MERZ + CO./FOREST LABS SIGN PACT FOR MEMANTINE DEVELOPMENT.

Neurobiological Technologies, Inc. (NTI*) (OTC-BB:NTII), Richmond, Calif., has announced that its corporate collaborator, Merz + Co. (http://www.merz.de/index_ehtml) of Frankfurt, Germany has entered into an agreement with Forest Laboratories, Inc. (NYSE: FRX), for the development and marketing of Memantine in the United States for the treatment of Alzheimer's disease, neuropathic pain, and AIDS-related dementia.

Memantine is the leading prescription pharmaceutical product used in the treatment of dementia in Germany. Merz has completed three separate Phase III clinical trials of Memantine for mild to moderate vascular dementia, moderately severe to severe dementia, and Alzheimer's disease in Europe. In February 2000, Merz announced positive results after completing a Phase III trial in the U.S. for moderately severe to severe Alzheimer's disease. The U.S. study demonstrated improvement in patients with more advanced disease for which no other treatment has yet proven successful.

NTI recently completed a 421-patient, Phase IIB clinical trial in the U.S. of Memantine for diabetic neuropathic pain that demonstrated a statistically significant reduction in nighttime pain after treatment with Memantine. In addition, last January NTI completed enrollment in a double-blind, placebo-controlled Phase II clinical trial of Memantine for AIDS-related dementia funded by the National Institute of Health (NIH) and conducted by the AIDS Clinical Trials Group (ACTG), a clinical consortium funded by the National Institute of Allergy and Infectious Diseases (NIAID). The company expects results of this trial to be reported in the latter part of this year.

Memantine is an orally active N-methyl-D-aspartate (NMDA) antagonist. Research indicates that NMDA receptor antagonists have the potential to prevent the injury and death of neurons related to a variety of conditions, including neuropathic pain, Alzheimer's disease, Huntington's disease, and AIDS-related dementia. Memantine is the first NMDA receptor antagonist to show efficacy in Alzheimer's disease and vascular dementia.

"NTI is delighted that Merz + Co., our corporate collaborator on Memantine, and Forest Laboratories have entered into this agreement for the development and marketing of Memantine in the U.S.," said Paul E. Freiman, president and chief executive officer of NTI. "This agreement will initiate a sharing of payments with Merz on a formula basis including front-end, milestone and royalty payments. We strongly believe that Memantine will be an important and successful treatment for a number of NMDA-receptor-related neurological diseases."

NTI is an emerging drug development company focused on the clinical evaluation and regulatory approval of neuroprotective drugs. The company's strategy is to in-license and develop early-stage drug candidates that target major medical needs and that can be rapidly commercialized. NTI is currently developing Memantine for multiple neurological conditions and evaluating XERECEPT* as a treatment for peritumoral brain edema.

For more information, call 415-974-7230.