Acusphere Forms Joint Venture With Elan and Closes $30 Million Venture Financing; Joint Venture to Develop Acusphere's Microparticle Platform for Pulmonary Drug Delivery.

Business/Technology Editors

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Oct. 3, 2000

Acusphere Inc. today announced the formation of a joint venture with a subsidiary of Elan Corporation, plc (NYSE:ELN) for the development of controlled-release therapeutics for pulmonary delivery. The new venture will develop and commercialize a portfolio of therapeutic products for local delivery to the lungs and systemic delivery through the lungs. The venture has rights to develop Acusphere's proprietary microparticle technology as well as certain Elan technology in the field of pulmonary drug delivery. Financial terms of the collaboration were not disclosed.

"Acusphere has developed a very broad and flexible microparticle technology platform that is well-suited to the pulmonary delivery of therapeutics," said Dr. Eugene Cooper, Executive Vice President of Research and Development at Elan Pharmaceutical Technologies. "Acusphere has proprietary process and composition technology for making tiny microparticles that are porous and have a tight size distribution. The size of Acusphere's microparticles is important for delivering drugs efficiently to the lung. The porosity is important for controlling the aerodynamic properties of the particles so that they can be targeted to appropriate areas of the lung. Acusphere has demonstrated its ability to manufacture tiny, porous microparticles reproducibly under cGMP conditions for a product already in Phase 2 human trials. This demonstrated capability gives Elan great confidence that this new venture will be able to develop products quickly."

"We are very pleased to have Elan as a partner and investor", said Sherri C. Oberg, President and CEO of Acusphere. "Elan is the largest drug delivery company in the world and brings with it not only outstanding technology and strong financial resources, but also deep drug development experience and resources that will accelerate the development of Acusphere's core microparticle technology in the field of pulmonary delivery."

The venture, as yet unnamed, has been established as a subsidiary of Acusphere. The joint venture may seek to accelerate the commercialization of its products through marketing and sales partnerships with pharmaceutical companies. The joint venture may develop its own products and may seek alliances with pharmaceutical companies to develop pulmonary delivery systems for their proprietary products.

In addition to the funding provided by Elan for the pulmonary joint venture, Acusphere completed a $30.0 million venture financing led by New Medical Technologies (NMT) Management of Basel, Switzerland and Thomas Weisel Partners of San Francisco. Other new investors included Benefit Capital and the Audax Group. Existing investors also participated in the financing, including: Burr, Egan, Deleage & Co., Polaris Venture Partners, Bank of America Ventures, Prism Venture Partners, BancBoston Ventures, Technology Funding, The CIT Group, and Boston University.

Acusphere is a privately-held drug delivery company that is developing a variety of products based on its porous microparticle technology. The company's lead product, AI-700, is an intravenous delivery system for gas, being developed in Phase 2 clinical trials as an advanced ultrasound contrast agent for detecting ischemic heart disease. Acusphere is also applying its technology as a hydrophobic drug delivery system (HDDS) to enhance the dissolution of water insoluble drugs. Acusphere's second product, Paclitaxel-HDDS, is an improved formulation of the $1.5 billion-per-year cancer drug, Taxol. The company has raised $55 million to date from venture capital investors.