Nephros Provides Corporate Update Thursday

Provides Corporate Update

NY--(PR NEWSWIRE)--November 20, 2008 -- Nephros, Inc. (AMEX:NEP - News), a

medical device company developing and marketing filtration products for

therapeutic applications, infection control, and water purification, today

provided an update on its operations and strategy.

Highlights and Events

has undergone major changes in its management structure and operational

activities this year. We felt it was important to provide shareholders an

overview of these changes and of our strategy for the future," said Ernest A.

Elgin, President and CEO of Nephros.

MD220 Dialyzers and H2H Hemodiafiltration Module

has submitted a 510k application to the FDA for approval to market its

leading-edge hemodiafiltration ("HDF") products for end-stage renal disease

(ESRD) in the U.S. The application details Nephros's OLpur MD220 diafilter and

Nephros's OLpur H2H Hemodiafiltration module. Nephros's OLpur MD220 is a filter

designed expressly for HDF therapy that employs Nephros's proprietary

Mid-Dilution Diafiltration technology. Nephros's OLpur H2H Hemodiafiltration

module enables the most common types of dialysis machines to be used for HDF

therapy. Nephros believes that, if approved in 2009, its technology would be

first approved on-line HDF therapy available in the U.S.

OLpur MD220 diafilters are currently approved in the European Union and Canada.

Net diafilter revenues for the nine months ended September 30, 2008 were

$920,000 compared to $755,000 in the corresponding period of 2007, an increase

of approximately $165,000 or 22%. The increase is due to increased sales of

OLpur MD190 and MD220 diafilters in Europe.

interest in the Nephros ESRD products continues to be strong; the 510k

submission for FDA approval of Nephros's products represents an important

milestone toward bringing HDF therapy to the U.S.," said Eric A. Rose, M.D., a

member of Nephros's Board of Directors.

has filed a 510k application for approval to market its Dual Stage Ultrafilters

(DSU) to dialysis clinics. "We are seeing a great interest for ultra pure water

in dialysis centers for water polishing applications," said Mr.

is developing improvements to the functionality of its water ultrafiltration

products and has applied for water filter performance certifications from NSF

International, an independent non-profit product evaluation laboratory. Nephros

currently anticipates completion of required NSF testing in early

third quarter, Nephros recorded initial revenues of $9,000 from the sale of

water filtration products in the U.S. Nephros expects DSU sales to represent

increasing percentage of Nephros's revenue mix going forward.

has launched two new products aimed at preventing the risk of water borne

diseases at the point of use. The Nephros Protect! Kit, for showers and sinks,

and the Nephros Prevent! Kit, for in-line applications such as ice machines

clinical equipment, provide immediate risk mitigation. There have been multiple

reported outbreaks and deaths due to Legionnaire's disease this year in

institutional facilities in the U.S. Legionnaire's disease is caused by a

bacterium known as legionella pneumophila. Legionella can live in water and

often found in the plumbing systems of buildings such as hospitals, nursing

personal care facilities, ambulatory facilities and medical and dental

practices. In cases where the levels of these pathogens may not pose much threat

to healthy water users, immuno-compromised patients such as cancer, cystic

fibrosis, HIV, organ transplant, and burn patients may have a substantial risk

of infection. Nephros's DSU filtration products are an effective solution which

can provide immediate safety from water borne pathogens including

has contracted with the Office of Naval Research to develop an advanced water

purification system for military field use. Nephros's proprietary dual stage

cold sterilization ultrafilter will form the basis of the portable system.

Nephros is continuing the development of its dual stage ultra reliable personal

water filtration system under support from its U.S. Department of Defense (DoD)

appropriation and has completed initial concept development. Initial prototypes

are anticipated to be completed in the first half of 2009. With the additional

appropriation from the DoD, Nephros will expand the program and plans to

conclude development and to conduct limited field testing in 2009. Nephros

generated approximately $50,000 of revenue in the third quarter of 2008 and

$103,000 of revenue during the nine months ended September 30, 2008 from its

U.S. Defense Department project.

has initiated actions to aggressively reduce operating expenses and preserve

cash resources. Nephros has reduced its R&D staff to reflect the completion

of its U.S. clinical trial and submission of the 510k application for the

associated products.

taken difficult, but necessary actions, to reduce fixed costs and redirect

valuable cash resources to our revenue generating efforts. We appreciate the

dedication and past efforts of those employees affected by this transition

thank them for their contributions," said Mr. Elgin.

Nephros has signed a lease for a new, less costly location in River Edge, NJ.

Nephros has applied, and has been approved, for a grant from New Jersey's

Business Employment Incentive Program (BEIP). The BEIP is an incentive grant

from the State of New Jersey's Business Development Agency to help offset

overhead expenses to attract companies to move to New Jersey. As a result of

this program, Nephros will receive annual cash grants based on the number of

jobs it moves to New Jersey and all new jobs created by Nephros in the State

New Jersey for a ten year period. Nephros's relocation is anticipated to be

completed by year-end.

combined benefits of the reduction in headcount and the relocation of Nephros's

offices will significantly reduce Nephros's fixed expenses going

for Fourth Quarter and 2009

remainder of 2008, Nephros plans to focus its efforts on commercialization

activities. Primary goals for Nephros in 2009 include expansion of DSU product

sales for institutional infection control and preparation for the anticipated

launch of Nephros's OLpur MD 220 Hemodiafilter, OLpur H2H Hemodiafiltration

Module, and DSU products for dialysis centers in the U.S.

immediate future, we are taking steps to increase our DSU marketing efforts

sales to hospitals, assisted living facilities, and related domains in the

and abroad," said Mr. Elgin. "To that end, we will seek to expand our

distribution network and leverage strategic relationship opportunities to

generate greater access to these markets."

Board of Directors applauds Mr. Elgin's efforts to reduce costs and maximize

value for Nephros shareholders. We believe that the aggressive changes that

Nephros's new CEO has implemented will help position Nephros for long-term

success," said James S. Scibetta, Chairman of Nephros.

Inc., headquartered in New York, is a medical device company developing and