HealthCare Capital Partners

--FOR IMMEDIATE RELEASE--

ALVEOLUS CLOSES SIGNIFICANT FUNDING ROUND

CHARLOTTE, NC (July 22, 2004)—ALVEOLUS, a leader in the development of non-vascular medical technologies, announced today that it has closed one of the largest institutional rounds of funding for a medical device company in the Southeast this year. The investment syndicate was led by MDS Capital of Toronto, Canada and included Clayton Associates, Memphis Biomed Ventures, both of Tennessee, Healthcare Capital Partners of Atlanta, Georgia, and Matignon Technologies FCPR of Paris, France.

Eric Mangiardi, Alveolus President & CEO said, “We were very pleased to work with all of the syndicate firms on this round of financing. Moving forward, we are well positioned to implement our company objectives of releasing the next-generation of non-vascular technologies and improving the quality of life of those patients suffering from malignant and benign diseases.”

This significant investment capped a very successful Series B round of funding for the Company. The capital raised will be used to prepare for the commercial launch of Alveolus’ Next-Generation Tracheobronchial Stent Technology System, as well as catalyze the development of their remaining product portfolio.

About Alveolus

Headquartered in Charlotte, NC, Alveolus is a leading developer of non-vascular interventional stent technology. Alveolus’ advanced stenting technology enhances the quality of life for patients who suffer from pulmonary or gastrointestinal obstruction. The Alveolus product ideation process, guided by world leading interventionalists, allows for rapid prototyping and development of products to address the specific requirements for each are of the body. Products are created by physicians, for physicians, with an end goal of enhancing the quality of life and reducing the long term medical costs for patients and their families.

Any statements made in this release that are not based on historical fact are forward-looking statements. Any forward-looking statements made in this release represent management’s best judgment as to what may occur in the future. Actual outcomes and results are not guaranteed and are subject to certain risks, uncertainties and assumptions and if any of these risks of uncertainties materialize or any of the assumptions prove incorrect, Alveolus’ results could differ materially from their respective expectations in these statements.

For further information visit www.alveolus.com or contact Ji Hwan You at (704) 998-6012.

About MDS Capital Corp.

MDS Capital Corp. and affiliates, with more than $1 billion under management, is a leading North American venture capital company focused exclusively on providing financial support and other services to help build emerging life science companies. The company provides a continuum of capital, from early through later stages, by raising capital in public retail and private institutional funds. Additional information about MDS Capital Corp. is available at www.mdscapital.com.

MDS Capital Corp. operates in a strategic relationship with MDS Inc. (TSX: MDS; NYSE:MDZ), a global health and life sciences company. With over 10,000 employees around the world, MDS Inc. is focused on diagnostic services, drug discovery and delivery technology, and services and radioisotopes for sterilization and cancer treatment.

About Clayton Associates

Clayton Associates, LLC, based in Tennessee, provides early stage and growth equity capital to companies located in the Southeast. Our firm manages over $100 million in committed capital and invests in a variety of healthcare, diversified service and technology companies.

About Memphis Biomed Ventures

MB Venture Partners is a Memphis, Tennessee venture capital firm that provides growth capital and strategic direction to life sciences companies. The Firm invests in biotech and medical device companies at various stages of development. Our Firm is especially interested in product solutions for musculoskeletal disease.

About Healthcare Capital Partners

HealthCare Capital Partners is a venture capital firm based in Atlanta, Georgia formed in August 2003. The fund’s primary focus is on making seed and early-stage investments in healthcare companies, including healthcare IT, medical technology, healthcare services, medical devices, diagnostics and life sciences. Their preference is to work with companies commercializing intellectual property affiliated with universities and other research institutions in the Southeast.

About Matignon Technologies FCPR

Matignon Technologies is a 50 MC closed-end venture capital fund dedicated to investments in unlisted innovative, early-stage companies specialized in high technologies with strong growth potential. The Fund invests as a minority shareholder with a stake comprised between 0.5 MC and 3.0 MC. Subscriptions were closed in September 2000 and the Fund has a lifespan of six years.