Biorelease announces acquisition of TheraMed Partners and the planned spin off of its existing biotechnology research subsidiary to stockholders.

BEDFORD, N.H.--(BUSINESS WIRE)--Oct. 8, 1996--

Biorelease Corp. announces its plan to acquire TheraMed Partners Inc. to focus on mergers & consolidation of later stage biopharmaceutical technologies and companies. Biorelease will spin off its blood substitute subsidiary to its stockholders.

Biorelease Corp. ("BIO") (OTC/Electronic Bulletin Board: BREL), a publicly traded development stage company, announced today its board of directors has executed a letter of intent for the proposed acquisition of TheraMed Partners Inc. ("TheraMed"), a recently formed privately held company focusing on acquiring and consolidating late stage biotechnology companies and synergistic technologies.

The letter of intent provides the general terms and conditions of a proposed acquisition of TheraMed by BIO, whereby the management of TheraMed will receive a substantial interest in BIO. When taken together with shares held by existing management and directors of BIO, TheraMed holders and BIO's existing management and directors together will hold a controlling interest in BIO. Under the letter of intent, following the effective date of the acquisition, the BIO stockholders of record prior to the TheraMed closing will receive shares of Biorelease Technologies Inc. ("the subsidiary") presently held by BIO. The subsidiary holds technology and patents in the field of blood substitutes and sustained release drug delivery based on chondroitin sulfate. As a condition of the letter of intent, Dr. Reeves, currently BIO's president and CEO, has resigned as an officer and director of BIO.

BIO intends to spin off to its present stockholders the stock it holds in the subsidiary and will thereafter engage in the business of acquiring companies and undervalued technologies under a new name, Pharmatrage Holdings Inc. Biorelease's Erythrogen cell culture additive business will be included in the spinoff of the subsidiary prior to completing the proposed acquisition. It is the specific intent that the company become an aggressive opportunity driven product acquisition and development entity with a growing stable of commercially viable later stage synergistic products and technologies acquired out of the expected consolidation of the bio-pharmaceutical industry over the next several years.

The most recent fiscal year for both the company and its subsidiary ended June 30, 1996. Management anticipates releasing an audit and subsequently filed annual report on Form 10KSB on or about Oct. 11, 1996.

Under the proposed terms, BIO will issue approximately 21 million shares of restricted New Biorelease common stock along with certain stock options exercisable for 3.9 million shares of New Biorelease stock to the current stockholders and management of TheraMed in exchange for their TheraMed stock. Immediately following the acquisition, Pharmatrage Holdings will have approximately 30.5 million shares issued and outstanding in addition to approximately 7.5 million shares issuable upon exercise of options. The transaction is proposed to be a reorganization pursuant to Section 368 (a) (1) (B) of the Internal Revenue Code and is expected to close within 90 days subject to both BIO and TheraMed Stockholder approval.

TheraMed will oversee the operations of BIO prior to closing subject to the direction of the current BIO board of directors. Theramed has also agreed to advance operating funds to BIO to allow it to continue operations subject to stockholder approval of the transaction. BIO stockholders will be presented a slate of directors which will include existing BIO directors Schubert and Whitney plus TheraMed directors Donald E. Strange and Nigel Fleming plus a fifth authorized director to be named later.

The reorganized Pharmatrage's strategic plan anticipates integration of the new management team while establishing value and credibility of the company within the investment community. Strange, Dr. Paul Leibowitz and Fleming are the founders and principal stockholders of TheraMed. Strange will join the combined company upon closing as its chairman. Strange was the founder of Transcare Corp. and served as its CEO until December of 1995, a patient transport consolidating company with 1995 revenues of $37 million. Strange has over 25 years in the healthcare field including 13 years with Hospital Corporation of America. Strange has extensive mergers and acquisition experience in the healthcare field. Leibowitz, a scientific advisor to the company for the past four years, will oversee all pharmaceutical development and serve as chief operating officer.

Leibowitz has more than 18 years of diversified experience in the management of biological and pharmaceutical research and development, regulatory oversight, business development and strategic planning. While at Schering Plough Leibowitz founded for Schering both the molecular biology and tumor biology departments and built the initial infrastructure in biotechnology. Fleming will join the company as a director and assist in acquisition and business development activities. Until recently, Fleming served as director of business development for Athena Neurosciences which was recently acquired by Elan Pharmaceutical. Fleming was the founder of Genica, a neurological diagnostics company, which was ultimately acquired by Athena Neurosciences. Fleming is experienced in identifying and establishing relevant diagnostic and pharmaceutical product opportunities. Limited additional staff and outside consultants will be added to assist in the development and technology acquisition efforts as needed.

Biorelease Technologies Inc., The Subsidiary

During the development and evaluation of the subsidiary's cell culture product, Erythrogen, the subsidiary discovered possible therapeutic applications of this technology which have now been incorporated into its patent applications. This technology is based on complexes between hemoglobin and certain blood gases, nitric oxide and carbon monoxide, earlier believed to be both toxic and unstable. In vitro data has demonstrated that certain formulations based on this blood gas technology have a stimulative effect on endothelial and epithelial cells which comprise human skin. Further recently published data leads the subsidiary to believe that these compounds may also be significant vasodilators.

As a part of evaluating the potential of the license opportunity, the subsidiary expects to seek one of the blood substitute producers to form a cooperative agreement to commence in vitro and animal model screening of formulations similar in composition to Erythrogen for therapeutic activity relating to the possible use of its proprietary modified hemoglobin as a healing agent for wounds and burns as well as a vasodilator for use in sickle cell anemia, possibly stroke and certain neurodegenerative diseases. Formulation and stability studies derived from cell culture development work indicate stability adequate for use as a therapeutic product. It is the subsidiary's present intent to demonstrate product applications in one or several of these therapeutic areas and seek a development partner or licensee from the blood substitute industry to explore further product application and clinical trials.

In April 1996 the subsidiary entered into an exclusive licensing agreement with the blood substitute group of a billion dollar medical products and pharmaceutical company for the use of the subsidiary's chondroitin sulfate sustained release drug delivery technology with hemoglobin blood substitutes. This blood substitute group is one of four leading companies engaged in later stage development of hemoglobin based artificial blood substitutes. The markets for blood substitutes are project worldwide from $500 million to $5 billion dependent upon the degree of replacement of blood transfusion from donated blood. Presently, there are an estimated 12 million (U.S.)/25 million (worldwide) units of blood used annually. The subsidiary's agreement with this group provides for royalty payments commencing on sales of licensed product plus additional exclusivity payments. Provided the licensee continues to develop and obtain regulatory approval for its blood substitute product using the subsidiary's technology, the subsidiary projects royalty revenues could commence as early as calendar year 2000.

Independent scientific developments related to the subsidiary's blood gas technology have been recently reported in the publication "NATURE." These new findings may lead to possible utilization of the subsidiary's blood gas technology to add value and expand applications for hemoglobin based blood substitutes. The subsidiary has already received notice of allowance by the European Patent Office covering the use of this blood gas technology relating to hemoglobin blood substitutes. The subsidiary believes these recent discoveries may allow it to expand its licensing position within the synthetic blood field and possibly, with an appropriate partner from within the field, identify proprietary products derived from the technology.

Under terms of the business combination between TheraMed Partners and Biorelease and prior to the effective date of the reorganization and the spin off of the subsidiary to the Biorelease interest holders, the subsidiary and Biorelease shall enter into a license/option agreement whereby Pharmatrage shall have exclusive rights to the subsidiary's technology relating to chondroitin sulfate drug delivery subject to royalty payments on all related sales of products derived from the subsidiary's chondroitin drug delivery technology with the exception that the subsidiary will retain all royalties and payments under the existing blood substitute license agreement. Pharmatrage will also retain an option to acquire the underlying chondroitin technology payable in cash or free trading Pharmatrage stock for one year following the closing.

CONTACT: Biorelease Corp.

R. Bruce Reeves PhD, 603/471-1255