Out-licensing

Based upon recently obtained preclinical and clinical data, we believe that the Liquicoll and CollaRx technologies may have important applications in the treatment of certain non- operable tumors, as well as the prevention of local cancer recurrence and metastasis in the case of operable tumors.

Collagen matrices are known to provide localized, controlled release of DNA vectors and are considered an excellent biomaterial to enhance gene delivery. Recent in vivo experiments have shown unprecedented expression of interleukin II in a tumor-induced mouse model using Liquicoll as a gene delivery vehicle.

In addition, Liquicoll has demonstrated an ability to up-regulate immune response and augment the activity of immuno-based therapies. This technology is currently under evaluation by the University of Iowa for the treatment of urologic cancers.

Further evidence of potential applications in oncology stems from a recently published clinical study in 200 patients. Innocoll's collagen-gentamicin sponge (Collatamp G) was administered to rectal cancer patients undergoing total mesorectal excision (TME) to reduce the incidence of post- operative complications associated with this particular surgical procedure. At 3-year patient follow-up, it was discovered that Collatamp G not only reduced such complications, but also significantly reduced cancer metastasis and dramatically improved survival rate. Three deaths occurred in the treatment group compared to 16 in the control group.

This data has led us to consider the following anti-cancer product opportunities:

• Liquicoll for intra-tumoral injection and delivery of anti-cancer agents, particularly those based on gene delivery and immunotherapy.

• Development of Collatamp G as an adjunct to surgery for prevention of cancer metastasis.

• Development of a CollaRx implant impregnated with an anti- neoplastic agent to prevent local tumor recurrence following surgical excision of an operable tumor.

Technology licensing and co-development of oncology product opportunities.