ATRIX/ELAN SIGN PACT FOR ONCOLOGY AND PAIN MANAGEMENT PRODUCTS.

Atrix Laboratories (NASDAQ: ATRX) has signed an agreement with Elan Corporation, plc to form a research joint venture to develop and commercialize oncology and pain management products. As part of the agreement, Elan provides funding to develop these compounds. Atrix initially is the majority owner of the joint venture. Additionally, Elan made an equity investment of $5 million in Atrix at a premium to market.

This collaboration will use Atrix's patented BEMA(TM) and ATRIGEL(R) systems and Elan's NanoCrystal(TM) technology to deliver compounds targeted for major unmet medical needs, including control of side effects associated with chemotherapy or radiation therapy, rapid relief of break through cancer pain and tumor directed cytotoxic agents.

Dr. Larry Sternson, president of Elan Pharmaceutical Technologies, said, "We are pleased with the opportunity to invest in, and collaborate with, Atrix. We look forward to working with a highly innovative company like Atrix that has a leading position in polymer-based, biodegradable drug delivery systems. The potential development of oncology and pain products and the exploitation of the synergies between both companies' proprietary platform technologies, represents a tremendous opportunity to build value for both Elan and Atrix. This collaboration is consistent with Elan's long-term strategy of building multiple alliances with strong emerging technology companies."

David R. Bethune, chairman and chief executive officer of Atrix, said, "This long-term joint venture brings together Atrix, an emerging leader in parenteral drug delivery technologies and Elan, the industry leader in oral drug delivery technology, with the shared goal of accelerating the development and commercialization of a variety of oncology and pain management products. With Elan, we now have the technical and financial resources to further advance the formulation and development of our platform technologies.

"Dr. Sternson and his drug delivery team at Elan have an outstanding track record of capitalizing on new technologies to bring products into the market," said Bethune. "We believe that this agreement will create significant value for both companies. Speaking on behalf of the Atrix management team and the board of directors, we are delighted to have Elan, a world-class, high growth company, as our partner."

Atrix Laboratories, Inc. is a drug delivery and drug development company whose patented technologies provide drug delivery from "minutes to months." Atrix develops medical, dental and veterinary products in-house and also partners with large pharmaceutical and biotechnology companies to apply its proprietary technologies to new chemical entities or to extend the life cycle of existing products. Additional information is available on the Atrix Laboratories, Inc. Web site at http://www.atrixlabs.com or call 970/482-5868.