Chiron Corporation and Inhale Announce Collaborations to Develop Inhaleable Tobramycin and Other Antibiotics.

Business Editors/Health & Medical Writers

EMERYVILLE, Calif. and SAN CARLOS, Calif.--(BUSINESS WIRE)--December 4, 2001--Chiron Corporation (Nasdaq:CHIR) and Inhale Therapeutic Systems, Inc. (Nasdaq:INHL) today announced that they have entered into collaborations to develop a next-generation inhaled, dry powder tobramycin product for the treatment of Pseudomonas aeruginosa in cystic fibrosis patients and to explore the development of other inhaled antibiotics using Inhale's Inhance(TM) pulmonary delivery platform.

Under the terms of the tobramycin collaboration, Inhale will be responsible for development of the formulation, as well as clinical and commercial manufacturing of the drug formulation and device combination. Chiron will be responsible for the clinical development and worldwide commercialization of the system. Inhale will receive research and development funding, milestone payments as the program progresses through further clinical testing, and royalty payments when the product is commercialized.

In addition, the two companies have already begun work to explore the development of other inhaled antibiotic products for lung infections.

"We believe that the Inhance platform offers significant benefits for pulmonary drug delivery and that it could expedite the development of our next-generation inhaled anti-infective products," said Craig Wheeler, president of Chiron's BioPharmaceuticals division. "The next generation of TOBI(R) is a pivotal part of our strategy to expand our TOBI franchise by providing faster and easier treatment options for cystic fibrosis patients."

"Inhaled tobramycin is the first application of our Inhance pulmonary delivery technology to inhaled antibiotics for treatment of lung infections," said Ajit Gill, president and CEO of Inhale. "Recently reported clinical results of our inhaled tobramycin powder suggested efficient and reproducible delivery of high amounts of tobramycin to the lungs using a small, pocket-sized inhaler. We believe that this will be the first of many applications for treating the lung with antibiotics prepared using our Inhance technology."

About TOBI

Chiron's tobramycin product, TOBI, was introduced in 1998 and is the first inhaled antibiotic approved for treating Pseudomonas aeruginosa lung infections in cystic fibrosis patients. Cystic fibrosis is a chronic illness that causes the body to produce thick mucus that can clog airways and result in lung infections. Because TOBI is delivered directly to the lungs, the drug can be given at higher doses than would be safe to administer systemically. Clinical studies have demonstrated that TOBI has multiple benefits for cystic fibrosis patients. Specifically, TOBI reduces the frequency and length of hospital stays, decreases the use of IV antibiotics, significantly improves lung function, and is safe for long-term use.

About Cystic Fibrosis

Cystic fibrosis (CF) is a genetic disease that primarily affects people of Caucasian origin. About 30,000 people in the United States and about 70,000 people worldwide have CF. CF is caused by a genetic mutation which prevents cells from building a special protein required for normal movement of sodium and chloride (salt) in and out of cells lining the lungs and other organs. Patients with CF typically suffer from chronic respiratory infections, digestive disorders, reduced male fertility, and other problems.

About Chiron

Chiron Corporation, headquartered in Emeryville, California, is a leading biotechnology company that participates in three global healthcare markets: biopharmaceuticals, vaccines, and blood testing. The company is applying an integrated scientific approach to the development of innovative products for preventing and treating cancer and infection. For more information about Chiron, visit the company's WEB site at http://www.chiron.com.

About Inhale

Inhale Therapeutic Systems, Inc. develops advanced drug delivery solutions for the biopharmaceutical industry. Inhale offers the Inhance pulmonary delivery platform for the inhaleable delivery of macromolecules and small molecules for systemic and local lung delivery; supercritical fluid processing for powder particle engineering; and advanced PEGylation for enhanced delivery performance of most major drug classes. The company is collaborating with major pharmaceutical and biotechnology companies, including Amgen, AstraZeneca, Aventis Behring, Biogen, Bristol-Myers Squibb, GlaxoSmithKline, Johnson & Johnson subsidiaries' R.W. Johnson Pharmaceutical Research Institute (RWJPRI) and the Janssen Research Foundation (JRF), Lilly, Pfizer, Pharmacia, Roche and Schering-Plough.

This release contains forward-looking statements that reflect the current views of Chiron and Inhale managements respectively as to future products, product development, and other future events and operations. These forward-looking statements involve uncertainties and other risks that are detailed in reports and other filings with the Securities and Exchange Commission, including Forms 10-K and 10-Q. These documents identify important factors that could cause the companies' actual performance to differ from current expectations, including the outcome of clinical trials, regulatory review, manufacturing capabilities and marketing effectiveness.

In line with SEC Rule FD, Chiron Corporation does not undertake an obligation to update the forward-looking information we are giving today.

Note to Editors: TOBI is a trademark of PathoGenesis, a wholly owned subsidiary of Chiron Corporation. Inhance is a trademark of Inhale Therapeutic Systems, Inc.