Aastrom Biosciences, Inc. Reports Fourth Quarter 2005 Financial Results

Ann Arbor, Michigan, September 8, 2005 - Aastrom Biosciences, Inc. (Nasdaq: ASTM) today reported financial results for the fourth quarter and fiscal year ended June 30, 2005. The Company also reported significant clinical and operational achievements of the last quarter and fiscal year. For the quarter ended June 30, 2005, these achievements included:

• Clinical progress:
Announced positive results from its feasibility clinical trial conducted in Barcelona, Spain to evaluate the use of Aastrom's Tissue Repair Cells (TRCs) for the treatment of severe long bone non-union fractures. All of the patients treated with TRCs, an autologous bone marrow-derived cell product, exhibited clinical and functional healing, with 5 of 6 treatments showing bone regeneration at the fracture site as determined by radiographic imaging by 6 months. The results were notable in that each patient had failed prior treatment with standard of care methodologies and had a poor prognosis for healing.

This feasibility trial suggests that Aastrom's autologous TRCs may offer a new way to achieve local bone regeneration for bone grafting and other clinical indications for bone repair.

• New management appointment:
Appointed Gerald D. Brennan, Jr., JD, as Vice President Administrative and Financial Operations and Chief Financial Officer. Mr. Brennan has almost two decades of strong financial and operational expertise gained from his experience in senior management level positions.

• Other notable event:
Added to the Russell 3000® Index which measures the performance of the 3,000 largest U.S. companies based on total market capitalization.

Commenting on the year, R. Douglas Armstrong, Ph.D., Chief Executive Officer and Chairman of Aastrom, said, "We made significant strides in fiscal year 2005 and demonstrated our continued commitment to achieve progressive corporate milestones. Of particular note has been the movement of our TRCs into the clinic, and the interim results we have achieved in these patient treatments. The support and interest that we are receiving from the medical field as well as regulatory agencies, should further our clinical progress as we expand our trials and move toward a registration (Phase III) trial."

Dr. Armstrong continued, "As the Company continues to transform from a development company to a company focused on the commercialization of its products, we are strengthening our board and management leadership with new officers and personnel who bring additional expertise in the clinical and product development areas. These activities, combined with the successful financings of the past year, should assist us in delivering on our milestones throughout the coming fiscal year."

The Company also recently announced changes on the board of directors, including the additions of Stephen G. Sudovar and Timothy M. Mayleben, both of whom bring a wealth of biotechnology and pharmaceutical business experience at the executive and board level. Mr. Sudovar was the President of Roche Laboratories, Inc., U.S., a division of Hoffman La Roche, as well as the CEO of EluSys Therapeutics, Inc., a development stage biotech company, and the founder, President, CEO and Chairman of Pracon Incorporated, a healthcare consulting and communications firm. Mr. Mayleben is an active executive in the biotechnology field, with most recent roles as the CFO, and then COO of Esperion Therapeutics, Inc., now a division of Pfizer Global Research and Development. Mr. Mayleben qualifies as a financial expert for the audit committee under the SEC rules, and meets the NASDAQ financial sophistication requirements.

With new members joining the board, two of our long-term directors, Arthur F. Staubitz and Joseph Taylor, have chosen to retire. Each of these gentlemen served on Aastrom's board for over 6 years. We thank both of them for their contributions and service to the Company. In the coming months, the Company will continue to seek senior executives who could bring medical products industry or other desired experience to Aastrom's board.

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