CombiChem Inc. Receives $10 million in New Financing -- JAFCO, Brentwood & S.R. One Ltd. are new investors.

SAN DIEGO--(Health Wire)--Nov. 19, 1996--CombiChem Inc. announced Friday, Nov. 15 that it closed a new $10 million round of financing.

CombiChem, founded in 1994, is a privately held company with headquarters in San Diego. CombiChem accelerates drug discovery through the integration of medicinal chemistry and small library design technology. Last week, the company announced the signing of a major collaboration agreement involving multiple drug discovery targets.

Investors in the new financing round include Japan Associated Finance Co. Ltd. (JAFCO), Japan's leading venture capital firm, Brentwood Venture Capital and S.R. One Ltd. Along with the new investors, members of the CombiChem management team have invested over $500,000.

Vicente Anido Jr., Ph.D., Chief Executive Officer and President of CombiChem, said, "We're pleased to close this round of financing and to welcome the new investors to our company. They were selected because they bring additional expertise that will assist CombiChem in both its near term and long range goals."

Prior to Friday's announcement, CombiChem received $12.84 million in private equity financing from such investors as The Sprout Group, Forward Ventures, Sequoia Capital, Brinson Partners Inc., Sofinnova, Singapore Bio-Innovations Ltd., and Sorrento Associates Inc.

"CombiChem is poised to become the leader in accelerated drug discovery for the pharmaceutical market," said Pierre Lamond, General Partner of Sequoia Capital and Chairman of CombiChem's Board of Directors. "The funds from these private placements will enable CombiChem to develop its integrated combinatorial chemistry system more rapidly. The support of CombiChem by these investors certainly validates the company's approach to the new paradigm in drug discovery that is transforming the pharmaceutical industry."

The company has signed two major collaborations in the last six months. Because of its unique approach to drug discovery, the company can collaborate with partners via three different programs: lead generation, lead evolution and lead optimization. The company expects to generate revenues per program of $10 million to $20 million in upfront payments, research support and milestones. In addition, it will receive royalties on product sales.

CombiChem Inc. is located at 9050 Camino Santa Fe, San Diego, CA 92121.

A company overview follows this press release. -0-

CombiChem Inc. Overview

"CombiChem has structured its business model so that pharmaceutical and biotechnology companies may readily access our unique, multifaceted, and integrated approach to partnering for the acceleration of drug discovery," said Vicente Anido Jr., Ph.D., CombiChem's CEO and President.

At the apex of the model is the essential CombiChem strategy: a unique approach to drug discovery acceleration which entails working in partnership with pharmaceutical and biotechnology companies who can provide the biological capabilities, while CombiChem provides the chemical expertise of the discovery process.

"The three ways we work with our partners are Lead Generation, Lead Evolution and Lead Optimization," said Peter L. Myers, Ph.D., Chief Scientific Officer and Chief Operating Officer at CombiChem.

"The reason we're able to address all three areas is that we've built a paradigm we call the CombiChem Drug Discovery Engine," continued Myers. "The Drug Discovery Engine -- which represents a synergy between our medicinal chemistry expertise and our small library design technology -- gives us a unique iterative approach. In fact, this synergy is the foundation for all our efforts."

While Lead Generation is the most challenging endeavor for its partners, the CombiChem drug discovery approach makes it eminently attainable. Lead Generation is a process which is employed for novel targets with no known leads. CombiChem's unique and proprietary Universal Informer Library is used to generate information and launch the drug discovery cycle.

When Lead Evolution is pursued, CombiChem generates hypotheses based upon available data -- then matches the hypotheses against its proprietary virtual library -- and ultimately synthesizes alternative drug templates.

In Lead Optimization, CombiChem's proprietary design methodology is used to construct libraries around its partner's lead to improve it before identifying it as a drug development candidate.

"The advantage of the CombiChem approach is that the company doesn't have to make millions of compounds. Our Universal Informer Library will have roughly 10,000 compounds," said Myers. "Each time we go around the drug discovery cycle we'll make only a few hundred compounds.

"It's quite a different approach from the shotgun concept where one makes millions and millions of compounds with the expectation of finding the needle in the haystack. We don't have to make millions and millions because they're stored in the virtual sense in our library."

Basically, the major differences between CombiChem and other approaches are the company's data analysis and hypothesis generation capabilities, enabling an overall focus on smaller libraries.

"Hypothesis generation and testing are the keys," Myers concluded. "The problem of doing that traditionally is that you make one compound at a time. But we can set up these hypotheses and make forty very easy-to-synthesize compounds at a time. As I mentioned, that makes the drug discovery process starting from zero to delivery of lead compounds to our partners a very fast process indeed."

In summary, CombiChem Inc. has integrated medicinal chemistry, proprietary small library design and automation in order to assist partners to accelerate the drug discovery process.

CONTACT: Friestedt International

Susanne Friestedt

619/223-8844

or

CombiChem Inc.

Vicente Anido Jr., Ph.D.

619/530-0484