BioStratum Raises $28 Million in Private Financing

Research Triangle Park, N.C.,  --March 27, 2000-- BioStratum Incorporated, the world leader in basal
lamina research, announced today the close of a $28 million round of private financing. The private placement included investors from both the US and Europe. Institutional investors included HealthCap (Stockholm, Sweden), Equity Resources Group, Inc.(Cambridge,
MA, USA), BankInvest (Copenhagen, Denmark), Mellon Holdings, Ltd.(London, U.K.), and MP Bio hf (Reykjavik, Iceland).

"The strength of this financing reflects the investor's confidence in the potential of our two lead drug candidates, Pyridorin™ and Angiocol™, as well as the Company's basal lamina research pipeline," said Claus Kühl, M.D., Ph.D., President and CEO of BioStratum. "We welcome three new institutional investors along with significant follow-up investments made by our existing shareholders."

The funds will be used to:

  • complete Pyridorin™ Phase II clinical trials against diabetic kidney disease;
  • complete Angiocol™ Phase I/II clinical trials against cancer; launch gamma 2-Metastain™, a novel diagnostic test that detects metastatic cancer;
  • initiate preclinical studies of the Company's proprietary recombinant laminins in select wound repair and tissue regeneration applications;
  • expand in-house drug development capabilities;
  • and increase funding and staffing for BioStratum AB, the Company's research subsidiary in Stockholm Sweden.

The Company's focus on the basal lamina as a source of new therapeutic targets and treatments is unique to the biotechnology industry. The basal lamina is a specialized form of the extracellular matrix that exists as a thin membrane interacting directly with bordering cells and tissues. The basal lamina acts as a "biological operating system", directing the function and activity of cells and tissues through the binding and clustering of cell receptors.

Many of the disease processes found in diabetes and cancer involve significant pathological changes to the vascular and tissue basal laminas. BioStratum scientists have elucidated the molecular basis of many of these pathologies, which has lead to the discovery of Pyridorin™ and Angiocol™.The Company's basal lamina research is also uncovering several new promising targets and drug candidates for kidney and autoimmune diseases.

"Talk about being in the right place at the right time," continued Dr. Kühl. "Pioneering work in understanding the structure and composition of the basal lamina started about 25 years ago. Recent work by BioStratum scientists and others are now uncovering its important role in degenerative and invasive disease processes. These advancements are providing exciting new approaches for the treatment of diabetic kidney disease, cancer, and autoimmune disease, which are major medical problems in need of effective therapies."

Pyridorin™ is a highly specific and potent inhibitor of advanced glycation end-product formation, also known as AGEs, which occur at elevated levels in patients with diabetes, and are regarded to be a major causative factor
in the development of diabetic kidney disease. The Company believes Pyridorin™'s improved potency and specificity over other AGE inhibitors explain its improved performance in animal studies. Pyridorin™ has recently entered Phase II clinical trials for the treatment and prevention of early stage diabetic kidney disease.

Angiocol™ is a potent anti-angiogenesis drug candidate that targets the vascular basal lamina. The Company believes that Angiocol™'s basal lamina-based mechanism of action results in a multi-functional inhibitory activity against new blood vessel growth, which explains its observed potent anti-angiogenesis and anti-tumor activity
in animal models of cancer. The Company is currently scaling up production and will soon initiate its clinical evaluation as an adjunctive therapy against cancer.

BioStratum, based in Research Triangle Park, N.C., is
a privately held biotechnology company, which develops proprietary therapeutics based on recent scientific advances in basal lamina and related technologies. The company's drug candidates are directed against novel
basal lamina extracellular targets involved in degenerative and invasive disease processes fundamental to diabetes, cancer and kidney disease. The company has also developed proprietary recombinant basal lamina molecules for use in wound repair and tissue regeneration.