Acacia Research Affiliate Awarded Department of Defense Grant.

Business Editors

PASADENA, Calif.--(BUSINESS WIRE)--Jan. 10, 2000

Acacia Research Corporation (Nasdaq:ACRI) announced today that affiliate CombiMatrix Corporation has been awarded a $730,000 Phase II SBIR grant from the Department of Defense to use CombiMatrix's proprietary ArrayChip(R) technology to develop 'Nanode Array Sensor Microchips.'

This grant was awarded by the Department of Defense based upon the successful conclusion of the Phase I SBIR, awarded in July of 1999.

The ArrayChip technologies developed by CombiMatrix enable synthesis of very large arrays of biomolecules under direct software control on a semiconductor chip. Electrochemical methods are used for sensitive detection of numerous chemical and biological warfare agents simultaneously, which can eliminate the need for cumbersome and expensive optical detection technologies. ArrayChip technologies can enable small, battery-powered threat assessment tools for chemical and biological warfare agents.

"We are able to use conventional semiconductor technology to produce proprietary biochip array processors," said Don Montgomery Ph.D., V.P., Research & Development of CombiMatrix. "We can program the biochip to produce any array of biomolecules using standard software. While CombiMatrix has been concentrating on DNA array biochips as its initial commercial application, the SBIR grant program has allowed us to demonstrate that ArrayChip technology can be just as easily applied to immunochemical assays for chemical and biological warfare agents. In both of these applications, we are able to take advantage of our capability to program each site individually in a high-density array. As a result, each ArrayChip can be custom designed to multiplex numerous different assays on each biochip."

CombiMatrix plans to have its first genomic application in the near future and has demonstrated the use of its proprietary technology in combinatorial chemistry, protein, and peptide applications. The Department of Defense grant will enable CombiMatrix to pursue an additional area of application while being completely synergistic with its main product applications. CombiMatrix's software control affords significant cost reductions in making both custom and off-the-shelf arrays on biochips. The economics of manufacturing CombiMatrix ArrayChips scales in the same way as any semiconductor device. These two aspects should provide CombiMatrix with significant pricing advantages.

Acacia Research has a 53% equity ownership in CombiMatrix.

ABOUT COMBIMATRIX CORPORATION

CombiMatrix's biochip array processor system integrates semiconductor technology with new developments in biotechnology and chemistry. CombiMatrix's core technology utilizes a unique array of "virtual reactors" that have the potential to reach array densities in excess of 1,000,000 sites per cm2. ArrayChips are produced economically using standard semiconductor fabrication techniques. In initial applications, CombiMatrix expects its array system to allow researchers to perform hundreds of DNA tests on a sample of genetic material simultaneously. Genomic tests are frequently used in medicine to help develop new drugs. As new therapeutic entities are developed, biochip array products are expected to play an important role in toxicity and clinical studies as well as diagnostic products.

ABOUT ACACIA RESEARCH CORPORATION

Acacia Research develops and operates Internet and technology-related businesses as well as acquires strategic positions in other companies. Acacia Research's majority-owned subsidiaries include: Acacia Launchpad LLC (Internet incubator), CombiMatrix Corporation (biochip technology), MerkWerks Corporation (software development), Soundbreak.com Incorporated (music broadcast and lifestyle Internet site), and Soundview Technologies Incorporated (v-chip technology). Significant minority-owned affiliates include: Greenwich Information Technologies LLC (video-and audio-on-demand technology), Mediaconnex Communications (b2b e-commerce), and Signature-mail (personalized e-mail service).

This release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements address future events and conditions concerning the Company's business plans. Such statements are based on management's current expectations and are subject to a number of factors and uncertainties, such as future economic conditions, changes in consumer demand, legislative, regulatory and competitive developments, and other circumstances affecting anticipated revenues and costs, which may cause actual results to differ materially. The company expressly disclaims any future obligation or undertaking to update or revise any forward-looking statement contained herein.