Lattice Biologics Ltd. Reports Third Quarter 2017 Highlights

First profitable quarter of $.02 per share

Lattice Biologics Ltd. (TSX-V: LBL) (OTCQB: LBLTF) ("Lattice Biologics" or the "Company") announces financial results for the third quarter ended June 30, 2017:

Highlights:

• Grenville Strategic Royalty debt restructuring significantly strengthens balance sheet
• Total liabilities decrease by $2.8 million for nine months ended June 30, 2017, a 27% reduction.
• AmnioBoost sales increased 61% quarter over quarter.
• Higher gross profit for nine months ended June 30, 2017, 31.1% vs. 21.1% over the previous period
• Relocation of facility from Scottsdale, AZ to Belgrade, MT results in over $80,000 per month savings.
• Inventory levels remain consistent at $2.1 million vs $2.2 million for nine months ended June 30, 2017 over the previous period.
• Higher margin amnion based products grew from 10% of sales in the prior period and now account for 20.4% of all sales.
• G&A expenses reduced to 13% of sales vs 18% of sales on higher margins, for nine months ended June 30, 2017
• Net loss decreases from $6.3 million for nine months ended June 30, 2016 to $.59 million for nine months ended June 30, 2017, a decrease of 90%.

Q3 2017 Business Update:

The Company remains focused on reducing costs and increasing sales to reach cash flow break even and EBITDA profitability.

"I am extremely pleased with the adoption of our amniotic fluid based technologies. The clinical results are extremely encouraging, and we continue to streamline the Company to focus on these exciting new therapeutic treatments. With the recent relocation of the Company to Belgrade, Montana, the Company is reducing overall G&A costs to attain profitability in the near term. We remain dedicated to developing new iterations of our cellular therapies, and demonstrating clinical efficacy through our relationships with SAB members," said Guy Cook, CEO.

Furthermore, Lattice Biologics is proactively working to complete key additions to its Scientific Advisory Boards (SABs) which are comprised of strategic Key Opinion Leaders (KOLs) in each of the Company's targeted surgical specialties. These professionals play a significant role in influencing industry perception and opinion and can be instrumental in the recruitment of new surgeon partners and generation of critical clinical data.

Lattice Biologics maintains its commitment to honoring the gift of donation by implementing a strong quality control environment for the recovery and processing of donors, which has resulted in a multi-year American Association of Tissue Banks (AATB) re-accreditation.

As indicated above, the Company continues efforts to diversify the sales mix across the new higher margin product lines added in 2017 and expected new products in 2018.

Third Quarter 2017 Financial Results (all figures denoted in USD):

The product launches have been well received by surgeons and the Company continues to replace unprofitable legacy contracts and focus on the newer higher margin products. Lattice Biologics' total revenue was $2,340,834 in the nine months ended June 30, 2017 compared to $3,044,949 for the nine months ended June 30, 2016, a decrease of 23.1%, however the Company recognized total gross profit of $727,285, vs. $642,184 for the same period, an increase of 13.2%.

The following table sets out selected unaudited financial information, prepared in accordance with IFRS. The information contained herein is drawn from interim financial statements of the Company for each of the following quarterly periods ending:

Certain adjustments have been made to the quarterly information for the first two quarters of the fiscal year ended June 30, 2017, as compared to data contained in the quarterly filings for such quarters. These changes relate to certain adjustments for cost of sales and operating costs that were not recognized until the fourth quarter of such fiscal year.

(i) Operating costs are defined as all general and administrative costs, professional fees, rent, salaries and benefits, sales and marketing, and utilities expenses.
(ii) EBITDA is defined as gross profit less operating costs (as defined above).

Lattice also announces that it has obtained TSX Venture Exchange ("TSXV") approval to issue 164,959 common shares ("Shares") of the Company to an individual as compensation for certain services rendered to the Company during June of 2017. The Shares will be issued pursuant to the terms of the Shares for Services Agreement (announced August 8, 2016) at a deemed price of Can$0.13. The number of Shares was determined by using the volume weighted average price of the Company's common shares on the TSXV for the five business days prior to submission to the TSXV for approval of the issuance. The Shares will be subject to a four-month resale restriction.

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About Lattice Biologics Ltd.:

Lattice Biologics Ltd. is an emerging precision medicine leader in the field of cellular therapies and tissue engineering, with a focus on pain management. As a manufacturer of the highest quality allografts, Lattice is focused on next generation products to improve surgical outcomes.

Versatile allografts for a variety of surgical applications:

• Enhancing fusion in spine surgery
• Enhancing breast reconstruction post mastectomy for breast cancer patients
• Sports medicine indications, including ACL repair
• Promotion of bone regeneration in foot and ankle surgery
• Subchondral bone defect repair in knee and other joint surgeries

The Company is currently exploring new technologies in regenerative and personalized medicine:

• All natural amniotic fluid supplement for arthritic joints
  • Demonstrates lasting pain relief and improved outcomes
• Personalized Cancer Diagnostics - revolutionary high-throughput precision chemotherapy screening
  • See study details

Lattice Biologics operates headquarters, laboratory and manufacturing facilities in Belgrade, Montana as well as offices in Toronto, Ontario. The Company maintains all necessary licensures to process and sell its tissue engineered products within the U.S. and internationally. This includes Certificates to Foreign Governments from the U.S. Food and Drug Administration (FDA) and registrations for 29 countries, which allow the export of bone, tendon, meniscus, ligament, soft tissue, and cartilage products outside of the U.S.

Lattice Biologics (TSX-V: LBL) (OTCQB: LBLTF) became a publicly traded company on January 4, 2016.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Cautionary Statement on Forward-Looking Information:

Certain information contained in this news release constitutes "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995 and Canadian securities laws. All statements herein, other than statements of historical fact, are to be considered forward looking. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "planned," "potential," "future," "expected," "could," "possible," "goal," "intends," "will" or similar expressions. Forward-looking statements in this news release include, without limitation: information pertaining to the Company's strategy, plans, or future financial performance, such as statements with respect to future revenues or products, and other statements that express management's expectations or estimates of future performance. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Lattice to be materially different from those expressed or implied by such forward-looking statements. Such risks include but are not limited to: the risk that the Company may not be able to generate sufficient cash to service its indebtedness and uncertainty regarding the ability to consummate the debt restructuring transaction.

Forward-looking statements are necessarily based upon a number of factors and assumptions that, while considered reasonable by management as of the date such statements are made, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The factors and assumptions that could prove to be incorrect, include, but are not limited to: that market prices will be consistent with expectations, the continued availability of capital and financing, and that general economic, market and business conditions will be consistent with expectations. The forward-looking statements are not guarantees of future performance. We disclaim any obligation to update or revise any forward-looking statements, except as required by law. Readers are cautioned not to put undue reliance on these forward-looking statements.

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