--DARPA awards $6MM in funding--

Wellesley, MA, USA,

December 13, 2002

Coley Pharmaceutical Group today announced that the US Defense Advanced Research Projects Agency (DARPA) has awarded $6MM to Coley to support the development of Coley’s CpG immunostimulatory oligonucleotides (CpG oligos) to enhance anthrax vaccines.

“This contract builds on our preclinical data showing that CpG oligos protect mice against a broad range of pathogens, including Anthrax, as well as our human clinical data showing enhancement of the Engerix-B® Hepatitis B vaccine when combined with our immunostimulatory oligos,” said Robert L. Bratzler, Ph.D., Coley President and Chief Executive Officer. “The DARPA contract and other development agreements with our partners, including Aventis and GlaxoSmithKline, give Coley the opportunity to realize the full potential of its immunostimulatory oligos to prevent or treat a broad range of diseases.”

The current anthrax vaccine requires six doses and 18 months to produce immunity. Coley’s CpG oligos, used together with vaccines, have the potential to reduce the number of vaccine doses, induce protective antibody levels more quickly, produce higher affinity antibodies directed against a broader range of anthrax antigens, and to improve duration of protection.

This research at Coley stems from a grant awarded in 1999 to Arthur Krieg, M.D., then a professor of Internal Medicine at the University of Iowa, a Coley founder and currently the company’s Chief Scientific Officer. Commenting on this new contract, Dr. Krieg said, “ I am delighted that our progress since we began this program in 1999 has been so rapid, and that DARPA has selected this program to transition from the preclinical phase to the clinical phase as a high priority.”

About B Class CpG Oligonucleotides
Coley has specifically optimized CpG 10103, a B Class oligo for vaccine applications. CpG 10103, acting through the TLR9 receptor present in B-cells and plasmacytoid dendritic cells, potently stimulates human B-cell proliferation, enhances antigen-specific antibody production and induces Interferon-a production, Interleukin-10 secretion, and Natural Killer Cell (NK cell) activity. These broad immunostimulatory actions are required to improve the immune response to vaccines.

CpG 7909, Coley’s lead drug candidate, is also a B Class oligo. CpG 7909 significantly increased antibody responses when administered to normal human volunteers in combination with Engerix-B, GlaxoSmithKline’s marketed prophylactic Hepatitis B vaccine. The approved dosing of Engerix-B requires three vaccinations over six months but fails to induce protective antibody levels in 5-10% of normal healthy individuals. In a clinical study conducted by Coley in normal healthy volunteers, individuals given the Engerix-B vaccine (without CpG 7909) rarely had any detectable antibody response within two weeks of the first vaccine dose, but almost 60% of subjects given the vaccine together with CpG 7909 had protective antibody levels within just two weeks of the first dose, and 100% of subjects receiving CpG 7909 did within six weeks.

About Coley Pharmaceutical Group
Coley Pharmaceutical Group is developing several classes of immunomodulatory oligonucleotide drugs with broad potential applications in cancer, asthma, allergy and infectious diseases. Coley’s CpG drug candidates activate the human immune system to prevent or fight disease. Coley has 16 Phase I and Phase II clinical trials completed or ongoing. The lead product candidate, CpG 7909, a B Class oligo, is in clinical trials as a monotherapy for melanoma and renal cell carcinoma, and in combination with Rituxan® for non-Hodgkin’s B-cell lymphoma and with Herceptin® for breast cancer. Coley has established a novel Human Cell Screening drug discovery and development platform for the rapid validation and optimization of new product candidates. Coley has product development and licensing agreements with Aventis Pharmaceuticals, Inc. for the development of CpG products in the treatment of asthma and allergic rhinitis, as well as two license agreements with GlaxoSmithKline for the use of certain CpG drug candidates in specified preventive and therapeutic infectious disease vaccines and certain therapeutic cancer vaccines. Coley’s patent portfolio includes 65 U.S. patents and patent applications and their worldwide counterparts, including ten U.S. patents that have been issued. Coley is a private company with operations in the United States, Germany and Canada. For further information, please visit www.coleypharma.com.

Rituxan® is a registered trademark of IDEC Pharmaceutical Corp. Herceptin® is a registered trademark of Genentech, Inc. Engerix-B® is a registered trademark of GlaxoSmithKline Biologicals s.a.

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