Chronix Biomedical Awarded Grant for Mad Cow Disease Living Test; New Blood Test Only Ante Mortem Diagnostic to Address BSE Eradication.

SAN JOSE, Calif. -- Chronix Biomedical announced today that it has received a letter from the German Ministry for Education and Research (BMBF) that it has been awarded a grant of up to EUR 500,000 ($650,000 USD). The grant will fund the development of the Company's ante mortem (living) test for bovine spongiform encephalopathy (BSE), commonly referred to as mad cow disease. On September 28, 2004, the BioRegion GmbH board of reviewers recommended that the German government approve the grant supporting the commercialization of the Chronix Biomedical Gottingen Living Test (GLT), an ante-mortem BSE susceptibility test.

Dr. Howard Urnovitz, Chief Executive Officer of Chronix, said, "This award represents an international collaboration of corporate, academic and governmental bodies toward the common goal of improving public health. Additionally, it accomplishes the important milestone of scientific validation of our core technology and its commercial application in the marketplace." Dr. Urnovitz added, "The problem of BSE affects humans in such a severe manner that only through the courage and initiative of governments can we fight to eradicate this life threatening disease. We commend the German government for its courage and initiative and look forward to working collaboratively on this and future projects."

The Company is currently in discussions with various financial institutions for the purpose of securing the funds necessary to commercialize the GLT, as well as further expanding its products to include diagnostic tests for human diseases such as CJD and human cancers.

Currently, the only available BSE tests are post mortem tests performed on brain tissue from animals that have been slaughtered. Animals are currently confirmed as having BSE by tests that detect the misfolded forms of the prion protein, which are not found in an animal until the disease has progressed into late stage. These "prion positive" animals are removed from the food chain. The Chronix GLT is performed on live animals and requires only a blood sample. In its current format, the GLT, a living test, can be run on hundreds of samples a day. The Company will use the proceeds of the grant to assist in adapting the technology for high throughput commercialization to allow performance of thousands of tests per day.

Results from a clinical trial performed by the Company on the Chronix GLT were presented on September 15, 2004, in Tokyo, Japan, at the International Society for Animal Genetics. The results showed that the test detected not only cows with confirmed BSE (i.e., prion positive cows) but also high-risk prion negative animals exposed to BSE-contaminated food. The data were based on a clinical study that the Company conducted on confirmed prion positive cows (n=4), 15 at-risk prion negative feeding cohorts (n=207) and randomly selected cattle from a local slaughterhouse (n=908). By analyzing circulating nucleic acids (CNA) in the blood, the Company observed a distinct pattern of repetitive nucleic acids associated with prion positive cattle and their associated prion negative feeding cohorts. Using gene amplification techniques, the Company detected unique CNA profiles in 100% of the 15 BSE associated feeding cohorts. In contrast, only 0.55% of the prion negative control group, comprised of normal herds and randomly selected cattle from a local slaughterhouse, were reactive (p less than 0.001). The significant association of the unique CNA profiles with BSE at-risk cows supports the use of the Company's CNA PCR ante mortem test for identifying at-risk herds in BSE eradication programs.

About Bovine Spongiform Encephalopathy (BSE):

Although the BSE epidemic appears to have started in cattle in 1984, this type of neurological disease traces its roots to the 1730's when a similar disease called scrapie was observed in sheep. The disease appears to have spread to cattle when farmers began to feed parts of sheep and other ruminants to their cattle. The disease appeared to jump species, this time to humans in the form of variant Creutzfeldt-Jakob disease (vCJD), when humans consumed infected cattle or were administered medications produced using raw materials from cattle. More recently, it was discovered that humans could also contract vCJD from blood transfusions. Testing for BSE is conducted primarily in the EU and Japan where approximately 13 million tests were performed in 2004. All 24 countries that test the food supply for BSE have discovered the disease. However, the largest cattle populations in the world, namely North America and South America, do not test cattle prior to its entry into the food supply. Estimates of the economic impact of BSE vary widely but most experts place the dollar figure in the tens of billions.

About BioProfil GmbH:

The BioProfil "Functional Genome Analysis" was initiated by research establishments and biotechnology companies in the German regions of Braunschweig, Gottingen, and Hannover. The German Ministry for Education and Research has made available funding of up to EUR 15 million to BioProfil, with the aim of making the results of research into the biology of infections, neurobiology and stem cell biology economically profitable. The BioProfil "Functional Genome Analysis" is coordinated by BioRegion GmbH with a mission to provide development funding for companies with new product ideas that demonstrate exceptional commercial promise and public impact.

About Chronix Biomedical:

Chronix Biomedical is a functional genomics company whose products address both the human and veterinary chronic disease markets. The company's core technology is based on a proprietary approach to developing laboratory tests for the early detection and monitoring of a new class of markers for chronic illnesses: circulating nucleic acids (CNA). Chronix's first commercial product, the Gottingen Living Test (GLT) is a test for the detection of cows at risk for developing bovine spongiform encephalopathy (BSE) or mad cow disease. The company released its first in-house clinical results (http://www.chronixbiomedical.com/dw/isagbwnoshad.pdf) at the 29th International Conference on Animal Genetics, the International Society of Animal Genetics in September 2004.

Statements in this press release that are not historical facts are forward-looking statements within the meaning of the Securities Act of 1933, as amended. Those statements include statements regarding the intent, belief or current expectations of the Company and its management. Such statements reflect management's current views, are based on certain assumptions and involve risks and uncertainties. Actual results, events, or performance may differ materially from the above forward-looking statements due to a number of important factors, and will be dependent upon a variety of factors, including, but not limited to, the Company's ability to obtain additional financing and access funds from its existing financing arrangements that will allow it to continue its current and future operations and whether demand for its test products in domestic and international markets will continue to expand. The Company undertakes no obligation to publicly update these forward-looking statements to reflect events or circumstances that occur after the date hereof or to reflect any change in the Company's expectations with regard to these forward-looking statements or the occurrence of unanticipated events. Factors that may impact the Company's success are more fully disclosed in the Company's most recent Private Placement Memorandum. Any illustrations of foreign currency conversions are approximations based on composite rates from the date of this press release.