Novopharm Biotech and Genesys Pharma enter into letter of intent with option for business combination.

TORONTO--(BW HealthWire)--April 15, 1997--Novopharm Biotech to acquire two generic biopharmaceutical products and fund AIDS research by Genesys Pharma

Novopharm Biotech Inc. (TSE, VSE:NVO) and Genesys Pharma Inc. (VSE:GPI) are pleased to announce that they have entered into a letter of intent under which NVO will acquire two generic biopharmaceutical products developed by GPI. Genesys Pharma is currently researching and developing an antisense drug, GPI-2A, for the treatment of AIDS. Proceeds from the sale of the two products will be used by GPI to fund a Phase I clinical trial with GPI-2A.

As part of the transaction, GPI has also agreed, at the option of NVO, to propose and recommend to its shareholders that they approve a business combination between NVO and GPI (the "Combination Option") which will result in NVO acquiring at least 90 percent of the outstanding shares of GPI at a share exchange ratio to be determined, in part, by an independent valuation of GPI and NVO. In consideration for the two biopharmaceutical products and the Combination Option, NVO will pay $500,000 to GPI.

Within three months of acquiring the two products, NVO will also subscribe for 363,636 common shares of GPI at a price of $1.10 per share. If the Combination Option is not exercised within 120 days of the start of Phase I clinical trials with GPI-2A, then for every 30 day period thereafter, NVO will subscribe for an additional 90,909 common shares of GPI at a price of $1.10 per share until either the completion of the trial, or December 31, 1997.

Under the terms of the letter of intent, Dr. Albert Friesen, President of GPI, and his spouse have accepted a payment from, and have agreed to grant to NVO, an option (the "Friesen Option") for the acquisition of all their common shares of GPI held by them (including common shares acquired on the exercise of convertible securities) at a price of one common share of NVO for each 1.46 common shares of GPI, to a maximum of 6,243,957 common shares of NVO. Dr. and Mrs. Friesen currently hold 8,816,178 common shares of GPI and options to acquire an additional 300,000 common shares. There are currently 16,061,383 common shares of GPI outstanding. In addition, GPI has outstanding warrants for 1,480,046 common shares, options for 1,602,500 common shares and a commitment to issue up to 2,000,000 common shares under financing to raise an additional $3,000,000.

The Friesen Option will expire at the same time as the Combination Option, however, the former cannot be exercised unless both NVO and GPI agree to the form of the business combination. If an agreement is reached, then the Friesen Option may be exercised even if the business combination is not approved by the shareholders of GPI.

Novopharm Biotech is acquiring the Friesen Option to facilitate the completion of the business combination with GPI. Presently, NVO does not beneficially own or exercise control or direction over any common shares of GPI. Novopharm Biotech, in acquiring the Friesen Option, is not acting jointly and in concert with any other person.

Novopharm Biotech is a publicly traded subsidiary of Novopharm Limited -- one of Canada's largest generic pharmaceutical companies. On February 17, 1997 NVO entered into a long-term agreement with Warrick Pharmaceuticals, the generic pharmaceutical marketing subsidiary of Schering-Plough Corporation (NYSE:SGP) to develop, manufacture, and market generic biopharmaceuticals worldwide. Generic biopharmaceuticals are biological pharmaceutical products that are equivalent to existing branded products in terms of their chemical composition and therapeutic effect.

The completion of the transactions contemplated in the letter of intent is subject to the execution of a final agreement and the receipt of all necessary regulatory and shareholder approvals, including approvals from the Toronto Stock Exchange and the Vancouver Stock Exchange.

CONTACT: Novopharm Biotech Inc.

Stacey Jurchison, 416/291-8888, ext. 5165

or

Genesys Pharma Inc.

Dawson Reimer, 204/488-4244