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Activbiotics and De[pomed Announce Aagreement to Develop New Product for the Treatment of Acute and Chronic Gastrointestinal Diseases

October 15, 2002 at 12:00 AM EDT

Cambridge, MA and Menlo Park, CA, October 15, 2002. -- ActivBiotics, Inc. and DepoMed, Inc. (AMEX:DMI) today announced a memorandum of understanding under which DepoMed will develop a controlled-release oral tablet which delivers ActivBiotics' broad spectrum lead compound, rifalazil, to the gastrointestinal tract. Under terms of the agreement, ActivBiotics will fund DepoMed's research and development expenses related to the feasibility of the product while a definitive license and development agreement is being negotiated based on the terms included in the memorandum of understanding. If a definitive agreement is entered into, it will provide for continued funding of research and development expenses by ActivBiotics and milestone payments to DepoMed during the course of development, as well as a royalty to DepoMed on sales if the product is successfully commercialized. The therapeutic indications for the potential product are acute gastrointestinal bacterial infections and chronic diseases associated with those bacterial infections.

"This memorandum allows us to begin the product development program immediately while a definitive license agreement is being negotiated", said John W. Fara, Ph.D., DepoMed Chairman and CEO. "This arrangement is another example of DepoMed's strategy, 'Our Technology, Their Compound'. We are hopeful that this feasibility study will demonstrate the value of our oral Gastric Retention (GR(TM)) drug delivery technology for the treatment of acute bacterial infections and related diseases and that we will be successful in entering into a collaboration with ActivBiotics to develop this new product."

Chalom Sayada, M.D., Ph.D., ActivBiotics' CEO stated, "Given the unique potency, distribution, and pharmacokinetic properties of our lead compound, rifalazil , this is a unique opportunity to partner with DepoMed's experienced team and develop a new improved product, Rifalazil GR, for gastrointestinal diseases. If the feasibility study is successful, we would expect to start clinical trials in 2003, which will target several unmet needs for the treatment of acute bacterial infections and related chronic diseases. Additional Phase II clinical trials for our current rifalazil product are planned to start also early in 2003 for other indications, which we expect to compete favorably with the current standard of care. "

ActivBiotics, a privately owned pharmaceutical company, is focused on the development and commercialization of antibacterials for the treatment of acute and chronic diseases. Among other programs, ActivBiotics is developing rifalazil, a potent broad spectrum antibiotic that targets and inhibits the transcriptional machinery of bacteria. Previously studied in Phase I and IIA clinical trials for separate indications, ActivBiotics is currently planning additional Phase II trials in several indications. Additional information may be found at the company's web site, www.activbiotics.com.

DepoMed, Inc., a development stage company, is applying its innovative oral drug delivery systems to the development of novel oral products and improved formulations of existing oral drugs. DepoMed's Gastric Retention (GRTM) System is a patented oral drug delivery technology designed specifically for drugs preferentially absorbed high in the gastrointestinal tract. Using normal physiological processes by which the stomach retains large objects for further digestion, the GR System swells following ingestion and is retained in the stomach for a number of hours, while it continuously releases the incorporated drug at a controlled rate to absorption sites in the upper intestinal tract. The controlled release of the drug at the preferred absorption site optimizes delivery of the drug during the "therapeutic window," potentially maximizing its therapeutic benefits. In addition to developing products jointly with other companies, DepoMed is developing its own line of proprietary products based on off-patent and over-the-counter drugs. Additional information about DepoMed may be found at the company's web site, www.depomedinc.com.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995. The statements that are not historical facts contained in this release are forward-looking statements that involve risks and uncertainties including, but not limited to, the results of research and development efforts, the results of pre-clinical and clinical testing, the effect of regulation by the FDA and other agencies, the impact of competitive products, disputes arising from collaborative arrangements, product development, commercialization and technological difficulties, and other risks detailed in DepoMed's Securities and Exchange Commission filings.