filed within 120 days after the effective time of the merger, or if the stockholder delivers to the surviving corporation a written withdrawal of the holder’s demand for appraisal and an acceptance of the merger consideration, except that any attempt to withdraw made more than 60 days after the effective time of the merger will require the written approval of the surviving corporation and, once a petition for appraisal is filed, the appraisal proceeding may not be dismissed as to any holder absent approval by the Delaware Court of Chancery, which approval may be conditioned upon the terms the Court deems just.

Failure to comply with all of the procedures set forth in Section 262 may result in the loss of a stockholder’s statutory appraisal rights. Consequently, any stockholder wishing to exercise appraisal rights is urged to consult legal counsel before attempting to exercise those rights.

The following description summarizes the material provisions of the merger agreement. Stockholders should read carefully the merger agreement, which is attached as Annex A to this proxy statement.

The merger agreement has been included to provide you with information regarding its terms. It is not intended to provide any other factual information about us. Such information can be found elsewhere in this proxy statement and in the other public filings we make with the Securities and Exchange Commission, which are available without charge at www.sec.gov.

The merger agreement contains representations and warranties of IsoTis, Integra and Merger Sub made to each other as of specific dates. The assertions embodied in those representations and warranties were made solely for purposes of the contract among IsoTis, Integra and Merger Sub and may be subject to important qualifications and limitations agreed by IsoTis, Integra and Merger Sub in connection with negotiating its terms. Moreover, certain representations and warranties may not be accurate or complete as of any specified date because they are subject to a contractual standard of materiality different from those generally applicable to stockholders or were used for the purpose of allocating risk among IsoTis, Integra and Merger Sub rather than establishing matters as facts. For the foregoing reasons, no person should rely on the representations and warranties as statements of factual information.

The merger agreement provides that, if our stockholders adopt the merger agreement and approve the merger and all other conditions to the merger are satisfied or waived, Merger Sub, a Delaware corporation and wholly-owned subsidiary of Integra, will merge with and into us. We will survive the merger and continue to exist after the merger as a wholly-owned subsidiary of Integra.

Unless the parties agree otherwise, the closing date for the merger will be the third business day after the satisfaction or waiver of all conditions to closing in the merger agreement. We anticipate that the merger will be consummated in the fourth quarter of calendar year 2007. However, we cannot assure you when, or if, all of the conditions to the closing of the merger will be satisfied. See “— Conditions to the Merger.”

The merger will be effective when a certificate of merger is duly filed with and accepted by with the Secretary of State of the State of Delaware, or at such later time as we and Integra specify in the certificate of merger. We expect to make this filing at the time of the closing under the merger agreement.

The merger agreement provides that each share of our common stock outstanding immediately prior to the effective time of the merger (other than shares held by us, our wholly-owned subsidiaries, Integra or Merger Sub or by holders properly exercising appraisal rights under Delaware law) will be converted at the effective time of the merger into the right to receive $7.25 in cash, without interest and less any applicable withholding taxes.

If any of our stockholders perfect appraisal rights with respect to any of our shares, then we will treat those shares as described under “— Appraisal Rights.”

If the merger occurs, stock options will be treated as described below. All stock options not exercised prior to the effective time of the merger will be cancelled in the merger, with the holder of each stock option becoming entitled to receive, in full satisfaction of the rights of such holder with respect thereto, an amount in cash equal to the product of (i) the excess, if any, of $7.25 over the applicable per share exercise price of our common stock subject to such stock option, multiplied by (ii) the number of shares of our common stock subject to such stock option. All amounts payable will be paid at or as soon as practicable following the effective time of the merger, but in any event no later than ten business days following the effective time, without interest.

After the effective time of the merger, Integra will deposit funds with American Stock Transfer and Trust Company, the exchange agent, in amounts necessary for the payment of the merger consideration.

As promptly as practicable after the effective time of the merger, the exchange agent will mail to each person who was a holder of record of our common stock immediately prior to the effective time of the merger a letter of transmittal containing instructions for exchanging certificates representing shares of our common stock. As soon as reasonably practicable after the effective time of the merger, each holder of a certificate previously representing shares of our issued and outstanding common stock will, upon surrender to the exchange agent of a certificate, together with such letter of transmittal, be entitled to receive a check for the merger consideration of $7.25 in cash, less any withholding taxes, for each share of our common stock represented by such certificate.

No interest will be paid or will accrue on the cash payable upon surrender of any certificate. The cash paid upon conversion of our common stock will be deemed to have been paid in full satisfaction of all rights pertaining to the shares of our common stock.

If any certificate representing our common stock has been lost, stolen or destroyed, the exchange agent will pay the merger consideration with respect to each share of our common stock formerly represented by such certificate upon the making of an affidavit of that fact by the person claiming such certificate to be lost, stolen or destroyed and, if required by the surviving corporation, the posting by such person of a bond in such reasonable amount as the surviving corporation may direct as indemnity against any claim that may be made against the surviving corporation with respect to such certificate.

The merger agreement provides that the directors of Merger Sub immediately before the effective time of the merger will be the directors of the surviving corporation, and our officers immediately prior to the effective time will be the officers of the surviving corporation, until their death, resignation or removal or until their respective successors are duly elected and qualified, as the case may be.

We have made a number of representations and warranties to Integra and Merger Sub in the merger agreement regarding aspects of our business and other matters pertinent to the merger. The topics covered by these representations and warranties include the following:

Some of our representations and warranties are qualified by materiality or a material adverse effect standard. Subject to certain exclusions, a material adverse effect means any event, change, circumstance, effect, development or state of facts that, individually or in the aggregate:

Integra and Merger Sub have made a number of representations to us regarding various matters pertinent to the merger. The topics covered by these representations and warranties include the following:

The representations and warranties set forth in the merger agreement as described above should not be relied upon by any person as statements of factual information.

The representations and warranties of each of the parties to the merger agreement will expire upon consummation of the merger.

Conduct of Our Business Prior to the Merger

In the merger agreement, we have agreed that before the effective time of the merger, subject to certain exceptions, we will (i) conduct our, and we will cause each of our subsidiaries to conduct their, business, in all material respects, in the ordinary course of business consistent with past practice and, in all material respects, in compliance with applicable laws, (ii) maintain and cause our subsidiaries to maintain, in all material respects, our assets, properties, rights and operations in accordance with our present practice and in a condition suitable for their current use and (iii) use commercially reasonable efforts consistent with the foregoing to preserve substantially intact our business organization, keep available our officers’ and key employees’ services and to preserve, in all material respects, our significant business relationships.

In addition we have agreed, with specified exceptions, to various restrictions, including restrictions on our and our subsidiaries’ ability to:

No Solicitation of Acquisition Proposals

We have agreed that we will not, and will not permit any of our subsidiaries to, nor will we authorize or permit any of our or our subsidiaries’ directors, executive officers, employees, investment bankers, attorneys, accountants or other advisors or representatives to, directly or indirectly:

If our board of directors receives a bona fide unsolicited written acquisition proposal by a third party prior to our obtaining stockholder approval, it may participate in discussions or negotiations with such third party directly or through representatives if, among other things, it determines in good faith by a majority vote that such acquisition proposal constitutes, or could reasonably be expected to result in, a superior proposal, it furnishes to the third party making the acquisition proposal information with respect to us and our subsidiaries pursuant to a confidentiality and standstill agreement which contains terms that are no less restrictive than those contained in the confidentiality agreement between us and Integra and such information has been or is provided to Integra on a prior or concurrent basis and, after considering the advice of outside legal counsel, the board determines that failing to take such action would reasonably be expected to result in a breach of its fiduciary duties under Delaware law.

Board Recommendation

Our board of directors may withdraw or modify or change in a manner adverse to Integra its approval or recommendation of the merger agreement, if and only if, our board of directors, after considering the advice of outside legal counsel, has determined that (i) the acquisition proposal constitutes a superior proposal and that failing to take such action would result in a breach of its fiduciary duties under Delaware law or (ii) in response to an intervening event and failing to take such action would result in a breach of its fiduciary duties under the General Corporation Law of the State of Delaware.

The covenant in the merger agreement generally prohibiting us from soliciting acquisition proposals does not prevent us from complying with Rule 14d-9 and 14e-2(a) promulgated under the Exchange Act with regard to an acquisition proposal or from making any disclosure to our stockholders if our board of directors determines in good faith that failure to take such action would be inconsistent with applicable law.

In addition, if, at any time prior to our stockholders meeting, our board of directors determines in good faith, after consultation with its financial advisors and outside legal counsel, in response to an acquisition proposal that was unsolicited and that did not otherwise result from a breach of the merger agreement, that such proposal is a superior proposal, we or our board of directors may, pursuant to and subject to the satisfaction of certain conditions in the merger agreement, accept such superior proposal; provided however, we must provide Integra with 5 business days’ written notice advising Integra of our intent to accept such superior proposal. During such 5 business day period, we must negotiate in good faith with Integra to adjust the terms and conditions of the merger agreement such that such acquisition proposal would no longer constitute a superior proposal.

An “acquisition proposal” means any offer or proposal for a merger, reorganization, recapitalization, consolidation, share exchange, business combination or other similar transaction (excluding the transactions contemplated by the exchange offer) or any proposal or offer to acquire, directly or indirectly,

The term “acquisition proposal” does not include the merger contemplated by the merger agreement.

A “superior proposal” means a proposal (on its most recently amended or modified terms, if amended or modified) made by a third party to enter into any transaction involving an acquisition proposal that our board of directors determines in its good faith judgment (following consultation with an independent financial advisor) to be more favorable to our stockholders than the merger agreement, taking into account all terms and conditions of such transaction (including any break-up fees, expense reimbursement provision and financial terms, the anticipated timing, conditions and prospects for completion of such transaction, including the prospects for obtaining regulatory approvals and financing, and any third party approvals) and that is reasonably likely to be consummated, except that the reference to “more than 20%” in the definition of “acquisition proposal” shall be deemed to be a reference to “more than 50%”.

The merger agreement provides that an “intervening event” means a material event with respect to our business, neither known by our board of directors nor reasonably foreseeable as of the date hereof, which event (or any material consequence of which) becomes known to or by (or understood by) our board of directors prior to our stockholders meeting. The term “intervening event” does not include

Under the merger agreement, we have agreed to convene and hold a stockholders’ meeting as soon as reasonably practicable following the mailing of the definitive proxy statement to our stockholders.

We, Integra and Merger Sub have each agreed to use our commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate the merger and the other transactions contemplated by the merger agreement as soon as practicable, including:

Under the terms of the merger agreement, Integra is not required to propose or agree to accept any undertaking or condition, to enter into any consent decree, to make any divestiture, or accept any operational restriction, or take or commit to take any action that could reasonably be expected to limit Integra’s, or its subsidiaries’ or affiliates’,

No filing under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended, or any foreign competition act is required for the consummation of the merger.

We have agreed to keep Integra informed of, and cooperate with Integra in connection with, any stockholder litigation or claim against us or our directors or officers relating to the merger or other transactions contemplated by the merger agreement. We have further agreed that we will not settle any such stockholder litigation without Integra’s prior written consent, which shall not be unreasonably withheld.

Our, Integra’s and Merger Sub’s obligations to effect the merger are subject to the satisfaction of the following conditions:

Integra’s and Merger Sub’s obligations to consummate the merger are also subject to the satisfaction by us or waiver by them of the following conditions: