BIOMATRIX INC, 10-Q, 1997-08-07

BIOMATRIX INC
10-Q, 1997-08-07
BIOLOGICAL PRODUCTS, (NO DIAGNOSTIC SUBSTANCES)

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<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
---------

Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934

For Quarter Ended June 30, 1997 Commission File Number 0-19373

BIOMATRIX, INC.
--------------------------------------------------------------
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C>
Delaware 13-3058261
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
</TABLE>

65 Railroad Avenue, Ridgefield, N.J. 07657
---------------------------------------------------------
(Address of principal executive offices) (Zip Code)

(201)945-9550
-------------------------------------------
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

(1) Yes X No
---- ----

The number of shares outstanding of the issuer's common stock as of the latest
practicable date:

<TABLE>
<CAPTION>
Class June 30, 1997
----- -------------
<S> <C>

Common stock, $ 0.0001 par value 10,957,794
</TABLE>
<PAGE> 2
BIOMATRIX, INC.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C>
PART I. FINANCIAL INFORMATION

ITEM 1 - Unaudited Consolidated Financial Statements

Consolidated Balance Sheets as of
June 30, 1997 and December 31, 1996 3

Consolidated Statements of Operations for the
Three and Six Months Ended June 30, 1997 and 1996 4

Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 1997 and 1996 5

Notes to Consolidated Financial Statements 6-7

ITEM 2

Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-11

PART II. OTHER INFORMATION

ITEM 1

Legal Proceedings 12

ITEM 2

Changes in Securities 12

ITEM 4

Submission of matters to a vote of security holders. 13

ITEM 6

Exhibits and Reports on Form 8-K 14

Signatures 15
</TABLE>

2
<PAGE> 3
BIOMATRIX, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(Unaudited)

<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . $14,072,948 $ 3,034,764
Held-to-maturity investments . . . . . . . . . . . . . . . . . 3,601,094 10,603,358
Accounts receivable, less allowance for doubtful accounts
of $25,500 in 1997 and 1996 . . . . . . . . . . . . . . . . 1,480,709 1,230,456
Inventory, at lower of cost or market . . . . . . . . . . . . 1,736,367 727,083
Prepaid expenses and other current assets . . . . . . . . . . 1,090,788 730,302
----------- ------------

Total current assets . . . . . . . . . . . . . . . . . 21,981,906 16,325,963
Property, plant and equipment, net . . . . . . . . . . . . . . . 11,291,716 9,506,005
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . 277,023 162,059
----------- ------------
Total assets . . . . . . . . . . . . . . . . . . . . . $33,550,645 $ 25,994,027
=========== ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of notes payable and capital lease obligations $ 149,775 $ 167,408
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . 1,534,148 724,743
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . 2,344,685 1,599,419
----------- ------------

Total current liabilities . . . . . . . . . . . . . . . 4,028,608 2,491,570
Notes payable less current maturities . . . . . . . . . . . . . . 5,741,276 5,798,522
----------- ------------
Total liabilities . . . . . . . . . . . . . . . . . . . 9,769,884 8,290,092
----------- ------------
Commitments and contingent liabilities
Shareholders' equity:
Common stock, $.0001 par value: 60,000,000 shares authorized;
10,960,608 and 10,587,615 issued and 10,957,794 and
10,584,801 outstanding in 1997 and 1996, respectively . . . 1,096 1,059
Preferred stock, 3,000 shares authorized; none issued . . . . - -
Notes receivable - related parties . . . . . . . . . . . . . . (2,773,288) (2,450,000)
Additional paid-in capital . . . . . . . . . . . . . . . . . . 59,481,441 56,682,755
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . (31,817,826) (35,564,348)
Equity adjustment from foreign currency translation . . . . . (1,098,702) (953,571)
Treasury stock, 2,814 shares of common stock at cost . . . . . (11,960) (11,960)
----------- ------------

Total shareholders' equity . . . . . . . . . . . . . . 23,780,761 17,703,935
----------- ------------
Total liabilities and shareholders' equity . . . . . . $33,550,645 $ 25,994,027
=========== ============
</TABLE>

The accompanying notes are an integral
part of the consolidated financial statements

3
<PAGE> 4

BIOMATRIX, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------

1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Net sales . . . . . . . . . . . . . . . . $ 1,841,094 $ 1,064,578 $ 3,743,050 $ 2,161,478
Income from licenses, royalties,
and research contracts . . . . . . . . . 3,136,488 7,478,162 7,277,332 8,120,109
----------- ----------- ------------- -------------
Total revenues . . . . . . . . . 4,977,582 8,542,740 11,020,382 10,281,587
----------- ----------- ------------- -------------

Cost and expenses:
Cost of sales . . . . . . . . . . . . . . . 604,091 641,513 1,477,827 1,355,361
Research and development expenses . . . . . 1,425,659 1,367,432 2,805,545 2,624,851
Selling, general and
administrative expenses . . . . . . . 1,883,320 1,525,837 3,300,576 2,641,136
----------- ----------- ------------- -------------
Total costs and expenses . . . . 3,913,070 3,534,782 7,583,948 6,621,348
----------- ----------- ------------- -------------

Income from operations . . . . . . . . . . 1,064,512 5,007,958 3,436,434 3,660,239
Interest expense . . . . . . . . . . . . . (28,376) (37,920) (55,407) (66,375)
Interest and miscellaneous income . . . . . 243,016 234,078 426,495 361,449
----------- ----------- ------------- -------------
Income before taxes . . . . . . . . . . . . 1,279,152 5,204,116 3,807,522 3,955,313
----------- ----------- ------------- -------------

Provision for income taxes . . . . . . . . (61,000) - (61,000) -
----------- ----------- ------------- -------------
Net income . . . . . . . . . . . . . . . . $ 1,218,152 $ 5,204,116 $ 3,746,522 $ 3,955,313
=========== =========== ============ =============

Net income per common and
common equivalent share . . . . . . . $ 0.11 $ 0.50 $ 0.34 $ 0.39
=========== =========== ============ =============

Weighted average common and common
equivalent shares outstanding . . . . 11,158,598 10,378,868 11,077,380 10,270,152
=========== =========== ============ =============
</TABLE>

The accompanying notes are an integral
part of the consolidated financial statements

4
<PAGE> 5
BIOMATRIX, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------

1997 1996
---- -----
<S> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . $ 3,746,522 $ 3,955,313
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization . . . . . . . . . . . 317,109 269,767
Stock option compensation . . . . . . . . . . . . . 46,250 -
Change in assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . (252,688) 7,242
Inventory . . . . . . . . . . . . . . . . . . . . . (1,037,121) 102,175
Prepaid expenses and other current assets . . . . . (391,798) (105,046)
Other assets . . . . . . . . . . . . . . . . . . . . (150,184) 12,248
Accounts payable and accrued expenses . . . . . . . 1,475,086 197,795
---------- ----------

Net cash provided by operating activities . . . 3,753,176 4,439,494
---------- ----------

Cash flows from investing activities:
Maturity of held-to-maturity securities . . . . . . . . 7,002,264 4,161,510
Purchases of held-to-maturity securities . . . . . . . . - (12,306,708)
Capital expenditures . . . . . . . . . . . . . . . . . . (2,120,430) (326,606)
---------- ----------

Net cash provided by (used for) investing
activities . . . . . . . . . . . . . . . . . 4,881,834 (8,471,804)
---------- ----------

Cash flows from financing activities:
Payments of notes payable and capital lease obligations (74,376) (159,344)
Sale of common stock to related parties . . . . . . . . 1,890,000 -
Stock options exercised . . . . . . . . . . . . . . . . 543,334 300,524
---------- ----------

Net cash provided by financing activities . . . 2,358,958 141,180
---------- ----------

Effect of exchange rate changes on cash . . . . . . 44,216 (1,647)
---------- -----------

Net increase (decrease) in cash and cash equivalents . . . . 11,038,184 (3,892,777)
Cash and cash equivalents at beginning of period . . . . . . 3,034,764 8,888,869
---------- -----------
Cash and cash equivalents at end of period . . . . . . . . . $14,072,948 $ 4,996,092
=========== ===========

Supplemental cash flow data:
Interest paid, net of capitalized interest . . . . . $ 28,376 $ 37,920
Taxes paid . . . . . . . . . . . . . . . . . . . . . $ 144,000 -

Non-cash financing activities:
Sale of common stock financed with note receivable . $ 303,000 -
</TABLE>

The accompanying notes are an integral
part of the consolidated financial statements

5
<PAGE> 6
BIOMATRIX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION

The consolidated financial statements at June 30, 1997 and for the
three and six months ended June 30, 1997 and 1996 are unaudited, but include
all adjustments which the Company considers necessary for a fair presentation
of the financial position at such date and the operating results and cash flows
for those periods. These condensed consolidated financial statements should be
read in conjunction with the Company's audited consolidated financial
statements for the year ended December 31, 1996, which were included as part of
the Company's Form 10-K, filed with the Securities and Exchange Commission.
Results for the interim periods are not necessarily indicative of results for
the entire year.

NOTE 2 - CONTINGENCIES

In August 1990, the Company received a notice from the Pennsylvania Department
of Environmental Resources ("DER") that it is one of approximately 1,000
potentially responsible parties ("PRPs") that may have clean-up responsibility
at the Industrial Solvents and Chemical Company site in York Haven,
Pennsylvania (the "Site"). During the late 1980s, the Company, through a
licensed waste disposal transport company, shipped industrial solvents to the
Site, which was operating as a recycling facility. The DER reviewed hazardous
waste found at the Site as well as the DER's own records in order to identify
additional PRPs and to quantify each PRPs volumetric contributions. The
Company is a member of a steering committee that consists of many PRPs.
Although neither the total clean-up cost nor the portion of the total clean-up
cost assigned to each PRP has been determined, the Company estimated, based
upon the advice of a consultant, that its liability would be approximately
$780,000. Further, the same consultant has reported to the Company that there
is less than a 10% chance that its liability might exceed $1,070,033. During
the second quarter of 1995 the Company paid its first assessment for clean-up
costs of $79,390. Additionally, the Company paid $15,000 during the first
quarter of 1997; therefore, the reserve at June 30, 1997 represented $685,610.
The steering committee for the PRPs has prepared a buy-out proposal pursuant to
a consent order with the DER. This buy-out proposal identifies each PRP's
assigned portion of assumed total clean-up costs. When the final remedy is
selected by the DER, the Company plans to settle out of the matter pursuant
to the buyout proposal. The Company will monitor this situation and make any
necessary adjustments to the reserve once additional information is available
with regard to the DER's acceptance of the steering committee's proposal.

In October 1996, Michael Jarcho ("Jarcho") filed suit in the United
States District Court for the Southern District of California seeking to
recover damages and declaratory judgment for the alleged breach by the Company
of Jarcho's consulting agreement. A consulting agreement had been entered into
between the Company and Jarcho on December 2, 1988. The agreement contains
certain royalty provisions for products that result from Jarcho's consultancy.
Jarcho contends, inaccurately in the Company's view, that Hylaform resulted
from his consultancy. Jarcho seeks compensatory damages of $300,000 plus a
royalty on the Company's net sales of Hylaform as well as punitive damages and
recovery of attorney fees. The Company believes that no royalties are owed
Jarcho as a result of Hylaform sales. Jarcho's case was dismissed on January
10, 1997, on the grounds that the agreement requires such disputes to be
brought exclusively in New Jersey state court. Jarcho moved for a partial
reconsideration of the decision, the Company opposed that request, and the
request was denied. On June 16, 1997 Jarcho filed suit in New Jersey state
court. The Company intends to defend this matter vigorously. However, the
ultimate outcome of this litigation is unknown at the present time, and
accordingly, it could have a material adverse impact on the Company's financial
position, results of operations and cash flows. The Company has not made any
provision on the accompanying consolidated financial statements for any
liability that might result.

6
<PAGE> 7
BIOMATRIX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

NOTE 3 - INVENTORIES

Inventories at June 30, 1997 and December 31, 1996 consisted of:

<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
------------ ------------
<S> <C> <C>
Finished Goods . . . . . . . . . . . . . . . . . $229,848 $148,925
Work-in-Process . . . . . . . . . . . . . . . . 840,913 300,704
Raw Materials . . . . . . . . . . . . . . . . . 665,606 277,454
--------- --------
$1,736,367 $727,083
========== ========
</TABLE>

NOTE 4 - NOTES RECEIVABLE - RELATED PARTIES

The notes receivable - related parties relates to the acquisition of
common stock of the Company by two officers of the Company during 1996 and
1997. The notes are with recourse and payable with interest upon maturity.
All notes issued during 1997 have been for common stock issued pursuant to the
Company's 1997 Restricted Stock Plan.

NOTE 5 - IMPACT OF THE ADOPTION OF RECENTLY ISSUED ACCOUNTING STANDARDS

In February 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 128 "Earnings per
Share" which changes the reporting requirements for earnings per share ("EPS")
for publicly traded companies by replacing primary EPS with basic EPS and
requiring the dual presentation of basic and diluted EPS on the face of the
consolidated statements of operations. The Company is required to adopt this
standard in its December 31, 1997 financial statements. Had the new standard
been in effect on June 30, 1997 the Company would have experienced no material
impact from adoption.

In June 1997, the FASB issued Statement of Financial Accounting Standards No.
130 "Reporting Comprehensive Income" which establishes standards for reporting
and display of comprehensive income and its components in a full set of
financial statements. The Company is required to adopt this standard in 1998
and believes the principle component of comprehensive income will be foreign
currency translation.

In June 1997, the FASB issued Statement of Financial Accounting
Standards No. 131 "Disclosures about Segments of an Enterprise and Related
Information" which establishes standards for the way that public enterprises
report information about operating segments, geographic areas, products and
major customers. The Company is required to adopt this standard in 1998 and is
currently evaluating the impact of this standard.

7
<PAGE> 8
BIOMATRIX, INC. AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Biomatrix, Inc., together with its subsidiaries (the "Company"), is
principally engaged in the research, development and commercial application of
proprietary viscoelastic biological polymers, called hylans, for use in
therapeutic medical applications and skin care. For approximately the past
three years, a significant source of revenue for the Company has been from
certain up-front payments relating to corporate license and distribution
agreements. The Company expects milestone payments from existing agreements and
other one-time payments from partners to continue to be an important source of
revenues.

The Company's business is subject to significant risks.
Forward-looking comments included herein are subject to and should be read in
conjunction with the "Risk Factors" section of the Company's 1996 Annual Report
on Form 10-K, including the risks and uncertainties associated with the
regulatory approval process, with obtaining and enforcing patents important to
the Company's business and other risks detailed in the Company's reports filed
under the Securities Exchange Act. As a significant amount of Biomatrix'
future revenues may be based on payments from corporate distribution
agreements, the Company's total revenues and income or losses are expected to
fluctuate from quarter-to-quarter. Some of these fluctuations may be
significant and, as a result, quarter-to-quarter comparisons may not be
meaningful. As of June 30, 1997, the Company's accumulated deficit was
$31,817,826.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996

REVENUES. Total revenues for the three months ended June 30, 1997
were $4,977,582, a decrease of $3,565,158 from the same period in 1996.
Product sales for the three months ended June 30, 1997 were $1,841,094,
representing an increase of $776,516, or 72.9%, over the same period in 1996.
This increase was primarily attributable to new sales of Synvisc in France and
new sales of Hylaform in Europe. Also contributing to the increase was an
increase in skin care product sales of $177,013, or 43%, resulting from the
timing of shipments and increased demand. Revenues from licenses, royalties,
and research contracts were $3,136,488 in the second quarter of 1997, which was
primarily attributable to a non-refundable license fee payment of $3 million
from Bayer AG. The decrease in revenues from licenses, royalties, and research
contracts of $4,341,674 from the same period of 1996 was attributable to the
receipt in the prior year of a non-refundable $5 million payment from Collagen
for the marketing rights to Hylaform and the receipt of a payment allowing the
Company to reacquire the marketing rights for Synvisc in certain countries.

COST AND EXPENSES. Total cost and expenses for the second quarter of
1997 were $3,913,070, an increase of $378,288, or 10.7%, from the same period
in 1996. Cost of sales for the second quarter of 1997 and 1996 were $604,091
and $641,513, respectively, which represented 32.8% and 60.3% of sales for the
second quarter of 1997 and 1996, respectively. The decrease in the percentage
of cost of sales to sales was primarily a result of increased production
volumes and better utilization of capacities. Research and development
expenses in the second quarter were $1,425,659, representing an increase of
$58,227, or 4.3%, from the same period of 1996. Selling, general and
administrative expenses for the second quarter of 1997 were $1,883,320,
representing an increase of $357,483, or 23.4%, over the second quarter of
1996. The increase in selling, general and administrative was primarily
attributable to costs associated with the negotiation of corporate distribution
and joint venture agreements and higher personnel and consulting expenses
associated with the establishment of European operations and the expansion of
operations in Canada and the United States.

INTEREST AND MISCELLANEOUS INCOME. Interest expense was $28,376 for
the second quarter of 1997, a decrease of $9,544 from the same period of 1996.
Interest and miscellaneous income was $243,016 for the second quarter of 1997,
an increase of $8,938 from the same period in 1996.

8
<PAGE> 9
BIOMATRIX, INC. AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997, AND 1996

REVENUES. Total revenues for the six months ended June 30, 1997 and
1996 were $11,020,382 and $10,281,587, respectively, which represented an
increase of $738,795 in the 1997 period. Product sales were $3,743,050 in the
first half of 1997, representing an increase of $1,581,572 or 73.2%, over the
same period in 1996. This increase was due primarily to increased sales of
Synvisc in Sweden, new sales of Synvisc in France, and new sales of Hylaform in
Europe. Product sales accounted for 34% and 21% of total revenues for the six
months ended June 30, 1997 and 1996, respectively. Revenues from research
contracts, licenses and royalties were $7,277,332 and $8,120,109 for the six
months ended June 30, 1997 and 1996, respectively, and accounted for 66% and
79% of total revenues in the six months ended June 30, 1997 and 1996,
respectively.

COST AND EXPENSES. Total cost and expenses were $7,583,948 for the
six months ended June 30, 1997, which represented an increase of $962,600, or
14.5%, from the corresponding period of 1996. Cost of sales was $1,477,827
for the six months ended June 30, 1997, representing an increase of $122,466
over the same period of 1996, due to the higher sales volume. Cost of sales as
a percentage of sales was 39.5% in the six months ended June 30, 1997 versus
62.7% for the same period of 1996. Research and development expenses were
$2,805,545 in the first half of 1997, representing an increase of $180,694, or
6.9%, due primarily to increased clinical research activities. Selling,
general and administrative expenses were $3,300,576 in the first half of 1997,
representing an increase of $659,440, or 25%. The increase was due primarily
to costs associated with the negotiation of corporate distribution and joint
venture agreements and higher personnel and consulting expenses associated with
the establishment of European operations and the expansion of operations in
Canada and the United States.

INTEREST AND MISCELLANEOUS INCOME. Interest expense was $55,407 for
the first half of 1997, which represented a decrease of $10,968 from the same
period of 1996. Interest and miscellaneous income was $426,495 for the six
months ended June 30, 1997 as compared to $361,449 for the same period of 1996.
The increase in interest and miscellaneous income was due primarily to greater
interest income resulting from higher average cash and investment balances.

LIQUIDITY AND CAPITAL RESOURCES

The Company had cash and cash equivalents of $14,072,948 and
held-to-maturity investments, invested in U.S. government securities, of
$3,601,094 at June 30, 1997. Overall, the Company's cash and held-to-maturity
investment position increased by $4,035,920 in the six months ended June 30,
1997. The Company invests its excess cash in U.S. government securities. Any
security purchased with a maturity of three months or less is classified as
cash and cash equivalents.

The Company's operations over the past several years have been
financed primarily from the private placement of equity securities and up-front
non-refundable license fee payments from corporate partners. Over the past
three years, the Company has received funding of $7,717,775 from the private
placement of equity securities and $26,533,000 from license fee payments.

9
<PAGE> 10
BIOMATRIX, INC. AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

For the six months ended June 30, 1997 the Company had positive cash
flows from operations of $3,753,176 which primarily resulted from non-recurring
fees received during the six months of $7,000,000. During the six month
period, the Company invested $2,120,430 in property, plant, and equipment,
primarily associated with increasing the production capacity of its Canadian
manufacturing facility and the capitalization of costs related to a lease which
the Company entered into for a 93,000 square foot building in New Jersey in
which the Company intends to locate its U.S. manufacturing operation. The
lease term is approximately ten years with annual lease payments increasing
from $350,000 to $500,000 over the term of the lease. Within the first three
years of the lease, the Company has an option to acquire this building at a
price of approximately $4,500,000. Should the Company not exercise its option
within this three-year period, the landlord has the right to require the
Company to purchase this building for approximately the same price. The
Company plans to continue to modify this building to accommodate manufacturing
capability for the U.S. and foreign markets. The Company also plans to
relocate its executive and administrative offices and research and development
laboratories to this building upon the expiration in 1999 of the Company's
lease on its current headquarters in New Jersey. Additionally, the Company
received $543,334 from the exercise of Company stock options and $1,890,000
from the sale of common stock during the six months ended June 30, 1997.

In February 1997, the Company entered into a marketing and
distribution agreement with Wyeth-Ayerst Laboratories to sell Synvisc in the
United States, Germany, Austria, Spain, Portugal, Greece and certain countries
in the Middle East and Central Europe. As part of this agreement, the Company
received a non-refundable up-front license fee payment of $4,000,000 and could
receive up to a total of $19,000,000 related to the launch of Synvisc in
Europe, U.S. FDA approval and the launch of Synvisc in the United States, plus
additional payments for other milestones.

In April 1997, the Company entered into a marketing and distribution
agreement with Bayer AG to sell Synvisc in Australia, New Zealand, Taiwan,
Singapore, Indonesia, Thailand, Malaysia and Israel. In return, the Company
received an up front non-refundable license fee payment of $3,000,000, and
could receive an additional milestone payment of $2,000,000.

The planned increase in manufacturing capacity and commercialization
of medical products will continue to increase costs and expenses during the
remainder of 1997. The Company's capital spending associated with developing
its additional capacity is expected to approximate $9,300,000 during the
remainder of 1997. The Company plans to seek lease financing which, if
obtained, could fund a portion of these capital costs. The Company will
continue to incur higher expenses during 1997 associated with developing its
internal infrastructure to support the administration of its sales force for
its distribution agreements with Boehringer Ingelheim France, S.A., Wyeth, and
Bayer, as well as the establishment of a sales and marketing function for the
Company's direct sales in certain European and Asian countries. The Company
believes that its capital needs and higher operating expenses will be supported
by its current working capital position, potential milestone payments from
existing corporate partners, and other one-time payments from partners.

During the second quarter of 1997, the Company committed to repurchase
86,666 shares of common stock from one of its partners, Recordati International
Holdings, S.A. ("Recordati"), as was the Company's right under a Stock Purchase
Agreement entered into with Recordati in 1995. Also during the second quarter,
the Company sold 105,000 shares of common stock at fair market value to certain
officers of the Company under the 1997 Restricted Stock Purchase Plan. The
sale of these shares to the officers at fair market value were settled in cash
by the close of the second quarter and generated $1,890,000 of proceeds to the
Company. The Company repurchased 43,333 of the shares from Recordati during
July, which required approximately $929,000 of funds. The repurchased shares
will be treated as treasury stock. The Company still has the right to
repurchase the remaining 43,333 shares during the next six months upon notice
of sale from Recordati.

10
<PAGE> 11
BIOMATRIX, INC. AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

In June 1997, the FASB issued Statement of Financial Accounting Standards No.
130 "Reporting Comprehensive Income" which establishes standards for reporting
and display of comprehensive income and its components in a full set of
financial statements. The Company is required to adopt this standard in
1998 and believes the principle component of comprehensive income will be
foreign currency translation.

11
<PAGE> 12

BIOMATRIX, INC. AND SUBSIDIARIES

ITEM 1. LEGAL PROCEEDINGS

ITEM 2. CHANGES IN SECURITIES

On May 29, 1997, the shareholders approved the Company's 1997
Restricted Stock Purchase Plan (the "Plan"). Pursuant to the Plan, the
Company sold 6,000 shares of common stock to each of Dr. Janet L. Denlinger and
Mr. Rory B. Riggs, at a purchase price of $15.875 per share (such price being
the closing price on May 28, 1997). Dr. Denlinger and Mr. Riggs each purchased
the shares described above with a full recourse, ten-year, secured promissory
note that accrues interest at the rate of 7.18% per year. Such shares are
pledged to the Company as collateral for the notes and are subject to
repurchase by the Company according to agreements between the Company and each
of Dr. Denlinger and Mr. Riggs, as applicable.

On the same date, the Board of Directors approved Dr. Denlinger and
Mr. Riggs each foregoing a previous option grant of 5,000 shares at a price of
$11.25 per share in exchange for the purchase of 5,000 shares under the Plan.
Dr. Denlinger and Mr. Riggs each purchased the shares with an interest
bearing, full recourse, ten-year, secured promissory note equal to the
underlying option price per share. Both officers recognized a gain on this
conversion based on the fair market value of $15.875 per share as of May 28,
1997. Such shares are pledged to the Company as collateral for the notes and
are subject to repurchase by the Company according to agreements between the
Company and each of Dr. Denlinger and Mr. Riggs, as applicable.

These shares were issued pursuant to the shareholder approved Plan,
however, because the Plan was not yet filed with the Securities and Exchange
Commission the shares were sold in private offerings, which the Company
believes qualify as transactions by an issuer not involving a public offering
within the meaning of Section 4(2) of the Securities Act of 1933, as amended.

12
<PAGE> 13
BIOMATRIX, INC. AND SUBSIDIARIES

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On May 29, 1997, at the Company's Annual Meeting of Shareholders, the
Company's shareholders met to consider and vote upon the following five
proposals:

(1) A proposal to elect three Class 3 directors to hold office for a
three-year term and until their respective successors have been duly
qualified and elected.

(2) A proposal to ratify an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of Common
Stock from 20,000,000 to 60,000,000 shares.

(3) A proposal to ratify the amendment to the Company's 1994 Stock Option
Plan increasing the number of shares authorized for issuance under the
Plan from 2,000,000 to 2,500,000 shares.

(4) A proposal to ratify the adoption by the Board of Directors of the
Company's 1997 Restricted Stock Plan.

(5) A proposal to ratify the appointment of Coopers & Lybrand L.L.P. as
the independent public accountants for the Company for the fiscal year
ending December 31, 1997.

Results with respect to the voting on each of the above proposals were
as follows:

<TABLE>
<S> <C> <C>
Proposal 1: H. Stuart Campbell For - 8,198,761 Withhold Authority - 404,800
--- --------- ------------------ -------

Rory B. Riggs For - 8,198,661 Withhold Authority - 404,900
--- --------- ------------------ -------

Justin P. Morreale For - 8,198,761 Withhold Authority - 404,800
--- --------- ------------------ -------
</TABLE>

<TABLE>
<S> <C> <C>
Proposal 2: 7,817,240 Votes For
---------
778,211 Votes Against
---------
8,110 Abstentions
---------
0 Broker Non-Votes
---------

Proposal 3: 5,458,058 Votes For
---------
802,669 Votes Against
---------
20,620 Abstentions
---------
2,322,214 Broker Non-Votes
---------

Proposal 4: 5,690,242 Votes For
---------
571,545 Votes Against
---------
18,560 Abstentions
---------
2,323,214 Broker Non-Votes
---------

Proposal 5: 8,587,211 Votes For
---------
11,800 Votes Against
---------
4,500 Abstentions
---------
0 Broker Non-Votes
-
</TABLE>

13
<PAGE> 14

BIOMATRIX, INC. AND SUBSIDIARIES

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

A. EXHIBITS

10.1 Form of Restricted Stock Purchase Agreement under the
Company's 1997 Restricted Stock Plan.

10.2 Form of Secured Promissory Note under the Company's
1997 Restricted Stock Plan.

10.3 Form of Stock Pledge Agreement under the Company's
1997 Restricted Stock Plan.

11 Computation of Earnings Per Share

27.1 Financial Data Schedule

B. REPORTS ON FORM 8-K

None

14
<PAGE> 15
BIOMATRIX, INC. AND SUBSIDIARIES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

DATE: August 7, 1997 BIOMATRIX, INC.

By: /s/Endre A. Balazs
--------------------------------
Endre A. Balazs
Chief Executive Officer and
Chief Scientific Officer

By: /s/Rory B. Riggs
--------------------------------
Rory B. Riggs
President and Chief Financial Officer

<PAGE> 1
EXHIBIT 10.1

BIOMATRIX, INC.

RESTRICTED STOCK PURCHASE AGREEMENT

UNDER THE 1997 RESTRICTED STOCK PLAN

This Restricted Stock Purchase Agreement (this "Agreement") is made as
of this ______ day of ____, 199_, between BIOMATRIX, INC., a Delaware
corporation (the "Company"), and ____________ (the "Purchaser").

WHEREAS, the Purchaser is an employee of the Company whose
participation is considered by the Company to be important for its growth; and

WHEREAS, the Company desires to sell to the Purchaser, and the
Purchaser desires to purchase from the Company, __________ (____) shares of the
Company's Common Stock, par value $.0001 per share, all in accordance with the
terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the promises and mutual covenants
herein set forth, and other good and valuable consideration, receipt of which
is hereby acknowledged, the parties hereto hereby mutually covenant and agree
as follows:

1. Relationship to Plan. This Agreement is entered into
pursuant to the Company's 1997 Restricted Stock Plan (the "Plan"), and is in
all respects, subject to the terms and conditions of the Plan, a copy of which
has been provided to the Purchaser (the receipt of which the Purchaser hereby
acknowledges). The Purchaser hereby acknowledges that his purchase of the
Purchased Shares (as defined in Section 3 below) is subject to all of the terms
and provisions of the Plan. Capitalized terms used and not otherwise defined
in this Agreement shall have the respective meanings ascribed thereto in the
Plan. The Purchaser further agrees that all decisions under and
interpretations of the plan by the Company shall be final, binding and
conclusive upon the Purchaser and his successors, permitted assigns, heirs and
legal representatives.

2. Definitions. For all purposes of this Agreement, the
following definitions shall apply, unless the context otherwise requires:

(a) "Legal Representative" shall mean the executor or executors,
the administrator or administrators, or the other legal representative or
representatives, of the Purchaser or his estate.

(b) "Released Shares" shall mean, at the relevant time of
reference thereto, all of the Shares (other than the then Unreleased Shares).
<PAGE> 2
-2-

(c) "Repurchase Option" shall mean the repurchase option granted
to the Company and its assignees under Section 7 hereof.

(d) "Shares" shall mean, collectively, (i) all of the Purchased
Shares (as defined in Section 3 below) and (ii) any and all other stock or
securities that become subject to the Repurchase Option pursuant to Section
7(c) hereof.

(e) "Unreleased Shares" shall mean, at the relevant time of
reference thereto, that number of the Purchased Shares (subject to adjustment
as provided in Section 7(c) hereof) as shall not have been released from the
Repurchase Option on or prior to such time.

3. Sale of Stock. The Company hereby agrees to sell to the
Purchaser, and the Purchaser hereby agrees to purchase from the Company, an
aggregate of ___________ (_____) shares of the Company's Common Stock (the
"Purchased Shares"), at the price of $______ per share for an aggregate
purchase price of $______.

4. Payment of Purchase Price. The aggregate purchase price for
the Shares shall be paid to the Company by delivery to the Company at the time
of execution of this Agreement a promissory note in favor of the Company, in a
principal amount equal to such aggregate purchase price (the "Note").
Contemporaneously with the execution and delivery to the Company of the Note,
the Purchaser shall execute and deliver to the Company a stock pledge agreement
(the "Stock Pledge Agreement"), pursuant to which the Purchaser agrees to
pledge the Purchased Shares to secure the payment and performance of all of his
obligations under the Note.

5. Issuance of Certificate for the Purchased Shares. Upon
receipt by the Company of the Note, the Company shall issue in the name of the
Purchaser duly executed certificates evidencing the Purchased Shares, which
certificates shall be endorsed with the legend set forth in Section 12(c)
below. Pursuant to the Stock Pledge Agreement, by and between the Company and
the Purchaser, the Secretary of the Company shall hold such certificates until
such time as the Purchased Shares represented thereby become Released Shares
and the pro rata portion of the Note corresponding to such shares has been paid
by the Purchaser.

6. Restriction on Transfer. Except for any transfer of
Unreleased Shares to the Company or its assignees as contemplated by this
Agreement, none of the Unreleased Shares or any beneficial interest therein
shall be sold, transferred, assigned, pledged, encumbered or otherwise disposed
of in any way (including, without limitation, by operation of law) at any time.
None of the
<PAGE> 3
-3-

Released Shares or any beneficial interest therein shall be sold, transferred,
assigned, pledged, encumbered or otherwise disposed of in any way (including,
without limitation, by operation of law), except in accordance with and upon
compliance with all of the provisions of this Agreement. Any sale, transfer,
assignment, pledge, encumbrance or other disposition of the Shares shall be
void unless the provisions of this Agreement are met.

7. Repurchase Option.

(a) In the event of the voluntary or involuntary termination of
the Purchaser's employment or active consultancy with the Company, as the case
may be (or, if the Purchaser shall have two or more of such relationships with
the Company, in the event of the voluntary or involuntary termination of all of
such relationships between the Purchaser and the Company), for any or no reason
(including death or disability) before all of the Purchased Shares have become
Released Shares, the Company shall, upon and from the date of such termination,
as reasonably fixed and determined by the Company (the "Termination Date"),
have an irrevocable, exclusive right, but not the obligation, to repurchase all
or any number of the Unreleased Shares at the original purchase price per share
of $________ (subject to adjustment as provided in Section 7(c) below) plus any
interest that may have accrued under the Note with respect to that portion of
the principal amount under the Note attributable to the purchase price of such
Unreleased Shares. The Company may exercise its right to repurchase at any
time within ninety (90) days after such termination by delivery to the
Purchaser or his Legal Representative of a written notice of exercise (the
"Repurchase Notice") and, at the Company's option, (i) by delivery to the
Purchaser or his Legal Representative, together with such Repurchase Notice, of
a check in the amount of the aggregate purchase price for the Unreleased Shares
being repurchased, or (ii) by cancellation by the Company of an amount of any
indebtedness of the Purchaser to the Company equal to the aggregate purchase
price for the Unreleased Shares being repurchased, or (iii) by a combination of
(i) and (ii) so that the combined payment and cancellation of indebtedness
equals such repurchase price. Any Unreleased Shares not so repurchased shall
no longer be subject to the provisions of this Section 7. Upon delivery of
such Repurchase Notice and the payment of such aggregate purchase price in any
of the ways described above, the Company shall become the legal and beneficial
owner of the Unreleased Shares being repurchased and all rights and interests
therein or relating thereto, and the Company shall have the right to retain and
transfer to its own name the number of Unreleased Shares being repurchased by
the Company. Notwithstanding anything in this Agreement (including, without
limitation, this Section 7(a) or Section 8) expressed or implied to the
contrary, the right to repurchase granted to the Company under this Section
7(a) shall apply to any and all Unreleased Shares that are outstanding on the
Termination Date despite the fact that from

<PAGE> 4
-4-

and after the Termination Date any or all of such Unreleased Shares are, or are
scheduled to be, released from the Repurchase Option by operation of the
provisions of Section 8 hereof.

(b) Whenever the Company shall have the right to repurchase
Unreleased Shares under this Agreement, the Company may designate and assign
one or more employees, officers, or directors of the Company or other persons
or organizations to exercise all or any part of the Company's rights under this
Agreement to repurchase all or any number of such Unreleased Shares.

(c) In the event the shares of Common Stock of the Company shall
be subdivided (whether by stock split, stock dividend or otherwise) or combined
into a greater or smaller number of shares or if, upon a merger, consolidation,
sale of all or substantially all of its assets, reorganization, split-up,
combination, reclassification, recapitalization or the like of the Company, the
shares of the Company's Common Stock shall be exchanged for other securities of
the Company or of another corporation, person or entity, then such number of
shares of Common Stock or such amount of other securities of the Company or
such other corporation, person or entity as were issued in respect of or in
exchange for the Unreleased Shares shall be, thereafter, included as part of
the Unreleased Shares, and the term "Unreleased Shares" shall, thereafter,
include, for all purposes of this Agreement, such number of shares of Common
Stock and/or such amount of other securities of the Company or such other
corporation, person or entity. Immediately upon the occurrence of any of the
events referred to above in this Section 7(c) an appropriate and equitable
adjustment shall be made to the purchase price payable by the Company or its
assignees in connection with the repurchase of any Unreleased Shares pursuant
to this Section 7.

(d) Contemporaneously with the execution and delivery of this
Agreement, the Purchaser agrees to execute and deliver to the Company a stock
power relating to the Purchased Shares and any shares that may become subject
to the Repurchase Option.

8. Release of Purchased Shares From Repurchase Option.

(a) At each date set forth in the table below, the number of the
Purchased Shares equal to the product of (i) the cumulative percentage set
forth next to such date and (ii) the total number of the Purchased Shares
(subject to appropriate adjustment upon the occurrence of any of the events
referred to in Section 7(c) hereof) shall be released from the Repurchase
Option.

<PAGE> 5
-5-

<TABLE>
<CAPTION>
Date Cumulative Percentage
---- ---------------------
<S> <C>

-------- ----%
-------- ----%
-------- ----%
-------- ----%
</TABLE>

(b) Immediately upon the occurrence of a Change of Control (as
defined below), any and all of the Unreleased Shares shall become Released
Shares. For the purposes of this Section 8(b), the term "Change of Control"
shall mean sale of all or substantially all of the assets of the Company or the
coordinated sale of 50% or more of the Company's issued and outstanding common
stock.

9. Representations and Warranties of the Purchaser.

(a) The Purchaser hereby represents and warrants to the Company,
its officers, directors, agents, and employees as follows:

(i) That he has had an opportunity to ask questions of
and receive answers from the authorized representatives of the Company, and to
review any relevant documents and records concerning the business of the
Company and the terms and conditions of this investment, and that any such
questions have been answered to his full satisfaction.

(ii) That he has such knowledge and experience in
financial and business matters that he is capable of evaluating the merits and
risks of an investment in the Company.

(iii) That the Shares are being acquired for his own
account for investment and not with a view toward subdivision, resale, or
redistribution thereof in a manner prohibited under the Securities Act of 1933,
as amended (the "Act"), and he does not presently have any reason to anticipate
any change in his circumstances or other particular occasion or event which
would cause him to sell his Shares. Other than the Stock Pledge Agreement, he
has no contract, undertaking, agreement, understanding, or arrangement with any
person to sell, transfer, or pledge to any person any part or all of the Shares
for which he hereby subscribes, or any interest therein, and has no present
plans to enter into the same.

(iv) That he is an "accredited investor" as defined in
Regulation D of the Act by virtue of his being an executive officer and
director of the Company, if not otherwise.

<PAGE> 6
-6-

(v) That all information which he has provided (or will
provide) concerning himself and his financial position, is correct and
complete as of the date of this Agreement.

(b) The Purchaser acknowledges that the Company and its officers,
directors, employees, and agents are relying on the truth and accuracy of the
representations and warranties set forth in Section 9(a) in connection with the
offering of Shares for sale to the Purchaser without having first registered
the Shares under the Act. All representations, warranties, and covenants
contained in this Agreement shall survive the acceptance of this Agreement and
the sale of the Shares. Notwithstanding the foregoing, however, no
representation, warranty, acknowledgment, or agreement made herein by the
Purchaser shall in any manner be deemed to constitute a waiver of any rights
granted to him under federal or state securities laws.

10. Investment Intent.

(a) The parties agree that none of the Shares or any beneficial
interest therein shall be sold, transferred, assigned, pledged, encumbered or
otherwise disposed of in any way (including, without limitation, by operation
of law) unless and until (i) such Shares or such beneficial interest, as the
case may be, proposed to be sold, transferred, assigned, pledged, encumbered or
otherwise disposed of are registered pursuant to an effective registration
filed with the Securities and Exchange Commission pursuant to the Act or (ii)
if required by the Company, the Company shall have received an opinion, in form
and substance satisfactory to the Company, from the Company's legal counsel to
the effect that the sale, transfer, assignment, pledge, encumbrance or other
disposition of such Shares or such beneficial interest, as the case may be,
does not require registration under the Act or any applicable state securities
laws.

(b) Certificates evidencing the Shares shall be endorsed with a
legend, in addition to any other legends required by this Agreement,
substantially as follows:

"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SHARES HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE,
AND MAY NOT BE MORTGAGED, PLEDGED HYPOTHECATED OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SHARES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR, IF REQUIRED
BY THE CORPORATION, AN

<PAGE> 7
-7-

OPINION OF COUNSEL FOR THE CORPORATION THAT REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT."

(c) The Purchaser understands and agrees that neither the Company
nor any agent of the Company shall be under any obligation to recognize any
transfer of any of the Shares if, in the opinion of counsel for the Company,
such transfer would result in violation by the Company of any federal or state
law with respect to the offering, issuance or sale of securities.

11. Tax Consequences.

(a) It is understood by the parties hereto that the
issuance and sale of the Shares hereunder may be deemed compensatory in purpose
and in effect and that, as a result, the Company may be obligated to pay
withholding taxes in respect thereof at the time the Purchaser becomes subject
to Federal income taxation with respect to the receipt of the Shares hereunder.
In the event that at the time the above-said withholding tax obligations arise
(i) the Purchaser is no longer in the employ of the Company or is no longer
otherwise providing services to the Company, as the case may be, or (ii) the
Purchaser's other cash compensation from the Company is not sufficient to meet
the aforesaid withholding tax obligation, the Purchaser hereby agrees to
reimburse the Company for all withholding taxes required to be paid in respect
of the issuance and sale of the Shares within thirty (30) days after written
request therefor is made to the Purchaser. Such request shall be made at or
about the time the Company is required to pay such withholding taxes. In the
event the Company determines that it is not obligated to withhold taxes payable
by the Purchaser with respect to the issuance and sale of the Shares but that
it is later held liable due to any non-payment of taxes on the part of the
Purchaser, the Purchaser agrees on his behalf, and on behalf of his heirs,
executors, administrators, legal representatives and assigns, to indemnify the
Company in the amount of any payment made by the Company in respect of such
liability.

(b) The Purchaser hereby agrees to deliver to the Company a signed
copy of any instrument, letter or other document he may execute and file with
the Internal Revenue Service evidencing his election under Section 83(b)(2) of
the Internal Revenue Code of 1986, as amended, to treat his receipt of the
Shares hereunder as includable in his gross income in the year of receipt. The
Purchaser shall deliver a copy of any such instrument of election to the
Company within five (5) days after the date on which any such election is
required to be made in accordance with the appropriate provisions of the
Internal Revenue Code or applicable Regulations thereunder.

<PAGE> 8
-8-

12. General Provisions.

(a) This Agreement shall be governed by the internal substantive
laws of the State of Delaware and shall be binding upon the heirs, personal
representatives, executors, administrators, successors and permitted assigns of
the parties.

(b) This Agreement supersedes all prior written and oral
agreements and understandings between the parties and represents the entire
agreement between the parties with respect to the subject matter hereof and may
only be modified or amended in writing signed by both parties.

(c) In addition to the legend set forth in Section 10(b) of this
Agreement, the certificates representing the Shares shall be endorsed with the
following legend:

"THIS CERTIFICATE AND THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO A RESTRICTED STOCK PURCHASE AGREEMENT DATED AS OF
_________, AND TO THE RESTRICTIONS UPON TRANSFER CONTAINED THEREIN. A
COPY OF THE AGREEMENT WILL BE FURNISHED TO ANY INTERESTED PARTY UPON
WRITTEN REQUEST FREE OF CHARGE."

(d) Any notice, demand, request or other communication hereunder
to any party shall be deemed to be sufficient if contained in a written
instrument delivered in person or duly sent by first class registered,
certified or overnight mail, postage prepaid, or telecopied with a confirmation
copy by regular, certified or overnight mail, addressed or telecopied, as the
case may be, to such party at the address or telecopier number, as the case may
be, set forth below or such other address or telecopier number, as the case may
be, as may hereafter be designated in writing by the addressee to the addressor
listing all parties:

if to the Corporation, to: with a copy to:

Biomatrix, Inc. Justin P. Morreale, Esq.
65 Railroad Avenue Bingham, Dana & Gould LLP
Ridgefield, NJ 07657 150 Federal Street
Attention: Endre A. Balazs Boston, MA 02110
Telecopier: (201) 945-0363 Telecopier: (617) 951-8736

<PAGE> 9
-9-

if to the Purchaser, to:

------------------------------------------

All such notices, request and other communications shall be deemed to
have been received: (i) in the case of personal delivery, on the date of such
delivery; (ii) in the case of mailing, when received by the addressee; and
(iii) in the case of facsimile transmission, when confirmed by facsimile
machine report.

(e) The rights and obligations of each party under this Agreement
shall inure to the benefit of and be binding upon such party's heirs,
successors and permitted assigns. The rights and obligations of the Company
under this Agreement shall be assignable by the Company to any one or more
persons or entities without the consent of the Purchaser. The rights and
obligations of the Purchaser under this Agreement may only be assigned with the
prior written consent of the Company.

(f) Either party's failure to enforce any provision or provisions
of this Agreement shall not in any way be construed as a waiver of any such
provision or provisions, nor prevent the party thereafter from enforcing each
and every other provision of this Agreement. The rights granted both parties
herein are cumulative and shall not constitute a waiver of either party's right
to assert all other legal remedies available to it under the circumstances.

(g) The Purchaser hereby consents to the utilization by the Company,
as necessary in connection with dealings with any governmental and regulatory
authorities, of any information supplied to the Company by the Purchaser or by
his representatives in connection with the offer and sale of the Shares, and
agrees to supply any additional information reasonably requested by any such
authority.

(h) If any provision of this Agreement shall be held illegal,
invalid or unenforceable, such illegality, invalidity or unenforceability shall
attach only to such provision and shall not in any manner affect or render
illegal, invalid or unenforceable any other severable provisions of this
Agreement.

(i) Headings are for convenience only and are not deemed to be
part of this Agreement.

<PAGE> 10
-10-

(j) The Purchaser agrees upon request to execute any further
documents or instruments necessary or desirable to carry out the purposes or
intent of this Agreement.

(k) This Agreement may be executed in counterparts, all of which
together shall for all purposes constitute one Agreement, binding on each of
the parties hereto notwithstanding that each such party shall not have signed
the same counterpart.

(l) The Company is not by reason of this Agreement or the issuance
of any Shares obligated to continue the Purchaser's employment.

(m) In case of any dispute hereunder, the parties will submit to
the exclusive jurisdiction and venue of any court of competent jurisdiction
sitting in Bergen County, New Jersey, and will comply with all requirements
necessary to give such court jurisdiction over the parties and the controversy.
EACH PARTY HEREBY WAIVES ANY RIGHT TO A JURY TRIAL AND TO CLAIM OR RECOVER
PUNITIVE DAMAGES.

IN WITNESS WHEREOF, the parties have duly executed this Agreement
under seal as of the day and year first set forth above.

<TABLE>
<S> <C>
BIOMATRIX, INC. PURCHASER:

By:
------------------------------------------ ------------------------------------------
Endre A. Balazs [____________]
Chief Executive Officer
</TABLE>

<PAGE> 1
EXHIBIT 10.2

SECURED PROMISSORY NOTE

$_________ Ridgefield, New Jersey
________, 199_

FOR VALUE RECEIVED, the undersigned, ___________ (the "Maker"), by
this Secured Promissory Note (this "Note"), absolutely and unconditionally
promises to pay to the order of BIOMATRIX, INC., a Delaware corporation (the
"Payee"), the aggregate principal amount of __________________________ Dollars
($______) on _________, 200_ (the "Maturity Date"), and to pay simple interest
on the principal amount outstanding from time to time hereunder, from the date
hereof through and including the date on which such principal amount is paid in
full, at a rate of ____% per annum simple interest. Interest hereunder shall
be due and payable on the Maturity Date or any accelerated maturity hereof.

The Maker shall have the right to prepay the unpaid principal amount
of this Note in full at any time, or in part from time to time, without premium
or prepayment penalty, provided that there is paid with each such principal
prepayment all accrued and unpaid interest to the date of prepayment
(calculated on the basis of a 365-day year for the actual number of days for
which the same is due).

All payments of interest and principal hereunder shall be made at the
principal business address of the holder hereof. All payments hereunder shall
be applied first to payment of all, if any, other amounts except principal due
under or in respect of this Note and second to repayment of principal.

This Note is made and delivered by the Maker to the Payee pursuant to
that certain Restricted Stock Purchase Agreement, dated as of the date hereof,
among the Payee and the Maker, and is secured pursuant to the provisions of a
certain Stock Pledge Agreement, dated of even date herewith, between the Maker
and the Payee.

Whenever any payment under this Note becomes due on a date that is not
a regular business day in the State of New Jersey, the maturity thereof shall
be extended to the next succeeding business day and interest at the applicable
rate shall accrue during such extension.

The indebtedness evidenced by this Note is and will be subordinate and
subject in right of payment to the prior payment in full of any indebtedness,
obligations or liabilities of the Maker to any bank or other financial
institution existing on the date hereof or arising hereafter.
<PAGE> 2
-2-

Anything implied herein to the contrary notwithstanding, in the event
that (1) the Maker shall fail to pay when due all or any portion of the
principal of or interest on this Note, (2) the Maker shall make an assignment
of the whole or a substantial part of his assets for the benefit of creditors,
or (3) there shall be commenced by or against the Maker any proceeding under
any bankruptcy, insolvency, readjustment of debt or similar law of any
jurisdiction, (each event referred to in clauses (1) through (3) above being
hereinafter referred to herein as an "Event of Default") then without notice to
or demand upon the Maker the entire unpaid principal of this Note, and all
interest accrued thereon, shall (if not already due and payable) immediately
become and be due and payable to the order of the holder hereof.

The Maker and the Payee shall provide any notices hereunder according
to the provisions of the Restricted Stock Purchase Agreement, dated as of the
date hereof, by and between the Maker and the Company. This Note may not be
assigned or transferred by Maker without the written consent of Payee.

The remedies of Payee as provided herein shall be cumulative and
concurrent, and may be pursued singularly, successively or together at the sole
discretion of the Payee. The Maker hereby, to the fullest extent permitted by
applicable law: (a) waives presentment, demand, notice, protest, and all other
demands and notices in connection with delivery, acceptance, performance,
default, acceleration or enforcement of or under this Note; (b) assents to any
extension or postponement of the time of payment or any other indulgence, and
to any substitution, exchange or release of collateral; and (c) agrees to pay
to the holder, on demand, all costs and expenses of collection, including,
without limitation, reasonable attorneys' fees and legal expenses, incurred by
the holder in enforcing this Note, whether or not litigation is commenced.

No failure by the holder to exercise, or delay by the holder in
exercising, any right or remedy hereunder shall operate as a waiver thereof, or
of any other right or remedy, and no single or partial exercise of any right or
remedy shall preclude any other or further exercise thereof or of any other
right or remedy. Acceptance by the holder of any payment after the maturity of
this Note has been accelerated shall not constitute a waiver of such
acceleration.

THIS NOTE SHALL TAKE EFFECT AS AN INSTRUMENT UNDER SEAL AND SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW
JERSEY.

------------------------------------------------
[_____________]

<PAGE> 1
Exhibit 10.3

BIOMATRIX, INC.

STOCK PLEDGE AGREEMENT

This Stock Pledge Agreement (this "Agreement") is made as of this
_____ day of ________, 199_ by and between _____________ (the "Pledgor"), and
BIOMATRIX, INC., a Delaware corporation (the "Company").

WHEREAS, the Company has agreed to sell to the Pledgor, and the
Pledgor has agreed to purchase from the Company, ___________ (_____) shares
(the "Shares") of the Company's Common Stock, $.0001 par value per share, upon
the terms and conditions set forth in that certain Restricted Stock Purchase
Agreement, dated as of the date hereof, by and between the Company and the
Pledgor (the "Restricted Stock Purchase Agreement");

WHEREAS, the Restricted Stock Purchase Agreement provides that the
Pledgor shall make payment of the aggregate purchase price for the Shares by
delivering to the Company a promissory note (the "Note"), the principal amount
of which shall be equal to such aggregate purchase price; and

WHEREAS, the Pledgor has agreed to execute and deliver this Agreement
as a condition to the Company's sale of the Shares to the Pledgor.

NOW, THEREFORE, in consideration of the premises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:

1. Pledge of Stock, etc.

(a) The Pledgor hereby pledges, assigns, grants a security
interest in, and delivers to the Company, to secure the Obligations (as defined
below), all of his right, title and interest in and to the Shares to be held by
the Company subject to the terms and conditions hereinafter set forth. The
certificates for such Shares, accompanied by stock powers or other appropriate
instruments of assignment thereof duly executed in blank by the Pledgor, are
being delivered to the Company contemporaneously herewith and shall be held by
the Secretary of the Company. The Pledgor also hereby pledges, assigns, grants
a security interest in, and delivers to the Company, to secure the Obligations,
all of his right, title and interest in and to any and all sums or other
property (including, without limitation, any additional shares of the capital
stock of the Company and any shares of the capital stock of any issuer) paid or
distributed upon or with respect to any of the shares of the capital stock of
the Company or any other issuer pledged hereunder from time to time, regardless
of whether any such sums or other property are paid or distributed by dividend
or redemption, upon liquidation or dissolution, or otherwise.
<PAGE> 2

-2-

(b) Upon the Pledgor's repayment of any part of the Obligations,
the Company agrees to release the pledge pursuant to this Agreement of the pro
rata portion of the Shares corresponding to the proportionate amount of the
Obligations that have been repaid by the Pledgor.

2. Definitions. The following terms shall have the following
meanings:

(a) "Event of Default" shall have the meaning ascribed to such
term in the Note.

(b) "Stock." The Shares, together with any additional shares of
capital stock of any issuer pledged to the Company from time to time pursuant
to Section 1 hereof.

(c) "Stock Collateral." The property at any time pledged to the
Company hereunder (whether described herein or not) and all income therefrom,
increases therein and proceeds thereof, but excluding from the definition of
"Stock Collateral" any income, increases or proceeds received by the Pledgor to
the extent expressly permitted by Section 6.

3. Security for Obligations. This Agreement and the security
interest in and pledge of the Stock Collateral hereunder are made with and
granted to the Company as security for the payment and performance in full of
all of the obligations of the Pledgor under the Note (all of such obligations
being collectively referred to herein as the "Obligations").

4. Liquidation, Recapitalization, etc. Any sums or other
property (including, without limitation, any shares of the capital stock of any
issuer, including the Company, or any securities exchangeable for or
convertible into shares of such capital stock) paid or distributed upon or with
respect to any of the Stock, whether by dividend or redemption or upon the
liquidation or dissolution of the issuer thereof or otherwise, shall, except to
the limited extent provided in Section 6, be paid over and delivered to the
Company to be held by the Company, pursuant to the terms of this Agreement, as
security for the payment and performance in full of all of the Obligations. In
the event that, pursuant to the recapitalization or reclassification of the
capital of the issuer thereof or pursuant to the reorganization thereof, any
distribution of capital shall be made on or in respect of any of the Stock or
any property shall be distributed upon or with respect to any of the Stock, the
property so distributed shall be delivered to the Company to be held by it as
security for the Obligations. Except to the limited extent provided in Section
6, all sums of money and property paid or distributed in respect of the Stock,
whether as a dividend or upon such a liquidation, dissolution, recapitalization
or reclassification or otherwise, that are received by the Pledgor
<PAGE> 3
-3-

shall, until paid or delivered to the Company, be held in trust for the Company
as security for the payment and performance in full of all of the Obligations.

5. Warranty of Title; Authority. The Pledgor hereby represents
and warrants that: (a) the Pledgor has good and marketable title to the Shares,
subject to no pledges, liens, security interests, charges, options,
restrictions or other encumbrances except the pledge and security interest
created by this Agreement, and except for any restrictions imposed by the
Securities Act of 1933, as amended (the "Securities Act"), (b) the Pledgor has
full power, authority and legal right to execute, deliver and perform its
obligations under this Agreement and to pledge and grant a security interest in
all of the Stock Collateral pursuant to this Agreement, and (c) the execution,
delivery and performance of this Agreement by the Pledgor and the pledge of and
grant of a security interest in the Stock Collateral hereunder do not
contravene any law, rule or regulation or any provision of the charter or
by-laws of the issuer or issuers thereof or of any judgment, decree or order of
any tribunal or of any agreement or instrument to which the Pledgor is a party
or by which he or any of his property is bound or affected or constitute a
default thereunder. The Pledgor further warrants that he will have good and
marketable title to any and all Stock Collateral hereafter pledged to the
Company hereunder, subject to no pledges, liens, security interests, charges,
options, restrictions or other encumbrances except the pledge and security
interest created by this Agreement, and except for any restrictions imposed by
the Securities Act. The Pledgor covenants that he shall defend the Company's
rights and security interest in such Stock Collateral against the claims and
demands of any and all third parties. The Pledgor further covenants that he
shall not enter into any agreement that conflicts with this Agreement.

6. Dividends, Voting, etc., Prior to Maturity. So long as no
Event of Default shall have occurred and be continuing, the Pledgor shall be
entitled to receive all cash dividends paid in respect of the Stock, to vote
the Stock and to give consents, waivers and ratifications in respect of the
Stock; provided, however, that no vote shall be cast or consent, waiver or
ratification given by the Pledgor if the effect thereof would impair any of the
Stock Collateral. All such rights of the Pledgor to receive cash dividends
shall cease in case an Event of Default shall have occurred and be continuing.
All such rights of the Pledgor to vote and give consents, waivers and
ratifications with respect to the Stock shall, at the Company's option, as
evidenced by the Company's notifying the Pledgor of such election, cease in
case an Event of Default shall have occurred and be continuing.

7. Remedies.

7.1. In General. If an Event of Default shall have
occurred and be continuing, the Company shall thereafter have the
following rights and remedies (to the extent permitted by applicable
law) in addition to the rights

<PAGE> 4
-4-

and remedies of a secured party under the Uniform Commercial Code of
the State of New Jersey, all such rights and remedies being
cumulative, not exclusive, and enforceable alternatively, successively
or concurrently, at such time or times as the Company deems expedient:

(a) if the Company so elects and gives notice of
such election to the Pledgor, the Company may vote any or all
shares of the Stock (whether or not the same shall have been
transferred into its name or the name of its nominee or
nominees) for any lawful purpose, including, without
limitation, if the Company so elects, for the liquidation of
the assets of the issuer thereof, and give all consents,
waivers and ratifications in respect of the Stock and
otherwise act with respect thereto as though it were the
outright owner thereof (the Pledgor hereby irrevocably
constituting and appointing the Company as his proxy and
attorney-in-fact, with full power of substitution, to do so);

(b) the Company may demand, sue for, collect or
make any compromise or settlement the Company deems suitable
in respect of any Stock Collateral;

(c) the Company may sell, resell, assign and
deliver, or otherwise dispose of, any or all of the Stock
Collateral, for cash or credit or both and upon such terms, at
such place or places, at such time or times and to such
entities or other persons as the Company deems expedient, all
without demand for performance by the Pledgor or any notice or
advertisement whatsoever except as expressly provided herein
or as may otherwise be required by law; and

(d) the Company may cause all or any part of the
Stock held by it to be transferred into its name or the name
of its nominee or nominees.

7.2. Sale of Stock Collateral. In the event of any
disposition of the Stock Collateral as provided in clause (c) of
Section 7.1, the Company shall give to the Pledgor at least five
business days' prior written notice of the time and place of any
public sale of the Stock Collateral or of the time after which any
private sale or any other intended disposition is to be made. The
Pledgor hereby acknowledges that five business days prior written
notice of such sale or sales shall be reasonable notice. The Company
may enforce its rights hereafter without any other notice and without
compliance with any other condition precedent now or hereunder imposed
by statute, rule of law or otherwise (all of which are hereby
expressly waived by the Pledgor, to the fullest extent permitted by
law). The Company may buy any part or all of

<PAGE> 5
-5-

the Stock Collateral at any public sale and if any part or all of the
Stock Collateral is of a type customarily sold in a recognized market
or is of the type which is the subject of widely-distributed standard
price quotations, the Company may buy at private sale and may make
payments thereof by any means. The Company may apply the cash
proceeds actually received from any sale or other disposition to the
reasonable expenses of retaking, holding, preparing for sale, selling
and the like, to reasonable attorneys' fees, travel and all other
expenses which may be incurred by the Company in attempting to collect
the Obligations or to enforce this Agreement or in the prosecution or
defense of any action or proceeding related to the subject matter of
this Agreement, and then to the Obligations in such order or
preference as the Company may determine after proper allowance for
Obligations not then due. Only after such applications, and after
payment by the Company of any amount required by Section
12A:9-504(1)(c) of the Uniform Commercial Code of the State of New
Jersey, need the Company account to the Pledgor for any surplus.

7.3. The Pledgor's Agreements, etc. The Pledgor further
agrees to do or cause to be done all such other acts and things as may
be reasonably necessary to make any sales of any portion or all of the
Stock pursuant to this Section 7 valid and binding and in compliance
with any and all applicable laws (including, without limitation, the
Securities Act, the Securities Exchange Act of 1934, as amended, the
rules and regulations of the Securities and Exchange Commission
applicable thereto and all applicable state securities or "Blue Sky"
laws), regulations, orders, writs, injunctions, decrees or awards of
any and all courts, arbitrators or governmental instrumentalities,
domestic or foreign, having jurisdiction over any such sale or sales,
all at the Pledgor's expense. The Pledgor further agrees that a
breach of any of the covenants contained in this Section 7 will cause
irreparable injury to the Company, that the Company has no adequate
remedy at law in respect of such breach and, as a consequence, agrees
that each and every covenant contained in this Section 7 shall be
specifically enforceable against the Pledgor and the Pledgor hereby
waives and agrees not to assert any defenses against an action for
specific performance of such covenants.

8. Marshalling. The Company shall not be required to marshal any
present or future security for (including, but not limited to, this Agreement
and the Stock Collateral pledged hereunder), or guaranties of, the Obligations
or any of them, or to resort to such security or guaranties in any particular
order; and all of its rights hereunder and in respect to such security and
guaranties shall be cumulative and in addition to all other rights, however
existing or arising. To the extent that he lawfully may, the Pledgor hereby
agrees that he will not invoke any law relating to the marshalling of
collateral which might cause delay in or impede

<PAGE> 6
-6-

the enforcement of the Company's rights under this Agreement, and, to the
extent that he lawfully may, the Pledgor hereby irrevocably waives the benefits
of all such laws.

9. Pledgor's Obligations Not Affected. To the extent permitted
by law, the obligations of the Pledgor hereunder shall remain in full force and
effect without regard to, and shall not be impaired by (a) any bankruptcy,
insolvency, reorganization, arrangement, readjustment, composition, liquidation
or the like of the Pledgor; (b) any exercise or nonexercise, or any waiver, by
the Company of any right, remedy, power or privilege under or in respect of any
of the Obligations or any security therefor (including this Agreement); (c) any
amendment to or modification of any of the Obligations; (d) any amendment to or
modification of any instrument (other than this Agreement) securing any of the
Obligations; or (e) the taking of additional security for, or any guaranty of,
any of the Obligations or the release or discharge or termination of any
security or guaranty for any of the Obligations; whether or not the Pledgor
shall have notice or knowledge of any of the foregoing.

10. Transfer, etc., by the Pledgor. Without the prior written
consent of the Company, the Pledgor will not sell, assign, transfer or
otherwise dispose of, grant any option with respect to, or pledge or grant any
security interest in or otherwise encumber or restrict any of the Stock
Collateral or any interest therein, except for the pledge thereof and security
interest therein provided for in this Agreement.

11. Further Assurances. The Pledgor will do all such acts, and
will furnish to the Company all such financing statements, certificates, legal
opinions and other documents and will obtain all such governmental consents and
corporate approvals and will do or cause to be done all such other things as
the Company may reasonably request from time to time in order to give full
effect to this Agreement and to secure the rights of the Company hereunder, all
without any cost or expense to the Company. If the Company so elects, a
photocopy of this Agreement may at any time and from time to time be filed by
the Company as a financing statement in any recording office in any
jurisdiction.

12. Company's Exoneration. Under no circumstances shall the
Company be deemed to assume any responsibility for or obligation or duty with
respect to any part or all of the Stock Collateral of any nature or kind or any
matter or proceedings arising out of or relating thereto, other than (a) to
exercise reasonable care in the physical custody of the Stock Collateral and
(b) after an Event of Default shall have occurred and be continuing to act in a
commercially reasonable manner. The Company shall not be required to take any
action of any kind to collect, preserve or protect its or the Pledgor's rights
in the Stock Collateral or against other parties thereto. The Company's prior
recourse to any part or all of the Stock Collateral

<PAGE> 7
-7-

shall not constitute a condition of any demand, suit or proceeding for payment
or collection of any of the Obligations.

13. Overdue Amounts. Until paid, all amounts due and payable by
the Pledgor hereunder shall be a debt secured by the Stock Collateral and shall
bear, whether before or after judgment, interest at the rate of interest set
forth in the Note.

14. No Waiver, etc. No act, failure or delay by the Company shall
constitute a waiver of its rights and remedies hereunder or otherwise. No
single or partial waiver by the Company of any default or right or remedy that
it may have shall operate as a waiver of any other default, right or remedy or
of the same default, right or remedy on a future occasion. The Pledgor hereby
waives presentment, notice of dishonor and protest of all instruments, included
in or evidencing any of the Obligations or the Stock Collateral, and any and
all other notices and demands whatsoever (except as expressly provided herein).

15. Notices, etc. Any communication to be made hereunder shall
(a) be made in writing, but unless otherwise stated, may be made by telex,
facsimile transmission or letter, and (b) be made or delivered to the address
of the party receiving notice which is identified with its signature below
(unless such party has by five (5) days' written notice specified another
address), and shall be deemed made or delivered, when dispatched, left at that
address, or five (5) days after being mailed, postage prepaid, to such address.

16. Termination. Upon final payment and performance in full of
the Obligations, this Agreement shall terminate and the Company shall, at the
Pledgor's request and expense, return such Stock Collateral in the possession
or control of the Company as has not theretofore been disposed of pursuant to
the provisions hereof, together with any moneys and other property at the time
held by the Company hereunder.

17. Amendment. Neither this Agreement nor any term hereof may be
amended, modified, waived, discharged or terminated except by a written
instrument expressly referring to this Agreement and to the provisions so
amended, modified, waived, discharged or terminated, and executed by the party
to be charged.

18. Successors and Assigns. This Agreement and all obligations of
the Pledgor hereunder shall be binding upon the heirs, successors and assigns
of the Pledgor, and shall, together with the rights and remedies of the Company
hereunder, inure to the benefit of the Company, its successors in title and
assigns.

<PAGE> 8
-8-

19. Governing Law; Consent to Jurisdiction. THIS AGREEMENT IS
INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW JERSEY. To the
fullest extent permitted by law, the Pledgor hereby absolutely and irrevocably
consents and submits to the exclusive jurisdiction of the courts of the State
of New Jersey and of any Federal court located in the said State in connection
with any actions or proceedings brought against the Pledgor by the Company
arising out of or relating to this Agreement or any of the agreements or
transactions contemplated hereby and hereby irrevocably agrees that all claims
in respect of any such action or proceeding shall be heard and determined in
any such court. The Pledgor hereby waives any objection that he may now or
hereafter have to the venue of any such suit or any such court or that such
suit is brought in an inconvenient court.

20. Waiver of Jury Trial. THE PLEDGOR WAIVES HIS RIGHT TO A JURY
TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE
PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law,
the Pledgor waives any right which he may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages.

21. Headings. The descriptive section headings have been inserted
for convenience of reference only and do not define or limit the provisions
hereof.

22. Severability, etc. If any term of this Agreement shall be
held to be invalid, illegal or unenforceable, the validity of all other terms
hereof shall be in no way affected thereby, and this Agreement shall be
construed and be enforceable as if such invalid, illegal or unenforceable term
had not been included herein. The Pledgor acknowledges receipt of a copy of
this Agreement.

IN WITNESS WHEREOF, intending to be legally bound, the Pledgor and the
Company have caused this Agreement to be executed as of the date first above
written.

<TABLE>
<S> <C>
BIOMATRIX, INC. PLEDGOR:

By:
---------------------------------------------- -----------------------------------------------
Endre A. Balazs [____________]
Chief Executive Officer
</TABLE>

<PAGE> 1

BIOMATRIX, INC. AND SUBSIDIARIES

EXHIBIT 11

COMPUTATION OF EARNINGS PER SHARE

<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, 1997 June 30, 1997
------------- -------------
<S> <C> <C>
Income applicable to common shares . . . . . . . . . . $1,218,152 $3,746,522

Weighted-average number of common shares
and common share equivalents outstanding
during the period:
Common Stock . . . . . . . . . . . . . . . . . 10,844,719 10,760,559
Stock options - primary . . . . . . . . . . . 313,879 316,821
----------- ----------
Shares outstanding - primary . . . . . . . . . 11,158,598 11,077,380
Stock options - fully diluted . . . . . . . . 81,611 78,669
---------- ----------
Shares outstanding - fully diluted . . . . . . 11,240,209 11,156,049
========== ==========

Primary earnings per common share . . . . . . $ 0.11 $ 0.34
Fully diluted earnings per common share . . . $ 0.11 $ 0.34
</TABLE>

<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 14,072,948
<SECURITIES> 3,601,094
<RECEIVABLES> 1,506,209
<ALLOWANCES> 25,500
<INVENTORY> 1,736,367
<CURRENT-ASSETS> 21,981,906
<PP&E> 15,173,558
<DEPRECIATION> (3,881,842)
<TOTAL-ASSETS> 33,550,645
<CURRENT-LIABILITIES> 4,028,608
<BONDS> 5,891,051
0
0
<COMMON> 59,482,537
<OTHER-SE> (3,883,950)
<TOTAL-LIABILITY-AND-EQUITY> 33,550,645
<SALES> 3,743,050
<TOTAL-REVENUES> 11,020,382
<CGS> 1,477,827
<TOTAL-COSTS> 7,583,948
<OTHER-EXPENSES> 27,037
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,037
<INCOME-PRETAX> 3,807,522
<INCOME-TAX> (61,000)
<INCOME-CONTINUING> 3,746,522
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,746,522
<EPS-PRIMARY> 0.34
<EPS-DILUTED> 0.34

</TABLE>