QBI RECEIVES MILESTONE PAYMENT FROM MITSUBISHI-TOKYO.

Quark Biotech, Inc. (QBI) has received a milestone payment from Mitsubishi-Tokyo Pharmaceuticals, Inc. under an existing collaborative research and license agreement. The undisclosed milestone signifies Mitsubishi's decision to screen for a small molecule lead compound and commence development of a candidate based on a new gene implicated in neuron death.

The milestone and the discoveries on which it is based are a result of the companies' collaborative research program that began in 1995 between QBI and Mitsubishi Chemical Corporation , prior to its merger with Tokyo Tanabe Co., Ltd.

The collaboration was extended in 1997. Through the collaboration, QBI utilized its pathology-specific gene discovery technology platform, model systems and extensive panel of experts and academic collaborators to identify candidate genes suitable for drug development in a variety of serious diseases, including conditions involving neuron death. The gene that has now reached a developmental milestone under the agreement is one of six novel gene candidates which were selected for further development out of numerous potential target genes discovered and patented as a result of the research collaboration between QBI and Mitsubishi.

Mitsubishi's decision to commence chemical screening is a significant step toward therapeutic product development and strengthens its position in the Japanese pharmaceutical industry.

Under the terms of the agreement, Mitsubishi has exclusive and non-exclusive rights to market products yielded from the research program. QBI will receive research and development payments, milestone payments, and royalties.

QBI, a U.S. based, privately held genomics company, is engaged in pathology-specific gene discovery designed to identify, select and validate genes and gene products as diagnostics and drug candidates in virtually every disease category. QBI's portfolio of genomic technologies and bioinformatic systems is among the most comprehensive in the industry and is highly selective in the information it produces, critical to the disease. QBI's principal objective is to establish the company's gene discovery technologies as platforms for developing and commercializing therapeutic and diagnostic products for those major diseases that are inadequately served by current therapeutic and diagnostic alternatives.

Mitsubishi Chemical Corporation is Japan's largest chemical company and heads a group of more than 350 subsidiaries and affiliates worldwide. Effective October 1, 1999, the drug divisions of MCC and Tokyo Tanabe Co., Ltd. merged and is operating under the name Mitsubishi-Tokyo Pharmaceuticals, Inc. as a wholly-owned subsidiary of MCC. The new company is expected to significantly increased MCC's position in the pharmaceutical market.

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