July 2nd

Tang Capital Partners, LP Announces Proposal to Acquire Northstar Neuroscience, Inc.

Tang Capital Partners, LP today announced that it has made a proposal to acquire Northstar Neuroscience, Inc. (NASDAQ: NSTR) in a negotiated transaction for a price of $2.25 per share in cash. The text of the letter sent to the Northstar Board of Directors making such proposal follows.

July 2, 2008

    Board of Directors
    c/o Alan Levy, Ph.D., Chairman of the Board
    Northstar Neuroscience, Inc.
    2401 Fourth Avenue, Suite 300
    Seattle, Washington 98121

    Dear Members of the Board of Directors,

    As a follow-up to recent discussions with management of Northstar
     Neuroscience, Inc. (\"Northstar\"), I am writing this letter to set
     forth a proposal by Tang Capital Partners, LP (\"Tang\") to acquire
     Northstar in a negotiated transaction between Tang and Northstar.
     This is not a proposal to acquire the stock of Northstar directly
     from the shareholders in a tender offer.

    To date, we have had access only to Northstar\'s publicly available
     information. Based on that information, we are proposing to
     acquire Northstar for $2.25 per share in cash. This proposal
     would unlock significant value for Northstar\'s shareholders and
     is a compelling value proposition in that it represents a 50%
     premium to the closing sale price of Northstar\'s common stock on
     July 1, 2008 and an approximate 47% premium to Northstar\'s
     volume-weighted average trading price since January 22, 2008,
     when Northstar announced its EVEREST clinical trial results.

    While the transaction would be subject to customary closing
     conditions, including the approval of Northstar shareholders
     under Northstar\'s charter documents and applicable law, and very
     limited confirmatory due diligence, it would not be subject to
     any financing condition.

    As Northstar\'s largest shareholder, holding approximately 18% of
     Northstar\'s outstanding common stock, we have spent considerable
     time analyzing Northstar and its options. We strongly believe
     that the best course of action for Northstar and its shareholders
     is for Northstar to be acquired in a transaction that represents
     a significant premium to its current market price. However, the
     window for consummating any such transaction is limited; if the
     Board is to prevent further erosion of Northstar\'s value, it must
     act quickly. Accordingly, this non-binding proposal is contingent
     on our receipt of a positive response on or before July 9, 2008
     and Northstar entering into a binding definitive merger agreement
     on or before July 23, 2008.

    Our proposal provides Northstar shareholders an immediate and
     certain path to a premium, all-cash transaction that will
     eliminate future market risk as well as the risk of future
     erosion in value. We believe that the vast majority of other
     Northstar shareholders will agree and expect this proposal to be
     readily approved by them. We encourage Northstar\'s Board to work
     with us to finalize a definitive merger agreement and bring the
     transaction to a shareholder vote as quickly as possible.

    We value the input of the Board and management when considering
     Northstar\'s strategic alternatives and have tried on several
     occasions to have constructive, confidential discussions with
     management regarding these alternatives. So far, management has
     been unwilling to entertain such discussions except under
     conditions that would make it impossible for us to protect the
     value of our significant investment in Northstar. We have made
     this proposal now because of our belief that this is the only
     remaining path to protect that investment.

    We expect the Board to consider our proposal seriously and
     expeditiously. We are, of course, available to meet with the
     Board and management at any time and immediately begin
     negotiations of a definitive agreement. We look forward to a
     prompt and favorable response.

    Sincerely,

    Tang Capital Partners, LP
    by: Tang Capital Management, LLC, its general partner



    Kevin C. Tang
    Managing Member

ABOUT TANG CAPITAL PARTNERS, LP

Tang Capital Partners, LP is an investment fund that focuses on the life sciences industry. Tang Capital Partners, LP currently owns approximately 18% of the outstanding common stock of Northstar Neuroscience, Inc.

Important Information

This press release is for informational purposes only and is not an offer or solicitation relating to the proposal made by Tang Capital Partners, LP. If a transaction proceeds, Northstar would be required to file with the SEC a proxy statement and other documents regarding the proposed transaction. The definitive proxy statement would be mailed to shareholders of Northstar. INVESTORS AND SECURITY HOLDERS OF NORTHSTAR ARE URGED TO READ ANY PROXY STATEMENT FILED WITH THE SEC CAREFULLY IN ITS ENTIRETY IF AND WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain free copies of the proxy statement (if and when available) and other relevant documents filed with the SEC by Northstar through the Web site maintained by the SEC at http://www.sec.gov. It is anticipated that free copies of the proxy statement (if and when available) and other documents filed with the SEC would also be available from Northstar.

Tang Capital Partners, LP, Tang Capital Management, LLC and Kevin C. Tang may be deemed to be participants in any solicitation in connection with the proposal. Information about them and their beneficial ownership of shares of Northstar may be obtained from a Schedule 13D filed with the SEC by them in respect to Northstar, as the same may be amended.

Any transaction would require the approval of the Northstar Board of Directors and two-thirds of Northstar shareholders unaffiliated with Tang Capital Partners, LP as required by applicable law. There are significant risks and uncertainties as to whether a transaction will be completed on the proposed terms, or at all. Tang Capital Partners, LP undertakes no duty or obligation to update any statements contained in this release as a result of new information, future events or changes in its expectations.

SOURCE: Tang Capital Partners, LP

Tang Capital Management, LLC Kevin C. Tang, 858-200-3830