Receptagen Ltd. is acquiring exclusive U.S. patent rights to apotential immune stimulant, Coenzyme Q10 (CoQ10), throughits purchase of Ryan Pharmaceuticals Inc. for about $1.4 millionin stock.

Under the agreement, Receptagen of Vancouver, BritishColumbia, will provide Ryan with 750,000 shares and a 5percent royalty on any future net sales of CoQ10. The shareswill be issued in three installments of 250,000 each at theclosing of the agreement, upon initiation of Phase I trials withCoQ10 and upon the filing or transfer of an investigational newdrug (IND) application for CoQ10 use in treatment of AIDS.

Receptagen's stock (ASE:RCG) was trading at $1.87 (U.S.) a shareon the Alberta stock exchange on Friday.

Receptagen also will provide an initial payment of $15,000 toRyan shareholders and up to $200,000 for expenses incurred inconnection with the patent.

Ryan Pharmaceuticals of Bellevue, Wash., was founded byJames Ryan to acquire patent rights to CoQ10 from a universitydeveloping the compound as an AIDS treatment. Ryan hadcongestive heart failure and was told by doctors he had 18months to live before he began taking the drug 10 years ago.

CoQ10 was approved in Japan in 1974 for treating congestiveheart failure (CHD) and has been prescribed to more than 40million people worldwide. Marketed by DainipponPharmaceutical Co. Ltd. and Konica Corp., it was not widelyavailable until companies found a way to manufacture it inbulk. It is currently in Phase III clinicals in Europe for the CHDindication.

CoQ10 is a natural molecule that serves as a co-factor in theproduction of adenosine triphosphate (ATP), which providescells with energy. A Receptagen representative said themechanism of action is not clear, but in congestive heartfailure, the compound seems to act as an anti-oxidant and boostthe energy production of cells. A major university has beenunder contract with Ryan to study the drug's potential toimprove the immune response of people with AIDS.

In an early Phase I trial, the drug improved immune functionand alleviated disease symptoms. Specifically, it increased theratio of T4/T8 cells by a statistically significant margin.

Receptagen is focused on developing "growth blocker" drugs,which block the uncontrolled cell proliferation characteristic ofcancer, AIDS-related lymphoma (ARL) and other life-threatening diseases. The drugs are designed to control thebiological activity of receptors responsible for vitamin B12uptake, an essential nutrient for cell growth and division.

Receptagen's first target is ARL. The company has researchagreements with the University of Washington to developsmall-molecule growth blocker drugs for ARL, the BiomedicalResearch Centre at the University of British Columbia todevelop antibody-based drugs, and the State University of NewYork Health Science Center to isolate and clone the cell receptorinvolved in vitamin B12 uptake.

Receptagen, which operates through its wholly owned U.S.subsidiary, Receptagen Corp. of Seattle, also announced Mondaythat it is seeking to raise $8 million to $10 million throughprivate placement of special warrants. Each warrant will bepriced at $2 and entitle the holder to acquire a common shareand one-half of one common share purchase warrant.

The proceeds would be used for the development ofReceptagen's growth-blocker technology over the next twoyears, including for commencement of clinical trials andacquisition and development of complementary technologies.

The placement is being handled by Equity Capital Group, aToronto-based division of Canaccord Capital Corp.

-- Brenda Sandburg News Editor

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