Release issued 27th March 2003

Munich, Germany, and Alameda, USA, 27 March 2003… Morphochem AG and Xenogen Corp. today announced that both companies have entered into a research collaboration to discover targets and develop compounds effective against bacterial biofilms.

Biofilms occur when bacteria, or other microorganisms, attach themselves to a surface as a colony, rather than continue to grow in a free-floating state. Biofilms are responsible for diseases such as otitis media, the most common acute ear infection in children, play a role in bacterial endocarditis, urinary tract infections and Legionnaire's disease, and may be responsible for a wide variety of infections stemming from the surfaces of catheters, medical implants and other types of medical devices. Biofilms are highly resistant to antibiotics and therefore new types of therapeutic compounds to combat their effects constitute a significant medical need.

Under the multi-year program, Xenogen will apply its cutting- edge real-time in vivo bioluminescent imaging technology platform, including Bioware(tm) cells and microorganisms and the IVIS(tm) Imaging System(tm) to develop in vitro and in vivo assays to discover gene targets specifically directed against the formation and maintenance of biofilms. Morphochem will apply its evolutionary drug discovery approach using multi- component reaction (MCR) chemistry and its proprietary software - MolMind(tm) - to identify structurally novel compound classes as drug candidates for those targets.

Financial terms of the collaboration were not disclosed. Both companies will retain an ownership interest in compounds developed under the collaboration. Terms for commercialization of any resulting compounds are already defined in the written agreement between the companies but were not disclosed.

"The ability to use Xenogen's bioluminescent imaging technologies for drug discovery will accelerate our ability to screen for effective and safe compounds in this critical area of infectious disease research. We are very excited about this opportunity to incorporate biophotonics with our chemical genomics approach and develop more complete biological knowledge in screening against biofilm targets," said Dr Wolfgang Keck, Morphochem's Vice President, Anti- infectives.

Commented Dr Pamela Contag, President and Co-Chief Executive Officer of Xenogen, "Morphochem is an excellent partner for identifying new small molecules directed towards biofilm targets. By combining our respective technologies, we think this collaboration will maximize the synergies between our biological and chemical areas of expertise and therefore the effectiveness and efficiency of the drug discovery process."

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Notes

Morphochem AG (www.morphochem.de) discovers and develops highly selective small molecule compounds for the medicines of tomorrow. The company integrates novel chemistries with biological screening on the basis of its proprietary MolMind(tm) technology. Its unique and highly integrated chemical genomics platform provides a continuous flow of novel drug candidates for un-met medical needs in major areas of indications such as cancer and inflammation.

Xenogen Corporation (www.xenogen.com) is a leader in the field of real-time in vivo imaging, providing the pharmaceutical and biotechnology industries with proprietary technologies, products and services to enable real-time in vivo monitoring to identify drug leads for clinical development. In addition to real- time in vivo imaging, Xenogen Biosciences, a subsidiary of Xenogen Corporation, provides comprehensive transgenic services for the pharmaceutical and biotechnology industries - from transgene microinjection and gene-targeting programs to long-term collaborative arrangements for developing and phenotyping animal models. Xenogen is also expanding its technology into broad applications for other fields, including biomedical research and toxicology testing in the chemical industry. Xenogen is headquartered in Alameda, California, USA.

Media enquiries: Northbank Communications Sue Charles, Managing Partner Tel: +44 (0)20 7321 3872 Mobile: +44 (0)7968 726 585 Email: s.charles@northbankcommunications.com

Investor enquiries: Dr Lutz Weber, CEO Tel: +49 (0)89 78 00 50 Email: lutz.weber@morphochem.de

At Morphochem: Dr Peter Seufer Wasserthal Tel: +43 (0)7673 321 511 E-mail: peter.seufer@morphochem.de

Dr Wolfgang Keck Tel: + 41 61 695 2121 Email: wolfgang.keck@morphochem.ch

(4th February 2004) Boehringer Ingelheim enters into multi-target drug discovery collaboration with Morphochem

(8th December 2003) Morphochem enters into research collaboration with Novartis for use of its MOREsystem in lead discovery

(7th November 2003) Morphochem names Alfred E. Seidel as CEO

(16th October 2003) New appointments prepare Morphochem for cancer product development

(4th July 2003) Morphochem launches new website that reflects its transition to a drug development company