Cellegy Pharmaceuticals Completes a $3.8 Million Private Placement and Reacquires Rights to Patented Skin Repair Technology.

FOSTER CITY, Calif.--(BW HealthWire)--July 23, 1997--Cellegy Pharmaceuticals Inc. (NASDAQ:CLGY) Wednesday announced that it has completed a $3.8 million private placement of approximately 1.5 million shares to a group of investors including the Tisch family, the Biotechnology Value Fund, two other institutions and Cellegy's CEO.

At the same time, the company said that it had reacquired rights to a unique technology for rapidly repairing the skin following damage by detergents, weather, allergens and other irritating substances. The technology was reacquired from Neutrogena Corp., a subsidiary of Johnson & Johnson, which had previously licensed rights to its use. A pivotal patent covering the technology was granted by the U.S. Patent Office on July 1, 1997.

"After the acquisition of Neutrogena by Johnson & Johnson in 1994, progress on Cellegy's skin repair technology stalled due to a readjustment of development priorities having nothing to do with the utility of the technology," said K. Michael Forrest, Cellegy's president and chief executive officer. "We have been negotiating over the past several months with J&J to get the technology back, and are very pleased that we were successful."

The technology was co-discovered by researchers at Cellegy and at the University of California, San Francisco. "We believe that this is an extremely valuable technology to a company the size of Cellegy," said Forrest. "We plan to use it to enhance several of our high performance products which are intended to be marketed by pharmaceutical companies and consumer products companies focusing on skin care."

As part of the technology reacquisition, the Tisch family and the Biotechnology Value Fund purchased from Neutrogena the remaining shares of Cellegy's common stock (approximately 425,000 shares) acquired by Neutrogena as part of the original licensing arrangement with Cellegy.

Commenting on the recent transactions, Forrest said "The amount raised in the private placement, although modest, gives us the ability to proceed confidently with our product development and commercialization plans. We are very pleased that two of the institutions participating in the private placement also agreed to purchase all of the stock held by Neutrogena as part of an orderly transfer of those shares. These investments represent a very strong vote of confidence in the future of Cellegy both by me and by a new group of sophisticated institutional investors with expertise in the pharmaceutical field."

Cellegy Pharmaceuticals is engaged in the development of a new generation of prescription drugs and high performance cosmeceutical products based upon its patented topical and transdermal delivery technologies. The company's first prescription dermatologic drug, Glylorin, has been licensed to Glaxo Wellcome and is nearing completion of Phase III clinical trials, the last testing phase required by the FDA before marketing approval of a drug in the United States may be sought. In addition to Glylorin, Cellegy is simultaneously testing and developing several prescription drugs including a transdermal testosterone gel and a line of non-prescription, high performance anti-wrinkling products.

CONTACT: Cellegy Pharmaceuticals

Richard Juelis or K. Michael Forrest, 415/524-1600

www.cellegy.com