Release issued 8th December 2003

Munich, Germany, 5th December 2003... Morphochem AG, a leader in the evolutionary discovery of small molecule drugs, has entered into a research collaboration with Novartis wherein Morphochem will apply the MOREsystem, its evolutionary drug discovery engine, to the discovery and optimization of novel compounds with activity against a number of undisclosed biological targets for a range of health disorders or diseases. Under the terms of the agreement, which were not disclosed, Novartis will fund the research at Morphochem and Morphochem is entitled to receive research and development milestone payments. Additionally Morphochem will retain the rights to develop compounds synthesized during the program for which Novartis does not exercise a license.

Dr Peter Seufer-Wasserthal VP Business Development at Morphochem commented: "This collaboration nicely fits our vision of working with partners to apply our integrated discovery technologies in parallel on a number of targets to identify compounds active against these targets. These compounds will then be further refined applying genetic algorithms in an evolutionary way in which multi parametric optimization is used to identify lead compounds suited as potential drug candidates."

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Morphochem AG 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 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 anti-infectives.

Morphochem was founded in Munich in 1996 and is an integrated, transnational drug discovery and development company, currently employing some 100 staff. To date the Company has raised EUR 78 million in four financing rounds. For further information please consult www.morphochem.com

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

(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

(27th March 2003) Morphochem and Xenogen collaborate to develop novel drug candidates against bacterial biofilms