Norwood Abbey Receives FDA 510k Approval for Its Laser-Assisted Transdermal Drug Delivery Device.

Business Editors & Health/Medical Writers

MELBOURNE, Australia--(BUSINESS WIRE)--Jan. 13, 2003

Norwood Abbey Ltd. (ASX: NAL) today announced that the U.S. Food and Drug Administration (FDA) has granted 510(k) marketing approval for the Company's Laser-Assisted Drug Delivery (LAD) device for "ablation of the outer layer of the skin prior to the application of OTC topical 4% lidocaine cream, for local dermal anesthesia." This device, which is comprised of a laser device together with single-use disposable tips, is designed to painlessly and temporarily alter the stratum corneum, or outer layer of skin, allowing for more efficacious delivery of topically applied drugs.

The Company believes that this proprietary technology represents a breakthrough in transdermal drug delivery, and is very pleased to now be in the position to have achieved this important milestone related to release of the product in the U.S. market.

"The approval represents a major milestone to achieving the Company's goal of generating profits from the LAD project and becoming cash flow positive," commented Peter Hansen, Executive Chairman of Norwood Abbey. "Our research indicates that in addition to local anesthetics, there are a large number of additional drugs that potentially can be delivered more effectively when used with the LAD."

Norwood's North American marketing partner for the LAD, Ferndale Laboratories Inc., will package Norwood disposable LAD tips with its over-the-counter topical anaesthetic, Ela-Max(R).

The primary market for the product is expected to be patients undergoing various procedures requiring needle-sticks, including injections, intra-venous insertions and blood donations. Prime initial target customers include clinicians and health care professionals in the fields of:

-- Dermatology/Plastic Surgery (approx. 15,000 in U.S.)

-- Oncology (approx. 2,000 in U.S.)

-- Pediatrics (approx. 11,000 in U.S.)

-- Blood Donations

While the strategy with respect to the laser project has always been to primarily concentrate on the receipt of an annuity or continuing revenue stream from the sale of single use disposable tips, the Company also expects to generate profits from the sale of the device.

Under the commercial arrangements that have been negotiated with Ferndale Laboratories Inc. in Detroit, Norwood Abbey, through a network of direct sales representatives, medical wholesalers and distributors, will sell disposable tips and drug in a single package throughout North America. Market research has indicated that devices are likely to be used, on average, 1,000 times annually.

The Company currently expects to have sold or placed 10,000 devices by the end of calendar 2005. This would generate -- on an ongoing basis -- approximately AUD$20 million per annum in gross profit or approximately 15 cents (pre-tax) for each Norwood share on issue.

In order to maximize market penetration, the Company has negotiated an arrangement with Ferndale whereby in a situation where a potential customer is not able to "fund" the capital cost of the device, Norwood -- together with Ferndale -- will be able to place a device with a customer in return for the ongoing purchase of a minimum number of "procedures" i.e. drugs and disposable tips.

Norwood has appointed a Vice-President for the laser project in North America, Mark McLoughlin, a distinguished healthcare industry specialist. Mr. McLoughlin will take the project to the next step of manufacturing, market development, sales, marketing and distribution. The Company will also seek to pursue further commercial applications, such as the possible delivery of vaccines, anti-inflammatories and other drugs.

To keep costs low, both the manufacture of the LAD and disposable tips is being outsourced to international groups with experience in manufacturing medical devices. This will of course, also reduce Norwood's need for working capital and reduce the cost of the LAD and the disposable tips.

Besides the significant initial market for its use in North America, Norwood has also commenced discussions with respect to targeting the European and Australian markets. Limited sales have already been made in Australia for specific applications and the project is expected to progressively generate substantial revenue from Asia.

As a result of positive feedback from the U.S. market, work is now under way on a second-generation laser device for local anesthetics that would cover a wider area of the skin.

Norwood Abbey Ltd. is a drug delivery and immunology company with three proprietary delivery platforms in various stages of commercialization and development. Its delivery technologies include laser-assisted delivery, micro-needle arrays and pressure wave technology for the transfer of both drugs and genetic material. In addition, the Company holds patent applications for the use of GnRH analogue drugs in the re-growth of the Thymus gland and production of new T-cells. GnRH drugs are already approved for the treatment of prostate and breast cancer and have been available on the market for many years.

For further information about Norwood, visit the Company's web site at www.norwoodabbey.com.