King Pharmaceuticals announces exclusive license for papillomavirus vaccines with Novavax.

King Pharmaceuticals, Inc. (Bristol, TN; 423-989-8077) announced that it has obtained an exclusive license from Novavax, Inc. (301-854-3900) to use its proprietary cell line to develop and potentially commercialize recombinant human papillomavirus virus-like particle vaccines. Novavax and King are currently working together on manufacturing HPV-16 virus-like particle vaccines being evaluated by the National Cancer Institute in clinical trials. The vaccines are designed to prevent and/or treat HPV-16 infection and associated cervical cancer.

The recombinant HPV-16 virus-like particle vaccines were developed originally by Drs. Douglas Lowy and John Schiller of the Laboratory of Cellular Oncology at the NCI. The HPV-16 virus-like particle vaccines were developed further and manufactured as experimental clinical vaccines by Dr. Robin Robinson of Novavax's Biomedical Service Division. In September 2000, Novavax received a contract from the NCI to manufacture the HPV-16 L1 virus-like particle vaccine for a large-scale clinical efficacy trial. The NCI will fund the initial planned related Phase III clinical trial which is expected to commence during mid-2001. The product will be manufactured at King's Parkedale facility in Michigan utilizing Novavax and Parkedale personnel.

Pursuant to the license agreement, King has an exclusive worldwide license to develop, manufacture and market HPV-16 virus-like particle vaccines for the prevention and/or treatment of human papillomavirus infection, except that Novavax retains the right to co-market any such product in the United States, including Puerto Rico. King will pay Novavax during the term of the license a royalty based on 17% of any net sales, less cost of goods, of any human papillomavirus product successfully developed under the license agreement. The term of King's license shall continue for so long as Novavax's related cell line technology remains proprietary to Novavax, including pursuant to any existing patent or patent protection that must be sought under the terms of the license agreement.

As part of the transaction, King has agreed to make a $25 million convertible debenture investment in Novavax. The note is convertible into Novavax common stock at $10.00 per share, an 18% premium to a 20 day trading average prior to closing. The note carries a 4% coupon payable semi-annually in cash and stock.

Novavax received $20 million on December 19, 2000, and will receive an additional $5 million when Novavax files a New Drug Application for its topical transdermal estrogen replacement therapy, ESTRASORB, expected to be filed in the first half of 2001.

John A. Spears, president and chief executive officer of Novavax, stated, "We are very pleased that King is making an investment in Novavax at this time. We have collaborated with King on several projects over the last several years and they have been an excellent corporate partner. This transaction confirms my belief that it has been and will continue to be, a mutually beneficial relationship. This is the first significant investment in Novavax by a major pharmaceutical company."

John M. Gregory, chairman and chief executive officer of King, stated, "We are excited to officially join forces with Novavax in the development of human papillomavirus vaccines which, if successful, could provide an important breakthrough in the prevention and/or treatment of human papillomavirus-induced cervical cancer. The Centers for Disease Control and Prevention recently reported that nearly 18% of American women and 8% of American men carry this strain of human papillomavirus which causes approximately half of all cases of cervical cancer."

Novavax is a biopharmaceutical drug delivery company engaged in the research and development of differentiated drug products primarily in the fields of women's health and infectious diseases. The company is applying its proprietary lipid vesicle encapsulation technologies, including Novasome lipid vesicles and micellar nanoparticles, to develop product candidates for the topical and oral delivery of generic and non-generic drugs, peptides, proteins and oligonucleotides. The company's Novasome technology is also being developed as an adjuvant delivery system for enhanced vaccine efficacy. Novavax's Biomedical Services Division is engaged in contract research and development and Phase I/II vaccine manufacturing of human vaccines for government laboratories and other vaccine companies.

King is a vertically integrated pharmaceutical company that manufactures, markets, and sells primarily branded prescription pharmaceutical products. King seeks to capitalize on niche opportunities in the pharmaceutical industry created by cost containment initiatives and consolidation among large global pharmaceutical companies. King's strategy is to acquire branded pharmaceutical products and to increase their sales by focused promotion and marketing and through product life cycle management.