In this Phase I SBIR project, Nanotherapeutics proposes to utilize its proprietary particle delivery systems to develop an injectable bone paste formulation incorporating an anti-microbial (PHMB) as a bone graft substitute. A solution-based system, GraftonT (Osteotech) and, recently, a dry osteconductive powder available for reconstitution, OSTEOFILT, became available as superior bone grafts, but each with drawbacks. A new composition incorporating gelatin-coated particles, NanopasteTM (produced by Nanotherapeutics, Inc., patent pending), which has excellent syringability, has proven to be osteconductive in animal studies and is currently licensed (undisclosed). This composition is particulary suitable for incorporation of additional anti-microbial materials, such as PHMB, which may be simply physically mixed in or encapsulated to produce slow-release over days. Using its proprietary powder processing technologies, sustained-release PHMB / NanopasteTM formulations will be tested with significant advantages over standard bone graft materials. In this six month Phase I project, preparation of PHMB / NanopasteTM formulations and in vitro characterization and release will be performed, and preparation for in vivo animal studies to test the efficacy in rodents will be conducted