Connetics Enters Agreement to Develop Its Second Dermatological Mousse Product.

PALO ALTO, Calif.--(BW HealthWire)--Jan. 14, 1998-- Connetics Corporation (NASDAQ:CNCT) announced today that it has completed an agreement with Soltec Research Pty Ltd., an Australian company, whereby Connetics has exercised its option to exclusively develop and market clobetasol mousse (a quick-break foam formulation of the dermatologic drug, clobetasol propionate) in North America.

Connetics plans to conduct a pivotal clinical trial in severe dermatoses for clobetasol mousse during 1998 and, if this trial is successful, to submit a New Drug Application for marketing the product in the United States. As part of an earlier agreement, Connectics has an exclusive option on Soltec's proprietary mousse system for the delivery of additional compounds. Connetics recently submitted a New Drug Application for its first mousse product, betamethasone valerate.

"Clobetasol mousse is our fourth late-stage product and fits perfectly with our strategic goal of acquiring proprietary products that demonstrate potential for rapid and cost effective market introduction," said Thomas G. Wiggans, president and chief executive officer of Connetics.

"In-licensing clobetasol mousse expands our commitment to dermatology and reinforces our enthusiasm for commercializing mousse-formulated products. We expect that our betamethasone mousse product will compete in the $200 million mid-potency topical steroid market. If approved, clobetasol mousse will allow us to compete in the $300 million high-potency topical steroid market."

W. Scott Harkonen, M.D., senior vice president of product development and operations, said, "Clobetasol mousse presents an exceptional opportunity to build on our recent development success with betamethasone mousse. We are eager to expand this product line with another late-stage drug candidate targeting severe dermatoses. The preformulation work has been completed, we are meeting with the FDA next month, and expect to initiate a PHASE III trial later this year."

Clobetasol mousse is a quick-break foam formulation of clobetasol propionate, a super high-potency corticosteroid currently marketed in the United States. The mousse remains a foam at room temperature and then liquifies when applied to the body, facilitating the delivery of active dermatologic agent. The mid-potency steroid version of this formulation has been shown to be easier to apply and less messy than currently marketed scalp lotions and gels. Connetics' Phase III clinical trial with betamethasone mousse demonstrated statistically significant disease improvement in scalp psoriasis as compared with betamethasone lotion.

Severe dermatoses includes several diseases such as psoriasis, atopic dermatitis and seborrheic dermatitis. The course for these diseases typically involves periods of remission followed by acute exacerbations. The United States market for high- and super- high-potency topical steroids such as clobetasol is more than $300 million.

Soltec Research Pty Ltd. is an Australian company focused on research, development and licensing of innovative products based on its delivery systems for pharmaceutical and consumer chemicals. Commercial successes to date include broad spectrum sunscreens, human and animal parasite control, infection control, acne therapy, intensive burn therapy and aerosol antibiotics.

Connetics Corporation, headquartered in Palo Alto, Calif., is focused on the acquisition, development and marketing of products in the areas of rheumatology and dermatology.

The company currently markets Ridaura(R) (auranofin), a treatment for rheumatoid arthritis. Several products are under development including betamethasone and clobetasol mousse for the treatment of certain dermatological indications; ConXn(R) (recombinant human relaxin-H2) for the treatment of certain rheumatic and fibrotic diseases; gamma interferon for the treatment of a certain fibrotic disease; and TCR vaccines for the treatment of certain autoimmune diseases. -0-

The first three paragraphs of this news release contain forward-looking statements that involve risks and uncertainties that could cause actual results or events to differ materially from those in such forward-looking statements. Potential risks and uncertainties include, without limitation, those associated with product development, clinical trials, and obtaining marketing approval.

These and other factors are discussed in more depth in Connetics' Form 10-K for the fiscal year ended Dec. 31, 1996, the company's Registration Statement on Form S-1 for the company's recently completed public offering, and the company's other filings with the SEC. These documents contain and identify important factors that could cause the actual results to differ materially from those contained in the projections or forward-looking statements.

CONTACT: Connetics Corporation

John L. Higgins, 650/843-2800

or

Burns McClellan

Reagan Codner (Investors), 212/213-0006

Mike Sinclair (Media), 415/352-6262