3 September 2002

KuDOS Pharmaceuticals Completes major third round of private equity funding

KuDOS Pharmaceuticals (KuDOS) of Cambridge, UK today announced completion of a third round of private equity funding totalling £29.5 million (US$45 million; €46 million).

EuclidSR Partners of New York and Philadelphia acted as lead investor for an international syndicate of venture funds supporting this round. Other new investors included Johnson & Johnson Development Corporation, LSP-Life Sciences Partners Netherlands and Germany, and BankInvest Biomedical Venture (Denmark). KuDOS' existing UK-based investors Advent Venture Partners, Schroder Ventures Life Sciences and 3i Group plc also contributed significantly to the fundraising; a clear indication of their long-term support for KuDOS.

A large part of the proceeds of this fundraising will be used to conduct clinical studies of KuDOS's two lead products: PaTrin-2 and AQ4N. Patrin-2, an inhibitor of alkylguanine alkyl transferase (AGT), enhances the efficacy of O6 methylating cytotoxics. Two Phase II trials will be conducted using Patrin-2 conjointly with Temozolomide against metastatic melanoma (in Australia) and colorectal cancer (in the UK). AQ4N is a novel prodrug of a potent hypoxic cell cytotoxin that is activated only in the hypoxic fractions of solid tumours. Hypoxia is now recognised as a major cause of resistance of solid tumours to ionising radiation and chemotherapies, both of which continue to be used widely to treat solid tumours. AQ4N is currently in Phase I clinical trials.

KuDOS's core drug discovery programmes will also benefit from KuDOS increased resource allocation. Already several potent, highly selective, small molecule inhibitors of the DNA repair enzymes ATM, DNA-PK and PARP have been discovered. KuDOS expects to be able to select lead candidate compounds from each of these programmes to enter full pre-clinical development over the next 6 to 12 months. KuDOS has also identified other targets within its DNA repair platform technology. These will be validated and investigated further with a view to selection for future development.

"KuDOS is very pleased to have completed a major fundraising in such difficult market conditions. We have a major development programme planned that will move our compounds into clinical trials. The support of these experienced life sciences investors now provides us the resources to concentrate all our efforts on implementation to achieve these significant milestones as efficiently and rapidly as possible. The whole KuDOS team is highly motivated to achieve these goals," commented Dr Barrie Ward, the company's Chief Executive Officer.

Dr. Raymond Whitaker, General Partner of EuclidSR Partners, who led the syndicate, said: "We are delighted to have been able to rally such strong international support for KuDOS in the current difficult financing environment. What attracted us was the range and depth of the assets available to KuDOS - two clinical stage compounds, the leading research programme in DNA repair and a pipeline of pre-clinical candidate compounds, a significant and productive in-house chemistry capability, and an experienced management team. We are particularly pleased that the round was considerably over-subscribed. We trust that this endorsement and the significant new resources will permit the company to deliver effective new products for the treatment of cancer."

KuDOS Pharmaceuticals was established in 1997 by Professor Stephen Jackson of University of Cambridge, UK, the University itself and Cancer Research UK (previously Cancer Research Campaign Technology). Initial funding of £5.0 million (US$ 7.7 million, €7.8 million) was provided by an investor group comprising Advent Venture Partners, Schroder Ventures Life Sciences and 3i Group plc. The company completed a further fundraising round of £8 million (US$12.2 million, €12.5 million) provided by its existing shareholders in Summer 2001. Proceeds of the last fundraising have been used to advance KuDOS' projects into pre-clinical and clinical development and to strengthen the company's core technologies.

About KuDOS

KuDOS Pharmaceuticals is a leader in the discovery and development of novel small molecule drugs that target DNA repair enzymes and signalling pathways for the treatment of human diseases, in particular cancer. Recent developments have greatly improved the understanding of the mechanisms used by cells to identify and repair breaks in DNA. Potential applications for drugs that target DNA repair additionally extend to treatment of viral disease, ischaemia and immunosuppression. The company retains strong links with the academic laboratory of Professor Stephen Jackson of the Wellcome/Cancer Research UK Institute in the University of Cambridge, UK, a world-renowned authority in DNA repair, on whose initial work the KuDOS programmes are based.

About ElucidSR Partners

EuclidSR Partners (ESR) is a $250 million venture capital partnership, based in New York and Philadelphia. ESR invests in development stage companies in life sciences, information technologies (IT) and the emerging "convergence" area of companies that develop IT and Internet applications for drug discovery, development and commercialisation. ESR was formed in January 2000 by combining the experienced management teams of Euclid Partners (founded in 1970) and S.R. One, Limited (founded in 1985).

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