Agensys and Merck Announce Agreement to Co-Develop and Commercialize a Novel Antibody for Cancer Therapy.

SANTA MONICA, Calif. & WHITEHOUSE STATION, N.J. -- Agensys, Inc., a cancer biotechnology company, and Merck & Co., Inc. today announced that they have formed a global alliance to jointly develop and commercialize AGS-PSCA, Agensys' fully human monoclonal antibody (MAb) to Prostate Stem Cell Antigen (PSCA).

The agreement grants Merck worldwide rights to AGS-PSCA and an exclusive license to PSCA, a proprietary Agensys target, as well as rights to other therapeutic and diagnostic products developed under the alliance. Under the terms of the agreement, Merck will make an initial cash payment to Agensys of $17.5 million and, subject to the achievement of certain events, further payments of $11.5 million over the following 12 months. The successful development and launch of AGS-PSCA would trigger milestone payments of $95.0 million that could increase to more than $170 million if multiple oncology indications are successfully developed and approved. Agensys would also receive royalties on worldwide sales. Further financial terms were not disclosed.

"AGS-PSCA is the first antibody product from our pipeline and developing this novel and potentially important cancer therapy with Merck fulfills one of our major strategic goals," said Dr. Donald B. Rice, Chairman, President and CEO of Agensys. "In preclinical studies of human prostate, pancreatic and bladder cancers, AGS-PSCA has consistently demonstrated significant inhibition of tumor growth and metastases leading to increases in survival.

"Merck's outstanding research and clinical development capabilities, dedication to oncology, and commitment to partnering made them a persuasive choice of co-development partner for Agensys," Dr. Rice added.

Merck and Agensys will co-develop and jointly fund AGS-PSCA for prostate cancer and other indications through Phase II. Agensys has initiated a Phase I clinical trial of AGS-PSCA in patients with advanced prostate cancer at Memorial Sloan-Kettering Cancer Center and Johns Hopkins Kimmel Cancer Center. Agensys manufactured the clinical trial supplies used in this study and will continue to manufacture AGS-PSCA until production can be transferred to Merck. Merck will lead the future worldwide clinical development program with significant participation by Agensys. Merck has primary responsibility for both commercialization and commercial manufacture. Agensys has an option to participate in Phase III development and commercialization in the United States.

"We are excited about joining with Agensys to develop AGS-PSCA for prostate and other cancers, which represent major unmet medical needs that we are hoping to address through Merck's oncology franchise," said Dr. Stephen H. Friend, Executive Vice President, Advanced Technology and Oncology, Merck Research Laboratories. "Agensys' innovative approaches have provided an excellent opportunity to evaluate this important mechanism, and we look forward to a productive alliance."

About AGS-PSCA

AGS-PSCA is a high affinity, fully human IgG1k MAb directed to PSCA, generated using XenoMouse(R) technology. PSCA is expressed at significant levels on tumor cells from a majority of patients with all stages of prostate, pancreatic and bladder cancers. Efficacy studies utilizing human specimens of these tumors in xenograft mouse models have consistently demonstrated that AGS-PSCA significantly inhibits both tumor growth and metastases. Pre-clinical animal toxicology and pharmacokinetic studies have indicated that all administered doses of AGS-PSCA were well tolerated and demonstrated a long serum half-life.

About Agensys

Agensys, Inc. is a privately held biotechnology company that is developing a pipeline of therapeutic monoclonal antibodies to treat solid tumor cancers. These antibodies, many of which are fully human, are being generated to a diverse portfolio of proprietary, clinically relevant cancer targets that encompass 14 types of solid tumors. The Company has the capabilities to generate, develop and manufacture and move into clinical trials antibody products and, through a partnership with Abgenix, has access to the XenoMouse(R) technology to generate fully human antibodies to multiple targets. Agensys is progressing a pipeline of preclinical MAb candidates with potential as naked or payload-conjugated therapeutic products, directed at a variety of cancer indications, including prostate, kidney, bladder, pancreas, lung, colon, ovary, breast, and skin. Agensys has initiated clinical trials with AGS-PSCA, a fully human MAb to Prostate Stem Cell Antigen (PSCA), a novel target which is expressed in the majority of prostate, pancreatic and bladder cancers. AGS-PSCA has demonstrated significant in vivo efficacy in a variety of human xenograft models and a benign safety profile in pre-clinical toxicology studies. In parallel to developing certain antibody products, Agensys has established partnerships to develop and commercialize selected antibody products and other product applications for its proprietary targets. The Company's laboratories, GMP manufacturing facility and offices are located in Santa Monica, California. For further information about Agensys, please visit http://www.agensys.com.

About Merck

Merck & Co., Inc. is a global research-driven pharmaceutical company dedicated to putting patients first. Established in 1891, Merck discovers, develops, manufactures and markets vaccines and medicines in more than 20 therapeutic categories. The company devotes extensive efforts to increase access to medicines through far-reaching programs that not only donate Merck medicines but help deliver them to the people who need them. Merck also publishes unbiased health information as a not-for-profit service. For more information, visit www.merck.com.

Merck Forward-Looking Statement

This press release contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties, which may cause results to differ materially from those set forth in the statements. The forward-looking statements may include statements regarding product development, product potential or financial performance. No forward-looking statement can be guaranteed, and actual results may differ materially from those projected. Merck undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. Forward-looking statements in this press release should be evaluated together with the many uncertainties that affect Merck's business, particularly those mentioned in the cautionary statements in Item 1 of Merck's Form 10-K for the year ended Dec. 31, 2004, and in its periodic reports on Form 10-Q and Form 8-K, which the company incorporates by reference.