ARBIOS SYSTEMS ACQUIRES ASSETS FROM CIRCE BIOMEDICAL.

Arbios Systems, Inc., Los Angeles, Calif., (BB: ABOS), a biomedical device company with proprietary liver assist technologies useful in the diagnosis and treatment of acute liver failure, has acquired certain assets of Circe Biomedical, Inc. The acquired assets include, among others, Circe's intellectual property portfolio, rights to a bioartificial liver ("BAL") (HepatAssistTM) and related technologies, clinical and marketing data, a Phase III IND, and over 400 manufacturing and QA/QC standard operation protocols previously reviewed by the Food and Drug Administration. The assets were acquired in exchange for a $200,000 upfront payment and a $250,000 deferred payment due the earlier of April 12, 2006 or when the company has raised accumulated gross proceeds of $4 million from the issuance of debt or equity securities.

Circe's HepatAssistTM is based on a BAL technology platform that was developed by the founders of Arbios, Drs. A. A. Demetriou and J. Rozga. The technology was licensed from Cedars-Sinai Medical Center in Los Angeles, Calif., to W.R. Grace & Co. in 1994 who then eventually transferred the technology to Circe Biomedical, Inc.

HepatAssistTM is an extracorporeal (outside the body) liver failure therapy device, in which the function of porcine liver cells is supplemented by a detoxification column filled with charcoal particles. Arbios' LIVERAIDTM is being developed to provide more liver support than the HepatAssist by combining much larger number of liver cells and expanded blood detoxification in a proprietary cartridge with unique fiber-in-fiber geometry.

HepatAssist was tested by Circe in 171 liver failure patients in a Phase II/III prospective, randomized, controlled trial in 11 U.S. and 9 European medical centers. This trial did not achieve its primary endpoint (30-day survival) in the overall study population. However, when adjusting for the impact of liver transplantation on patient survival, patients with fulminant and subfulminant hepatic failure treated with the HepatAssist had a statistically significant survival advantage compared to controls receiving standard medical care. HepatAssist also demonstrated a favorable safety profile. The outcome of the study becomes more important when taking into account the heterogeneity of the patient population, the large number of centers involved with varying local standards of care and the high degree of severity of illness of the study population.

"We are pleased to acquire the proprietary technology, know-how and wealth of data collected by Circe during the development of HepatAssist," commented Dr. Jacek Rozga, Arbios' CEO. "We view the HepatAssist system as our first generation bioartifical liver and we are glad that this promising technology returned 'home.' With HepatAssist, Circe demonstrated for the first time that extracorporeal cell based therapy is a safe and viable therapy in liver failure patients. With the knowledge gained through the work on HepatAssist, we hope to expedite the development of LIVERAIDTM and revolutionize the way liver failure patients are treated thereby increasing their chances of survival."

At present no direct treatment for liver failure is available and patients must receive a liver transplant or endure prolonged hospitalization with a significant mortality rate. However, only a small percentage of liver failure patients receive a transplant due to shortage of donor livers. Further, many patients cannot be transplanted because of alcohol or drug abuse, infection, cancer, cardiovascular disease, etc. There is, therefore, an urgent need for artificial means of liver assistance to facilitate recovery from liver failure without a transplant.

Arbios Systems, Inc. is an early-stage biomedical device company engaged in the discovery, acquisition and development of proprietary liver assist devices and new technologies useful in the diagnosis and treatment of acute liver failure, a debilitating and fatal disease. Arbios' two lead products are SEPETTM, a novel blood purification therapy employing selective plasma filtration, and LIVERAIDTM, a second-generation BAL.

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