Business update from Cardima

Oct 12 2009

Cardima, Inc. (OTCBB:CADM), a medical device company focused on the diagnosis and treatment of atrial fibrillation (“AF”), is providing the following update on its progress, recent activities and upcoming milestones:

JAPANESE DIAGNOSTIC MARKET

Cardima expects to receive regulatory approval in the near term to re-enter the Japanese market with its family of guidewire-based, PATHFINDER^® diagnostic micro-mapping catheters. Upon approval, Cardima’s PATHFINDER catheters, which are designed for accessing and mapping the smallest and most tortuous vasculature of the heart wall to facilitate treatment of arrhythmias, will be marketed in Japan though an exclusive agreement with medical device distributor Japan Lifeline Co. Ltd., a sub-distributor of Robert Reid Inc., Cardima’s logistics and regulatory partner in that country. The Japanese market for diagnostic catheters is robust and Cardima has been building inventory to meet anticipated demand. Japan Lifeline is an ideal marketing partner for Cardima’s diagnostic line of products as it has a significant presence in Japan’s electrophysiology market and sales representatives with established relationships with key physicians and clinical centers nationwide. Cardima notes that entering the Japanese diagnostic market is entirely dependent upon receipt of regulatory approval and in the event marketing approval is significantly delayed or denied, marketing efforts will be materially affected.

Cardima’s PATHFINDER diagnostic mapping catheters are currently approved for marketing in the U.S., Europe, Canada and Thailand.

SURGICAL ABLATION SYSTEM – U.S.

Cardima is training a number of cardiothoracic surgeons at leading U.S. medical centers on the use of the Cardima Surgical Ablation System (“SAS”). Cardima’s training program focuses on establishing commercial centers with some designated as regional training centers to facilitate additional surgeons training. Certain centers also will collect registry data to track product performance and safety. Dr. Li Poa, a pioneer in minimally invasive thoracoscopic atrial ablation and long-time user of the Cardima SAS, recently performed his first case at Kaiser Permanente Hospital – Sunset in Los Angeles. The SAS performed well and the probe was well received by other surgeons and electrophysiologists (“EPs”) in attendance. Additionally, several leading U.S. surgeons are planning clinical studies using the Cardima Surgical Ablation System.

SURGICAL ABLATION SYSTEM – Europe

Cardima will be launching surgical programs during the current quarter at hospitals affiliated with select leading European cardiac surgeons who have extensive experience in the surgical treatment of AF. These programs will highlight the benefits and advantages of the Cardima Surgical Ablation System over competing products for European physicians, patients and hospitals. A European surgical study using the Cardima Surgical Ablation System also is planned.

SURGICAL ABLATION SYSTEM – Thailand

Cardima has completed the first stage of surgeon training on the Cardima Surgical Ablation System at Ramathibodhi Hospital, a large public and teaching hospital in Bangkok. Ramathibodhi Hospital is preparing to launch its AF Center of Excellence utilizing the Cardima Surgical Ablation System. This Center of Excellence will be promoted in Thailand, as well as more broadly throughout Asia. Cardima also expects to begin training surgeons at one of Thailand’s leading private and tourist medicine cardiac centers, Bangkok Heart Hospital. Thailand is known as a significant “tourist medicine” market and Cardima’s move into the private market in Thailand is expected to commence in the current quarter.

SURGICAL ABLATION SYSTEM – China

Cardima expects to receive marketing approval for its Surgical Ablation System in China within the next two quarters, acknowledging the approval is outside of its control. The Company has established relationships with leading physicians at cardiac centers involved in the treatment of AF to facilitate market entry, subject to marketing approval. Some of these physicians also are attached to academic teaching hospitals, and clinical studies with the Cardima Surgical Ablation System are being actively considered in the Chinese market.

SURGICAL ABLATION SYSTEM – Regulatory and Clinical

Cardima is actively considering entering additional markets with the Cardima Surgical Ablation System, including Australia, India, Russia and several European markets. A decision to enter these markets is dependent on regulatory approvals, and an assessment of the individual market’s potential and the resources available to the Company.

EP ABLATION SYSTEM

As part of its regulatory and commercial strategy in the electrophysiology ablation market, Cardima maintains contact with several leading EPs around the world. The Company is in regular dialogue with these leading EPs, getting their input and feedback on the clinical performance of its EP Ablation System and regulatory strategy.

Cardima concluded in early 2009 that an opportunity existed to significantly improve its existing EP Ablation System with the key objective of marketing a system with a significantly higher clinical success rate from a single ablation procedure compared with existing commercial products. The Company elected to implement and clinically validate product improvements prior to a wide commercial launch of the EP Ablation System in Europe and the filing of a premarket approval (“PMA”) application with the U.S. Food and Drug Administration (“FDA”).

Cardima has made significant advances and is currently validating and clinically evaluating the new EP Ablation System. The Company expects that EPs will benefit from the new EP Ablation System’s improved power delivery, temperature feedback, tissue temperature stability, tissue contact, deflection characteristics and ease of catheter manipulation, as well as shorten total procedure times and improved formation of critical target lesions.

Based on the performance of the new EP Ablation System in studies to date, the Company is considering seeking regulatory approvals for a range of clinical indications that can benefit from linear, deep and contiguous lesions, including AF and atrial flutter. The Company is planning an aggressive regulatory strategy focused on seeking CE Mark approval for marketing the EP Ablation System in the European Union, a PMA filing with the FDA for the treatment of AF and potentially other indications, an updated filing for China that incorporates product modifications, and potentially seeking approvals in additional global markets.

NEW ENERGY MANAGEMENT DEVICE

Cardima is developing an entirely new and updated energy management device to improve both the Surgical Ablation System and EP Ablations System. Clinical studies with this new unit are scheduled to begin in 2010 and, following clinical evaluation, the new unit will be validated for sale in Europe and the U.S. This new unit will incorporate its own radiofrequency (“RF”) energy source and is expected to offer significant benefits in terms of improved power delivery and stability over the Company’s current Intellitemp^®, which relies on a third-party RF generator. Commercial sale and use of this new unit in each market will be entirely dependent upon receipt of the applicable regulatory approvals.