Somatix completes acquisition of Merlin Pharmaceutical; Somatix gains in vivo gene transfer technology; Adds noted scientists.

ALAMEDA, Calif.--(BUSINESS WIRE)--Feb. 14, 1995-- Somatix Therapy Corp. (NASDAQ: SOMA) announced Tuesday that it has completed the acquisition of Merlin Pharmaceutical Corp. pursuant to a definitive merger agreement announced in December 1994.

As a result, Somatix acquires Merlin's in vivo gene therapy programs and related intellectual property covering adenoviral (AV) and adeno associated viral (AAV) vectors, in exchange for 3 million shares of common stock to be issued over the next 24 months. One quarter of the shares will be released to Merlin shareholders at periods of 6, 12, 18 and 24 months after the closing. Additionally, 50 percent of the shares will be escrowed for 18 months to assure the continued active involvement of Merlin founding scientists with Somatix.

Somatix has signed exclusive long term consulting arrangements with these Merlin founders including noted gene therapy innovator Dr. Richard Samulski, professor at the University of North Carolina; world-renowned adenovirus virologist, Dr. Thomas Shenk, Howard Hughes professor of molecular biology at Princeton University; and Dr. Matthew During, a Yale endocrinologist. The scientists will join Somatix's scientific advisory board and will be retained as consultants developing vector technologies.

"The combination of Somatix and Merlin creates a world-class company exploring in vivo and ex vivo gene therapies in a broad variety of gene transfer systems," said David W. Carter, Somatix's chairman, president and chief executive officer. "The merger cements our leadership in creating novel therapies for neural diseases, an area where delivery issues make gene therapy a most promising and logical technique. Since the merger announcement in December, and as a result of our new gene transfer capabilities, there has been a marked increase in discussions with academic and corporate collaborators."

Somatix will continue to develop Merlin's AAV-based product for the treatment of Parkinson's disease in parallel with its own ex vivo method. Preclinical data from the AAV program, which is being conducted in collaboration with Dr. During, was published in the October issue of "Nature Genetics." AV and AAV technology complement Somatix's proprietary retroviral vector technology. With the addition of Merlin's intellectual property and methodologies, Somatix will now be able to explore in vivo genetic modification (inside the body) in addition to ex vivo (outside the body). AV and AAV also enable the genetic modification of non-dividing and dividing cells, as well as transfer of sizable genes of interest with predictable insertion points.

Somatix currently has clinical and preclinical programs in oncology, neural diseases and hemophilia, using its proprietary retroviral vector gene transfer technology. The company's lead product, the GVAX cancer vaccine, is being tested in Phase I clinical trials for the treatment of metastatic renal cell carcinoma and advanced melanoma. Additional trials of the vaccine are planned for the treatment of prostate and colorectal cancers. The company is also conducting research in-house in fundamental gene transfer techniques including a synthetic vector program, a hematopoeitic stem cell group and an effort in fourth-generation retroviral packaging cells.

Somatix Therapy Corp. is a leader in the field of gene therapy. The company intends to research, develop and commercialize proprietary processes for the genetic modification of cells and their use in the treatment of human disease. Somatix' assets include its highly efficient gene transfer technology, broad-based intellectual property and product development programs focused on cancer, neural diseases and hemophilia.

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Note to Editors: GVAX is a trademark of Somatix Therapy Corp.

CONTACT: Somatix Therapy Corp.

Mark Bagnall, 510/748-3064