Novocell, JDRF Announce Partnership to Clinically Test Encapsulated Human Islets

Protocol Could Advance Islet Replacement Therapies for Patients with Type 1 Diabetes

New York, NY / May 31, 2006 / The Juvenile Diabetes Research Foundation announced today that it has established a partnership with Novocell, Inc., an Irvine, California-based, biotechnology company, to support an on-going proof of principle Phase I/II human clinical trial for Novocell’s polyethylene glycol encapsulation of insulin-producing islets. According to Richard A. Insel, MD, Executive Vice President of Research at JDRF, the Novocell partnership is an exciting opportunity to clinically evaluate one of the potential therapies to cure Type 1 diabetes. “The Novocell encapsulation procedure potentially provides an approach to avoid the use of chronic immunosuppressive drugs in the islet transplant setting. We are pleased to support the clinical translation of this research that has shown promise in animal research.”

Islet transplantation has shown success over the past few years in significantly improving the day-to-day life of adult patients with uncontrolled diabetes or hypoglycemic unawareness, reversing their diabetes for a period of time and lowering their insulin requirements for an extended period. But the immunosuppressive drugs needed to suppress both the alloimmune (foreign tissue rejection) and autoimmune reactions to the transplanted islets can have significant side effects, making them inappropriate for children with diabetes.

Novocell’s encapsulation technology uniformly coats donated pancreatic islets with a thin layer of biocompatible material. This coating is believed to enable implanted cells to survive subcutaneously and control glucose levels in patients with Type 1 diabetes, resulting in near normal hemoglobin A1c levels without the need for life-long immunosuppression.

“Our encapsulation technology will be an essential element to implanted islet cells for the treatment of diabetes,” commented Alan Lewis, Ph.D., president and CEO of Novocell. “We expect to demonstrate the safety and efficacy of encapsulated islet cells in patients through this trial.”

The partnership is the latest in JDRF’s innovative Industry Discovery and Development Partnership Program, in which the world’s leading charitable funder of research for Type 1 diabetes teams with biotechnology companies to develop drugs, therapies, and treatments for diabetes. The program supports companies – often in collaboration with academic researchers -to develop or test, in preclinical models or early-stage clinical trials, novel therapeutic approaches for diagnosis, prevention or treatment of Type 1 diabetes or its complications.

The program includes two types of partnerships. Discovery Partnerships are intended to support early stage proof-of-concept programs, which identify mechanisms of potential therapeutics, demonstrate pre-clinical efficacy, or pilot clinical assessment of a potential therapeutic approach. Development Partnerships provide support for promising mid-stage research programs, including the advancement of a pre-clinical stage program to clinical trials, or advanced Phase II/III clinical testing of promising therapeutics.

About JDRF

JDRF was founded in 1970 by the parents of children with juvenile diabetes – a disease that strikes children suddenly, makes them insulin dependent for life, and carries the constant threat of devastating complications. Since inception, JDRF has provided more than $900 million to diabetes research worldwide. More than 80 percent of JDRF’s expenditures directly support research and education about research. JDRF’s mission is constant: to find a cure for diabetes and its complications through the support of research.

About Novocell, Inc.

Novocell, Inc. is a stem cell engineering company with research operations in Irvine and San Diego, CA, and Athens, GA, dedicated to creating, delivering and commercializing cell and drug therapies for diabetes and other chronic diseases. Novocell is the first company to efficiently engineer human embryonic stem cells into definitive endoderm, the gatekeeper cells that differentiate into many other cells, tissues and organs. Novocell has three primary technologies: stem cell-directed lineage, encapsulation and drug discovery. The company was founded in 1999 and merged with CyThera and BresaGen in 2004.

Novocell’s goal is to develop a renewable source of specialized cells that can be used to treat chronic diseases. To achieve this goal, Novocell is uniquely positioned to exploit human stem cell engineered product opportunities using its proprietary cell encapsulation technology. Combined with Novocell’s expertise in cell transplantation, these technologies will allow large numbers of patients to be implanted with disease curing cells without the use of immunosuppression. Beginning with the treatment of diabetes, Novocell’s technology platform has wide application to a range of diseases and conditions where the only effective treatment will be the replacement of non-functional cells.