Thursday, Dec 18, 1997

LeukoSite and Genentech Enter Collaboration

Cambridge, Mass. and South San Francisco, Calif. -- December 18, 1997 --

LeukoSite Inc. (Nasdaq: LKST) and Genentech, Inc. (NYSE: GNE) today announced that they have entered into a collaboration to develop and commercialize LeukoSite's LDP-02, a humanized monoclonal antibody for the treatment of inflammatory bowel diseases (IBD). Genentech's support of the program, including an equity investment, a credit facility and milestone payments, could reach approximately $50 million, excluding royalties and profit sharing. This amount assumes that all milestones are met and the exercise of a profit sharing option under which LeukoSite elects to share in the Phase III development costs through a second Genentech credit facility. LDP-02 is expected to enter human clinical trials in 1998.

Under the terms of the agreement, Genentech receives exclusive worldwide rights to market LDP-02. LeukoSite is to develop LDP-02 through successful Phase II clinical trials after which Genentech will complete the development of the product. Genentech will make a $4 million equity investment in LeukoSite, pay LeukoSite $8 million if certain development milestones are achieved, and pay royalties on product sales. In addition, Genentech will provide two credit facilities. The first facility will be for approximately $15 million and will fund development through completion of Phase II. The second facility will be available to LeukoSite if it agrees to fund 25 percent of the Phase III development costs in return for a share of profits on U.S. sales. If LeukoSite exercises this option, it will receive a share of profits rather than royalties in the United States. LeukoSite retains all rights to its program to develop small molecule therapeutics for the treatment of IBD.

The equity investment consists of 336,135 shares of LeukoSite common stock purchased at a price of $11.90 per share. Through the agreement Genentech also has received warrants to purchase 250,000 shares of LeukoSite common stock at a price of $16.22 per share.

Arthur Levinson, Ph.D., president and chief executive officer of Genentech stated, "LeukoSite has established a strong biological rationale for LDP-02 and developed compelling preclinical data in support of its use in the treatment of IBD. LDP-02 is also a good fit with our strategic focus on monoclonal antibody therapeutic products that have a high market potential and target a strong unmet medical need."

Christopher Mirabelli, Ph.D., chairman and chief executive officer of LeukoSite commented, "Genentech brings to our collaboration its outstanding track record in biopharmaceutical development and commercialization as well as strategic commitment to novel monoclonal antibody therapeutics. Our success with LDP-02 to date underscores our strategy for generating new product candidates with our technology for validating novel targets for therapeutics that selectively block the disease-promoting activity of leukocytes." Dr. Mirabelli added that with the agreement, LeukoSite has achieved one of the key milestones it had set for the 18 months following its initial public offering in August 1997.

IBD encompasses a group of chronic disorders, including ulcerative colitis and Crohn's disease, that produce inflammation and ulceration in the intestines. In both disorders, tissue destruction results from a damaging inflammatory response involving the recruitment and activation of leukocytes. Current drug therapy for serious cases involves steroids and other drugs which broadly suppress the immune response and as a result, carry a risk of infection and adverse side effects.

LDP-02 targets a protein called (alpha)4(beta)7 that is expressed on certain white blood cells. This protein is used to recruit white blood cells selectively to inflamed bowel mucosa. The development of LDP-02 is based on studies using antibodies in established animal models of IBD that validate (alpha)4(beta)7 as a biological target for therapeutic intervention of IBD. The key study, in a primate disease model, was published in 1996 in the journal Gastroenterology by researchers at LeukoSite. In this study, a murine antibody rapidly eliminated diarrhea and colonic inflammation, while a control antibody had no effect.

Genentech, Inc. is a leading biotechnology company that discovers, develops, manufactures and markets human pharmaceuticals for significant unmet medical needs. Eleven of the currently marketed biotechnology products stem from Genentech science. Genentech markets or promotes eight biotechnology products in the United States. Genentech is headquartered in South San Francisco, California and is traded on the New York Stock Exchange and Pacific Exchange under the symbol GNE. Genentech's worldwide web address is http://www.gene.com.

LeukoSite is a biotechnology company developing proprietary drugs designed to block disease-causing actions of white blood cells. The focus of LeukoSite's research and development is on drugs for the treatment of cancer and autoimmune and inflammatory diseases. LeukoSite has six research and development programs underway and three drug candidates in development. The Company is collaborating with Warner-Lambert Co., Roche Bioscience and Kyowa Hakko Kogyo Co., Ltd.

Statements in this press release regarding the development of LeukoSite's drug candidates constitute forward-looking statements and are subject to numerous risks and uncertainties, including but not limited to risks in technology and product development, failure to successfully complete clinical trials or obtain required regulatory approvals, competitive risks and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. The actual results may differ materially from those projected in the forward-looking statements. The Company disclaims any obligation to update these forward-looking statements.

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