Thursday, Dec 4, 1997

Alteon and Genentech to Collaborate on Therapy for Diabetic Complications

Agreements Cover Pimagedine and Second-Generation A.G.E. Formation Inhibitors

Ramsey, N.J. and South San Francisco, Calif. -- December 4, 1997 --

Alteon Inc. (Nasdaq: ALTN) and Genentech, Inc. (NYSE:GNE) today announced they have entered into a series of agreements for the continued development and marketing of Pimagedine, an Advanced Glycosylation End-product (A.G.E.) formation inhibitor currently in Phase III clinical trials to treat kidney disease in diabetic patients. The agreements also include rights to second-generation A.G.E. formation inhibitors, currently in pre-clinical development. Investments, milestones and funding for development efforts associated with Pimagedine and second-generation compounds could approach $200 million, excluding royalties.

By entering into these agreements, Alteon has granted Genentech worldwide exclusive license rights to Pimagedine (except for Japan, China, South Korea and Taiwan, territories covered under a previous Alteon agreement with Yamanouchi Pharmaceutical Co. of Japan, and Israel, Jordan, Bulgaria, Cyprus and South Africa, territories covered under a previous Alteon agreement with Gamida). Alteon has also granted Genentech exclusive license rights to second-generation A.G.E. formation inhibitor products (and any future Alteon compounds in this class), to be selected by Genentech after review of Alteon's A.G.E. formation inhibitor portfolio, in the same territory as for Pimagedine.

Pimagedine

In order to fund the continued development of Pimagedine and support possible additional clinical trials for expanded indications of the drug, Genentech will make a series of equity investments in Alteon. Genentech will make an initial equity investment of $15 million in a combination of Alteon common stock and convertible preferred stock. Thereafter, Genentech will fund development costs for Pimagedine with an investment of up to $48 million in Alteon convertible preferred stock, payable as an initial $16 million cash investment in January 1998, with future investments to follow.

Under the terms of the deal, Alteon will receive an additional $50 million in payments from Genentech upon meeting milestones relating to U.S. and European regulatory filings and approvals. Following commercialization, Alteon will receive a significant royalty on net sales of Pimagedine within the licensed territories.

Second Generation Products

Alteon has also granted to Genentech an exclusive license to second-generation products, to be selected from those currently in Alteon's portfolio of A.G.E. formation inhibitors and any future Alteon compounds in this class. Genentech will assume all costs associated with the development of second-generation products. Alteon will receive $50 million in milestone payments relating to U.S. and European regulatory filings and approvals, as well as a significant royalty on net sales within the licensed territories.

Development/Marketing Responsibilities

Under the agreements, all development activities in the United States will be jointly managed by a steering committee with representatives from Alteon and Genentech. Genentech will advise Alteon on development outside the United States, and on marketing and sales of licensed products throughout the licensed territory.

"We are extremely pleased to be working with a company possessing the same entrepreneurial spirit as our own. Genentech's many contributions to pharmaceutical progress are clear examples of its commitment to cutting- edge research and development," said James J. Mauzey, Alteon Chairman and Chief Executive Officer. "Our collaboration with Genentech provides us with an extraordinary opportunity to introduce products that offer breakthrough potential for the treatment of diabetic complications and other conditions. It also allows us to intensify our efforts on the development of other exciting products in our pipeline."

"This agreement with Alteon represents a significant business opportunity and reflects Genentech's corporate strategy to license late-stage products that can augment our product portfolio and contribute to revenues near-term," said Arthur D. Levinson, Ph.D., Genentech President and Chief Executive Officer. "Working together with Alteon, we look forward to completing development and filing for approval so this important treatment can be available to people with diabetes and their families."

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.

Alteon is a leader in the discovery and development of pharmaceutical products for the treatment of the complications of diabetes and age-related diseases. Pimagedine, its lead first-in-class compound is being developed to inhibit or block abnormal glucose/protein complexes that lead to diabetic complications such as kidney disease and retinopathy.

Three pivotal clinical trials evaluating Pimagedine for the complications of diabetes are ongoing: two Phase III ACTION (A Clinical Trial In Overt Nephropathy) trials in diabetic patients with progressive kidney disease; and a Phase III trial in patients with end-stage renal disease (ESRD), which was recently expanded from a Phase II trial because of a positive trend in the mortality rate of treated patients versus those on placebo. The ACTION trials are being conducted at more than 100 North American sites and involve over 1,200 patients. ACTION I (in Type I diabetics) is scheduled to be unblinded in 1998. In addition, Alteon is continuing to broaden its product pipeline through extensive research on two new categories of agents: A.G.E. cross-link breakers and the glucose-lowering agent series of compounds.

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