Khepri Pharmaceuticals, Caisse de depot et placement du Quebec and Innovatech du Grand Montreal Create Canadian Subsidiary -- Khepri Canada.

SOUTH SAN FRANCISCO, Calif.--(BUSINESS WIRE)--March 28, 1995--Khepri Pharmaceuticals, Inc. today announced the formation of a Canadian subsidiary called Khepri Canada.

The announcement was made jointly with Khepri's Canadian partners, the Caisse de depot et placement du Quebec and Innovatech Grand Montreal. The Caisse is a Quebec-based institutional investor that invests the funds of Quebec's various public pension and insurance plans. Innovatech Grand Montreal is a Montreal parapublic agency that operates as a venture fund.

Khepri Canada will be 50 percent owned by Khepri Pharmaceuticals, with the Caisse and Innovatech Grand Montreal each owning 25 percent. Khepri Canada will begin with Can$10 million (US$7 million) in capital, including a Can$4 million (US$2.8) investment by the Caisse, Can$4 million (US$2.8) by Innovatech Grand Montreal, and Can$2 million (US$1.4) from Khepri Pharmaceuticals.

Khepri Canada, which will have headquarters in Montreal, will focus on research and development of therapeutics based on proteases and protease inhibitors. Proteases are enzymes that play a central role in regulating key biological processes in the body, acting as the primary "on-off" switches that control a wide variety of biological responses. A recognized leader in protease-based technology, Khepri is already in the midst of preclinical programs in which lead molecules have demonstrated effectiveness in animal models of cancer, asthma and arthritis.

"This is both an exciting research opportunity for Khepri and an important additional source of capital," said Ronald D. Henriksen, president and chief executive officer of Khepri. "This new venture will give Khepri access to substantial research expertise in proteases and, in the future, to facilities useful in conducting preclinical and clinical research. We view this as a long-term commitment by Khepri to grow and commercialize Canadian and U.S. technologies into cost-effective therapeutics."

Khepri has been working in Canada since 1993, with researchers and collaborators at the University of Montreal and the Biotechnology Research Institute, in Montreal, an institution sponsored by the Canadian government. Several institutions in Quebec have been conducting research in protease biology, which Khepri Pharmaceuticals said was a major reason for its interest in working with Canadian partners.

"Khepri Canada is a model of what U.S. and Canadian organizations can do to generate medical and economic benefits for all of North America," added Bernard Coupal, president and chief executive officer of Innovatech Grand Montral.

Today's announcement follows Khepri Pharmaceutical's November 10, 1994 announcement that it had completed an US$11 million round of venture financing. Khepri Pharmaceuticals has raised a total of US$22.8 million in venture financing since it was founded in 1992.

Khepri Names Colin Bier Director General

Khepri Pharmaceuticals also announced the appointment of Colin B. Bier, Ph.D., as Director General of Khepri Canada. Dr. Bier received his Ph.D. in Experimental Pathology from Colorado State University and was recently president and chief executive officer of a contract laboratory in Montreal. He also served in a management position at Bio-Research Laboratories, in Senneville, Quebec, as vice president and director of experimental toxicology and clinical pathology. Dr. Bier is a lecturer in pathology at McGill University in the Department of Pathology and has authored/co-authored more than 25 publications and abstracts. He is a native of Montreal.

The Caisse de depot et placement du Quebec is an institutional investor that invests the funds of Quebec's public pension and insurance plans, and of various Quebec public bodies. It uses a range of traditional and innovative instruments as bonds, shares and convertible securities, mortgages, real estate, short-term securities and synthetic and derivative products. The Caisse has a Can$2.3 billion portfolio of private investments in various businesses.

Innovatech du Grand Montreal is a parapublic agency responsible for promoting technological innovation in the territory of Greater Montreal. The agency was established to spearhead sustained economic revival in the region and is backed by the Quebec government commitment of Can$300 million. Innovatech du Grand Montreal operates as a venture fund and invests in partnership with other investors.

Khepri Pharmaceuticals is a biopharmaceutical company focused on the discovery and development of novel drugs based on proteases and protease inhibitors. The company was co-founded in 1992 by Dr. Donald Payan, formerly with the Howard Hughes Medical Institute at the University of California, San Francisco, and by Dr. David Estell, formerly with Genencor International and Genentech, Inc. Khepri's programs focus on inflammation and cancer. Initial disease targets are small cell lung cancer, asthma and diseases characterized by aberrant protease activities resulting in tissue destruction, such as rheumatoid arthritis, infectious disease and stroke. Khepri is in discussions with potential corporate partners to support the development and marketing of its protease-based drug programs.

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Note to Editors: This news release moved over Business Wire, March 28, 1995.

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Khepri Pharmaceuticals, Inc. 415/794-3500 Ronald D. Henriksen President, CEO 

Donald Payan, M.D. Executive V.P., Chief Scientific Officer

Sandra R. McNamara V.P., Finance and Administration, CFO 

StratiPoint Group 415/388-3216 Mike Jackman

Khepri Canada 514/748-2900 Colin B. Bier, Ph.D. Director General

Innovatech du Grand Montreal 514/864-2929 Bernard Coupal, Ph.D. President, CEO

CONTACT: Khepri Pharmaceuticals, Inc.

Ronald D. Henriksen, 415/794-3500