Connetics Grants $14 Million License to Suntory Pharmaceuticals for the Development and Marketing of ConXn -- Relaxin -- for Scleroderma in Japan.

PALO ALTO, Calif.--(BW HealthWire)--April 27, 1998--Connetics Corp. (NASDAQ:CNCT) announced today that it has entered into a development, commercialization and supply agreement with Suntory Pharmaceuticals, a division of Suntory Limited of Osaka, Japan for ConXn(R) (recombinant human relaxin-H2) for the treatment of scleroderma.

Under the terms of the agreement, Suntory will pay approximately $14 million (approximately JPY 1.7 billion) in license fees and milestone payments. Suntory will be responsible for all development and commercialization expenses in Japan and will pay royalties on sales in Japan for the treatment of scleroderma. Suntory will pay a license fee of approximately $1.6 million upon closing and make milestone payments based upon development progress in the U.S. and Japan.

In addition, Suntory will purchase relaxin materials from Connetics. Connetics retains rights to all other indications in Japan and all ex-Japan rights for ConXn.

"We are delighted to welcome Suntory as our first development and commercialization partner for ConXn. The Suntory Pharmaceutical Division's commitment to developing novel therapeutics like ConXn makes Suntory an excellent partner for Connetics in Japan," said Richard J. Hammel, Ph.D., vice president of commercial development for Connetics.

"This deal is very significant to Connetics. It validates our progress in developing ConXn and provides capital support for the continued development of this novel product. We are eager to continue ConXn development within the United States and look forward to commencing product development in other major world markets, beginning with our partner Suntory in Japan," said Thomas G. Wiggans, president and chief executive officer for Connetics.

Suntory Limited has annual corporate revenue in excess of $6 billion. The pharmaceutical division of Suntory is a fast growing unit of the parent company whose strategy is to create innovative and unique pharmaceutical products based upon biomedical sciences, aimed to serve the needs of society in the 21st century. Since 1991, Suntory Pharmaceuticals has launched five products in Japan, has a number of biotechnology products in development, and has R&D partnerships with Bristol-Myers Squibb and ICOS.

Scleroderma is a very serious connective tissue disease resulting from an excessive production of collagen. The disease afflicts approximately 300,000 patients in the U.S. alone, 80 percent of whom are women. In its severe form (which affects approximately 70,000 patients), the disease results in hardening of the skin and internal organs, and is fatal in 50 to 70 percent of cases within five years.

It is estimated that the total economic impact of treating scleroderma in the United States exceeds $1.5 billion annually, according to a recently published paper in Seminars in Arthritis and Rheumatism.

Relaxin, first elucidated by the Howard Florey Institute of the University of Melborne, is a natural protein which has been shown to inhibit excessive connective tissue build-up by decreasing collagen production and enhancing collagen breakdown.

Results of a Phase II study of ConXn announced in 1997 showed a statistically significant improvement in the primary endpoint over placebo with the group of patients receiving a dose of 25 ug/kg/day, and positive trends were observed in all 11 secondary parameters, including physical parameters, such as lung function, oral aperture and hand extension, and quality of life parameters, such as eating, gripping, hygiene and reaching.

The drug was well tolerated. The outcome of this trial represents the first controlled clinical study to show positive results in the treatment of scleroderma.

Connetics Corp., headquartered in Palo Alto, 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 formulations 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.

This news release may contain forward-looking statements that involve risks and uncertainties that could cause actual results or events to differ materially from those expressed in such forward-looking statements. Potential risks and uncertainties include, without limitation, those associated with product development, clinical trials, future revenues and profitability, and obtaining marketing approval. These and other factors are discussed in more depth in Connetics' Form 10-K for the fiscal year ended December 31, 1997 under the heading "Additional Factors That May Affect Future Results" 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 Corp.

John L. Higgins, 650/843-2800