H3 Pharma Inc. and DSM Biologics sign development agreement for SC-1 monoclonal antibody for the treatment of gastric cancer

Montreal, Canada September 9, 2004 – H3 Pharma Inc., a Montreal-based pharmaceutical Product Development Company, and DSM Biologics, the biologics business unit of the Dutch firm DSM, today announced the signing of an important manufacturing agreement for H3 Pharma’s product candidate SC-1, a monoclonal antibody for the treatment of gastric carcinoma (GC). Under the terms of this agreement, DSM will develop a manufacturing process and produce SC-1 according to GMP (Good Manufacturing Practice) standards in order to allow H3 Pharma to continue clinical trials with this pharmaceutical candidate.

SC-1 is a fully human monoclonal antibody discovered as a result of targeted research attempting to discover antibodies raised by a patient’s own immune system against the patient’s tumor. The SC-1 antibody targets CD55SC-1, a cell surface receptor that is only expressed on human stomach carcinoma cells. SC-1 has already undergone an open-label, non-randomized study involving 51 surgical GC patients between 1997-2001 at the University Surgical Clinic in Würzburg, Germany. The results were extremely encouraging with 55% of patients treated with SC-1 surviving at least 2 years post-surgery without tumor recurrence. These results were presented in two poster presentations at this year’s meeting of the American Society of Clinical Oncologists (ASCO).

“Gastric carcinoma is a condition for which there is no satisfactory treatment at the present time. It is very often fatal,” said Dr. Loïc Maurel, CEO of H3 Pharma. “We are therefore very pleased to be able to start working with a manufacturer with the outstanding international reputation of DSM to establish the manufacturing process and develop the GMP material for this antibody. The fact that DSM’s facilities are located in close proximity to ours in Montreal will also help expedite this stage in our product development. If all goes well, we expect to have clinical product available by the second half of 2005 and to be able to initiate Phase II trials in humans shortly thereafter. We see this initial collaboration with DSM as the beginning of what we hope will become a long-term relationship.”

“DSM Biologics has had a great deal of experience in working with antibodies expressed in mammalian systems and developing scaleable manufacturing processes using our state of the art perfusion technology, and we are happy to have this additional opportunity to work with a product candidate that has shown such encouraging results in humans thus far,” said Mr. André Bos, CEO of DSM Biologics. “We share H3 Pharma’s desire to move this product candidate forward as quickly as possible to serve the many thousands of patients who presently have few treatment options.”

Gastric Cancer – Serious Unmet Medical Need
It is estimated that there are approximately 570,000 patients with gastric cancer in the US, Europe and Japan, alone. The prognosis for the overwhelming majority of these patients is very poor. Patients diagnosed with metastatic disease have five-year survival rates of only about three percent. Surgery and chemotherapy are the current primary treatment options, but have shown only very limited benefit.

SC-1 Acquired by H3 Pharma in 2003
H3 Pharma in-licensed SC-1 from OncoMab™ GmbH a spin-off of the Institute of Pathology, University of Würzburg in March 2003. H3 Pharma committed to the clinical development of SC-1 and worldwide registration of the product candidate. OncoMabTM is a drug discovery company based on a technology platform that enables the company to isolate human monoclonal antibodies involved in the cancer patient’s immediate, innate immune response to malignant cell transformation.

H3 Pharma envisages a fast track designation for SC-1 given the considerable unmet medical need and the promising preliminary results. The product was granted an Orphan Drug designation last December in the USA where there are 25,000 new cases of stomach cancer every year. The worldwide market for SC-1 is estimated to be at least US $500 million.

About DSM Biologics
DSM Biologics, a business unit of the DSM Pharmaceutical Products business group, is one of the world’s leading contract manufacturers of biopharmaceutical products, the latest generation of drugs, mainly on the basis of native molecules and produced with the help of cell cultures. The company is renowned for its experience in the use of a broad range of cell culture systems (microbial and mammalian) and its expertise in the field of purification techniques. Established in 1986, DSM Biologics currently employs about 450 people, who are based at the company’s two sites, one in Groningen, the Netherlands (ca. 1,000 liters fermentor capacity and 6,000 m2) and one in Montreal, Quebec, Canada (ca. 6,500 liters fermentor capacity and presently 10,000 m2).DSM Biologics is a joint venture of DSM and Societe general de financement du Quebec (SGF), an industrial and financial holding company, which carries out economic development projects, especially in the industrial sector, in cooperation with partners and in accordance with accepted requirements for profitability that comply with the economic development policy of the Government of Quebec. For more information, please visit www.dsmbiologics.com.

About H3 Pharma
H3 Pharma is a pharmaceutical product development company that focuses on oncology and gastrointestinal diseases. Extensive internal expertise and world-renowned advisory panels allow H3 Pharma to effectively bridge the gap between innovative products and the global pharmaceutical marketplace. H3 Pharma licenses in the most promising therapeutic discoveries (post proof-of-concept in humans) and manages the clinical development, intellectual property, global registration and manufacturing logistics prior to out-licensing the products for global commercialization. H3 Pharma is an international joint venture between SGF, one of Canada’s largest venture funds, and Debiopharm S.A., a privately owned company based in Lausanne, Switzerland.

All of the statements contained in this news release, other than statements of fact that are independently verifiable at the date hereof, are forward-looking statements. Such statements, based as they are on the current expectations of management, inherently involve numerous risks and uncertainties, known and unknown. Some examples of known risks are: the impact of general economic conditions, general conditions in the pharmaceutical industry, changes in the regulatory environment in the jurisdictions in which H3 Pharma does business, stock market volatility, fluctuations in costs, and changes to the competitive environment due to consolidation or otherwise. Consequently, actual future results may differ materially from the anticipated results expressed in the forward-looking statements.