Nucleonics Plans Appeal of Courts Dismissal of Patent Infringement Litigation Brought by Benitec; Recent Decision on a Legal Technicality Does Not Address Patent Validity or Enforceability.

HORSHAM, Pa. -- Nucleonics, Inc., a biotechnology company focused on the development of novel expressed RNA interference-based (eiRNA) therapeutics, announced today that it intends to appeal the decision made last Friday by the judge in the United States District Court for the District of Delaware to dismiss the lawsuit filed against it by Benitec in March 2004. Nucleonics believes that the court erred on matters of law and fact and is preparing to appeal to the Court of Appeals for the Federal Circuit.

Robert Towarnicki, President and CEO of Nucleonics stated, "Nucleonics has maintained since the litigation was filed by Benitec that the Benitec Patent issued in the United States as well as similar patent applications filed around the world by Benitec are invalid. To this end, Nucleonics' response to Benitec's lawsuit has been to invalidate the Benitec intellectual property worldwide and has eagerly sought its day in court. Now Benitec seeks to have the case dismissed on a technicality of jurisdiction, thereby avoiding adjudication on the merits. Nucleonics continues to believe that the patent is invalid and unenforceable and will pursue this case through the Appellate Court and continue to challenge the Benitec IP estate around the world."

Updating its efforts worldwide, Nucleonics is pleased to report that the US Patent Office, in response to the request for re-examination by Nucleonics, has issued a preliminary rejection of all claims of the Benitec Patent which is the issue of the litigation. Mr. Towarnicki added, "We are hopeful that the US Patent Office will make our court appeal moot by upholding the rejection of all the claims in the Benitec patent, however, we will remain proactive in our commitment to invalidate these patents and related applications."

Nucleonics has also enjoyed success in the European Patent Office, filing third party observations to Benitec's patent application that contributed to a final rejection of the Benitec application by the EPO after proceedings that included Benitec filing multiple amendments, two declarations by an expert and the inventor, and, finally an oral hearing before a panel of examiners. The claims were rejected for lack of inventive step, lack of sufficiency of disclosure, and lack of novelty. Nucleonics believes the Benitec US Patent and related applications pending in the US and EPO suffer the same flaws.

With respect to Benitec's Australian patent, Nucleonics was surprised by the Australian Patent Office's reversal of its initial findings of invalidity in the re-exam requested by Nucleonics. According to Mr. Towarnicki, Nucleonics chose not to pursue further action in the Australian Patent Office since "Nucleonics now possesses an issued patent in Australia (No. 776150) that will prevent Benitec from practicing RNA interference in any vertebrate, including humans, without taking a license from Nucleonics."

About Expressed Interfering RNA (eiRNA)

Post-transcriptional gene silencing, also known as RNA interference or RNAi, is a phenomenon in which genes are silenced in a sequence-specific manner through targeted mRNA (messenger RNA) degradation. Researchers believe RNAi may offer potential as a novel way to silence genes involved in disease, including genes encoded by viruses such as Hepatitis B, Hepatitis C and HIV, as well as genes involved in the establishment of inflammatory diseases and cancer.

Nucleonics is licensed under the RNAi technology of Andrew Fire, Craig Mello and their colleagues, widely recognized as the seminal work in this area. Nucleonics employs an expressed interfering RNA (eiRNA) approach whereby scientists insert plasmid DNA coding for relevant double-stranded RNA (dsRNA) into targeted cells, inducing the cells to produce and deliver specific dsRNA sequences. Cellular mechanisms then cleave the dsRNA into specifically encoded siRNAs (short interfering RNA), which silence the targeted genes. Nucleonics' researchers have shown the ability of long or short dsRNA strands produced in this way to silence genes, including Hepatitis B, Hepatitis C, and HIV, in relevant cell lines for extended periods of time. Moreover, they have silenced multiple genes, as well as HBV replication, in adult mice without triggering an interferon response. Plasmid DNA approaches similar to that used by Nucleonics for expression of dsRNA have demonstrated human safety in over 500 patients to date, in the field of DNA-based vaccines. Nucleonics is initially directing its technology to the development of eiRNA therapeutics for Hepatitis B virus and Hepatitis C virus infections.

About Nucleonics, Inc.

Nucleonics, founded in January 2001, is an emerging biotechnology company focused on the development of novel RNA interference-based therapeutics for viral and other diseases. Privately owned Nucleonics is headquartered in Horsham, Pennsylvania.