Affitech and XOMA Sign Antibody Collaboration and Cross-License Agreement.

OSLO, Norway & BERKELEY, Calif. -- Affitech AS and XOMA Ltd. (Nasdaq:XOMA) announced today that they have signed an antibody collaboration and cross-license agreement for antibody-related technologies. Financial terms were not disclosed.

Under the agreement, Affitech receives a license to use XOMA's bacterial cell expression (BCE) technology for developing antibody products using Affitech's phagemid display-based Breitling antibody libraries, CBAS(TM) technology and the AffiscreeN(TM) high-throughput screening system. Affitech also receives an option for the production of antibodies under XOMA's intellectual property.

The agreement allows XOMA to use Affitech's naive antibody library for target research and discovery purposes as well as the development and commercialization of selected antibodies. In addition, Affitech has agreed to build patient-derived libraries for XOMA and discover new antibodies against XOMA targets exploiting Affitech's patient libraries, AffiscreeN(TM) system and its leading edge C.B.A.S.(TM)(Cell-Based Antibody Screening) technology.

The agreement also provides for a release of Affitech and designated collaborators from any past activities using XOMA's antibody expression technology, and allows Affitech to use the XOMA technology in combination with its own technologies in future collaborations.

Dr. Martin Welschof, CEO of Affitech, said, "This agreement further underscores the importance of the Breitling IP family in the field of phage display-based antibody discovery area. We are delighted to be able to access XOMA's expression technology for our own product discovery and development as well as add this to our repertoire of technology and services for our current and future collaborators. We are especially pleased to enter into a broad collaboration with XOMA that potentially could involve multiple XOMA targets and our various antibody technologies including AffiscreeN(TM) and CBAS systems."

"We are pleased to enter into this human antibody phage display cross-licensing and collaboration agreement with Affitech," said Dr. Robert Gundel, Vice President, Scientific Corporate Development. "Through the addition of Affitech's naive antibody library, XOMA now provides a single point of access to the world's largest collection (seven) of the leading commercially available antibody phage display libraries. In addition, custom antibody phage display libraries will be created using relevant patient populations to further enhance XOMA's extensive and unique antibody discovery and development platform."

About Affitech AS

Affitech AS is a human antibody therapeutics company based in Oslo, Norway, having its US subsidiary in the San Francisco Bay Area. The Company's primary focus is in the discovery and development of human therapeutic antibodies for cancer, infectious and other diseases of unmet medical needs. Affitech's technology portfolio includes patents of a phagemid system containing full-length pIII phage protein as a display scaffold for antibody and antibody fragments, known as "Breitling" family of patents, as well as its proprietary AffiscreeN(TM) method that utilizes patient-derived antibody repertoires in a high-throughput screening platform. Breitling patent rights consist of a portfolio of patents and applications including United States Patent Nos. 5,849,500; 5,985,588; 6,127,132; 6,387,627, and 6,730,483, and other patents or applications in Europe and Japan. Affitech obtained the exclusive worldwide rights of the patent from the DKFZ (German Cancer Research Center) in Heidelberg, Germany.

More significantly, Affitech has recently implemented the C.B.A.S. system as an integrated functional cell-based screening approach for simultaneous discovery of human antibodies and cognate targets. By utilizing either naive or patient antibody libraries, CBAS identifies antibodies binding specifically to diseased cells, especially cancer cells or those targeted for inflammation and autoimmune diseases. C.B.A.S. delivers not only antigens of clinical interest, but also new antigens as proprietary biomarkers. Additionally, in contrast to genomics and proteomics methods, all targets newly identified by C.B.A.S. should be accessible to an antibody based therapy, since the method selects for antibody/antigen pairs only on the surface of cells.

Affitech's business strategy is to generate short-term revenue through customer-based projects and out-licensing of technology assets and early stage products, and in addition to build a proprietary product pipeline through collaborations and partnerships. Affitech's recent deals include collaboration with NatImmune, Peregrine, Viventia, Radium Hospital in Oslo, and an undisclosed UK-based biotechnology company, and an IP cross-licensing agreement with Dyax Corporation. Affitech's investors are leading Scandinavian venture capital companies: Braganza, Ferd Venture, Four Seasons Private Equity and Teknoinvest. Further information on Affitech can be found at www.affitech.com.

About XOMA and its Antibody Expression Technology

XOMA is a pioneer and leader in the discovery, development and manufacture of therapeutic antibodies, with a therapeutic focus that includes cancer and immune diseases. XOMA has a royalty interest in RAPTIVA(R) (efalizumab), a monoclonal antibody product marketed worldwide (by Genentech, Inc. and Serono, SA) to treat moderate-to-severe plaque psoriasis.

The company has built a premier antibody discovery and development platform that includes access to seven of the leading commercially available antibody phage display libraries, XOMA's proprietary Human Engineering(TM) method and bacterial cell expression (BCE) technologies. More than 40 companies have signed BCE licenses.

Bacterial cell expression technology (BCE) is an enabling technology used to discover and screen, as well as develop and manufacture, recombinant proteins and antibodies for commercial purposes. BCE is also a key technology used in multiple systems for high-throughput screening of antibody domains. Expression of antibodies by phage display technology, for example, depends on the expression and secretion of antibody domains from bacteria as properly folded, functional proteins.

XOMA scientists were the first to demonstrate the secretion of antibody domains directly from the bacterial cells as fully functional, properly folded molecules. XOMA has received ten U.S. patents to date relating to aspects of its BCE system, including six patents that broadly cover the secretion of immunoglobulins from bacteria, including antibody fragments such as Fab and single-chain antibodies. Corresponding foreign patents have also been granted. XOMA's patent estate is applicable to the practice of antibody phage display and other antibody screening applications.

XOMA's fully integrated biologics development infrastructure includes antibody discovery and selection, process research and development, clinical trial design and implementation of biologics regulatory filings. Protein and antibody production capabilities include a pilot plant and three 2750-liter cGMP microbial fermentor suites.

XOMA's current development collaborators include Aphton Corporation, Chiron Corporation and Lexicon Genetics Incorporated. The company pipeline also includes proprietary programs in preclinical and clinical development. In addition to these collaborations, XOMA leverages its recombinant protein and antibody production infrastructure through process development and manufacturing contracts with public and private sector organizations. For more information about XOMA's product pipeline and antibody product development capabilities and technologies, please visit XOMA's website at http://www.xoma.com/.

Certain statements contained herein concerning product development or that otherwise relate to future periods are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on assumptions that may not prove accurate. Actual results could differ materially from those anticipated due to certain risks inherent in the biotechnology industry and for companies engaged in the development of new products in a regulated market. These risks, including those related to the results of discovery research and preclinical testing; the timing or results of pending and future clinical trials (including the design and progress of clinical trials; safety and efficacy of the products being tested; action, inaction or delay by the FDA, European or other regulators or their advisory bodies; and analysis or interpretation by, or submission to, these entities or others of scientific data); uncertainties regarding the status of biotechnology patents; uncertainties as to the cost of protecting intellectual property; changes in the status of the existing collaborative and licensing relationships; the ability of collaborators, licensees and other third parties to meet their obligations; market demand for products; scale up and marketing capabilities; competition; international operations; share price volatility; XOMA's financing needs and opportunities and risks associated with XOMA's status as a Bermuda company, are described in more detail in XOMA's most recent annual report on Form 10-K and in other SEC filings. Consider such risks carefully in considering XOMA'sprospects.