PRESS RELEASE: BioE, University of Southern California Collaborate to Develop Non-Embryonic Stem Cell Therapies for
Neurodegenerative Diseases

March 23, 2004 08:28 AM US Eastern Timezone

BIOWIRE2K

ST. PAUL, Minn.--(BUSINESS WIRE)--March 23, 2004--BioE to provide proprietary stem cells from umbilical cord blood,
stem cell processing technology and research support to university.

BioE(R), Inc., a biotechnology company that develops antibody-based diagnostics and therapeutics, announced today it
has entered into a collaborative research agreement with the University of Southern California (USC) to support the
development of non-embryonic stem cell therapies for neurodegenerative diseases, including multiple sclerosis,
Parkinson's disease, spinal cord injuries, amyotrophic lateral sclerosis (ALS or Lou Gehrig's disease) and stroke.

Millions of people worldwide suffer from neurodegenerative diseases and current treatments only aim to halt the
progression of these conditions. To aid USC's therapeutic development efforts in restoring or renewing tissue and
organs damaged by these diseases, BioE will provide its proprietary stem cells derived from umbilical cord blood; its
PrepaCyte(R)-CB stem cell processing system; and research support to the university.

"We are very excited to be working with BioE to develop umbilical cord stem cell therapies for neurodegenerative
disease," said Professor Leslie Weiner, M.D., Richard Angus Grant Sr. Chair of Neurology and Leslie P. Weiner Chair in
Neurology, Keck School of Medicine of USC. "Umbilical cord blood is a rich source of stem cells that may afford several
potentially important advantages over embryonic or fetal stem cells, notably its abundance and genetic diversity, as
well as the potential of cord blood stem cells to develop into neuronal cell populations that can replace diseased
neurons in central nervous system (CNS) disorders. Through this collaboration, we hope to move closer to using cord
blood to pilot a new generation of treatments in regenerative medicine."

BioE's PrepaCyte-CB stem cell processing system is ideally suited for regenerative medicine applications because the
process results in increased recovery and higher purity of stem cells that retain their innate cellular functionality
compared to traditional cell separation methods.

"Our relationship with USC holds great promise for the development of therapies that may restore tissue and organ
function for numerous people suffering from neurodegenerative diseases," said Michael Haider, president and chief
executive officer for BioE. "Supplying both the potentially therapeutic stem cells, as well as the unique cell
separation technology, in this collaborative initiative further supports our company's dedication to developing
powerful and innovative technologies that improve patient outcomes and quality of life. Furthermore, as stem cell
research continues to progress, the advantage of using umbilical cord blood stem cells has become increasingly
apparent."

Benefits of Umbilical Cord Blood Stem Cells

-- Umbilical cord blood is readily available and non-controversial. According to the U.S. Department of Health and
Human Services, approximately four million births occurred in the United States in 2002. In addition, most stem-cell-
rich umbilical cord blood is discarded.

-- Umbilical cord blood is a highly enriched source of hematopoietic and non-hematopoietic stem cells that have
exhibited properties previously attributed to embryonic stem cells such as the necessary plasticity (capable of
building tissue) to repopulate and restore organ function in a variety of animal models and, more recently, in human
clinical settings. These properties are thought to be less evident in stem cells derived from adult sources such as
bone marrow.

-- Congress supports medical research involving umbilical cord blood stem cells. In July and October of 2003, the Cord
Blood Stem Cell Act of 2003 was introduced into the U.S. House of Representatives and the U.S. Senate respectively.
Legislation would provide funds to establish a National Cord Blood Stem Cell Bank Network. The Network would consist of
highly qualified cord blood banking centers to prepare, store and distribute human umbilical cord blood stem cells for
the treatment of patients and to support peer-reviewed research using such cells. Recently Congress passed an omnibus
appropriations bill with $10 million in funds to assist in this undertaking.

About PrepaCyte-CB Stem Cell Processing Technology

PrepaCyte-CB for cord blood is the most advanced product derived from BioE's PrepaCyte cell processing platform. This
proprietary technology platform is an antibody-based, closed, liquid reagent system that can be used in multiple cell
processing applications to separate and collect therapeutically important cells, including hematopoietic and non-
hematopoietic stem cells, and T-cells from a variety of human blood sources. It differs from traditional methods of
separating cells from blood sources that often require either the mechanical or chemical manipulation of cells, which
can result in the loss of desired cells or undesired alterations in their biological activity. Instead, when mixed with
a blood source, such as umbilical cord blood, peripheral blood or bone marrow, PrepaCyte causes unwanted cells to
settle to the bottom of the container, leaving desired cells in the upper fraction of the solution. This process allows
stem cells or T-cells to be easily removed for further processing prior to therapeutic use in humans, and results in
increased quantities and higher purity of cells that retain their innate cellular functionality. Multiple proprietary
products are rapidly derived from the platform by adjusting the unique components of the reagent system. PrepaCyte-CB
is currently on track to become the first U.S. Food and Drug Administration (FDA)-compliant cell separation product of
its kind.

About BioE

Founded in 1993, BioE (www.bioe.com) is a biotechnology company headquartered in St. Paul, Minn. that develops antibody-
based diagnostic and therapeutic technologies that improve patient outcomes and quality of life. BioE has three primary
technology platforms that are used to develop diagnostic and therapeutic products across a wide variety of medical
specialties. Its cell processing technology separates and recovers therapeutically important cells, including stem
cells, from various blood sources such as umbilical cord blood, circulating peripheral blood or bone marrow. These
cells are used in medical research, transplantation and regenerative medicine. The company has also patented a
diagnostic technology that simultaneously, but independently, detects both members of a binding pair, such as in an
immune complex, receptor/ligand pair or nucleic acid protein complex within a biological sample -- enabling early
disease diagnosis. Additionally, BioE is developing an Alzheimer's disease diagnostic (currently the subject of U.S.
clinical trials) that may determine through a simple, inexpensive blood test if a patient has or will develop the
disease. For more information on BioE, please call (800) 350-6466.

About the Keck School of Medicine of USC

Founded in 1885, the Keck School of Medicine of USC is a major center for basic and clinical biomedical research,
especially in the fields of cancer, gene therapy, the neurosciences and metabolic disease. The school today has more
than 1,100 full-time faculty members and a voluntary faculty of more than 3,700 physicians. These faculty direct the
studies of approximately 650 medical students and more than 400 students pursuing graduate degrees. The school's
postgraduate programs provide training for 1,300 residents fellows and interns annually.

The Keck School of Medicine has meant better health for people around the globe in all fields of medical care. Through
14 affiliated hospitals, USC physicians serve more than one million patients each year. Hospitals staffed by USC
physicians include USC University Hospital, USC/Norris Comprehensive Cancer Center and Hospital, Doheny Eye Institute,
Childrens Hospital Los Angeles and the Los Angeles County+USC Medical Center, one of the largest teaching hospitals in
the nation.

Contacts:

Haberman & Associates
For BioE, Inc.
Jon Zurbey, 612-338-3900
[log in to unmask]

or

USC Health Sciences
Jon Weiner, 323-442-2830
[log in to unmask]

SOURCE: Business Wire (press release)
http://tinyurl.com/24zjm

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Stem Cell Research Flowering In Vadnais Heights
Janet Moore,  Star Tribune
March 23, 2004BIOE0323

Located in a Vadnais Heights office park, the headquarters of BioE Inc. are not what one might expect for an emerging
biotechnology firm.

The environs, just off the Interstate near a mini-storage complex, are unassuming and almost anonymous, hardly bringing
to mind what BioE's executives call the frontier of medicine -- using stem cells to replace dead or dying cells in
organs.

The company has developed a processing system for harvesting stem cells from umbilical cord blood. The technology has
attracted some prominent Twin Cities investors and consultants to its ranks, as well as researchers on the cutting edge
of regenerative medicine.

Today, BioE will announce a research agreement with the University of Southern California supporting the development of
stem cell therapies for neurodegenerative diseases, such as multiple sclerosis and Parkinson's. USC will use BioE's
processing system, called PrepaCyte-CB, to glean the umbilical cord stem cells needed for its research.

Leading that effort is Dr. Leslie Weiner, a neurologist of some reknown who has served as former President Ronald
Reagan's doctor and who holds the Richard Angus Grant Sr. Chair in Neurology at USC's Keck School of Medicine.

Weiner, who has spent his life studying these neurodegenerative diseases, said he heard about BioE's system from a
former student, Dr. Elizabeth McLaughlin-Taylor, who is now an adviser to the company.

Weiner said that while conducting research with adult stem cells on mice, he became fascinated with the idea of using
umbilical cord stem cells. Blood from the umbilical cord is rich in stem cells, which have the potential to develop
into many different cell types in the body.

Weiner said he had no clue the company providing the building blocks for his research has just nine employees and was
based in Minnesota, which isn't known to be a hub of biotech activity. "They seem to be going in the right direction
and I'm impressed with the people I talked to as being pretty good scientists," he said.

By using umbilical cord blood -- which often is thrown away after birth -- BioE and its researchers have avoided the
controversy over the use of embryonic stem cells.

That's a bonus for Weiner, as well. "Quite clearly there are a lot of people including the [Bush] administration that
would like us to be able to develop stem cells that are not coming from embryos," he said.

President Bush has banned the use of federal funds to manipulate or create human embryos for research. He also has
limited scientific research to a few existing groups of cells left over from fertility clinics.

Validation of work

The USC agreement is a watershed for BioE. If the university is successful in developing a therapy that is approved for
commercial use, BioE could capture a revenue stream akin to the royalties drug companies reap from the introduction of
new medicines.

The cell therapy market will near $30 billion by 2010, with stem cell therapy fueling the growth, according to Drug and
Market Development Publications of Westborough, Mass.

Beyond that, BioE officials say the announcement is validation of the years of work that went into developing the
PrepaCyte technology.

"We all seem to have an inner drive to make a difference," said Michael Haider, BioE's president and CEO, who spent the
early part of his career in finance at Fridley-based Medtronic Inc. He also has started several companies, including
one called Pulsetrend Inc. that failed in 1992.

Not so long ago, BioE was laying off half its staff, parting ways with a co-founder and steering its strategy toward
what seemed to be uncharted waters of science and medicine.

When it was founded in 1993, BioE developed research tools primarily for use in university settings. Though the company
managed to eke out about $3 million in revenue the first eight years of its young life, it was largely unprofitable and
adrift by early 2001.

Company officials decided to remake BioE into a medically focused company, capitalizing on a few intellectual property
platforms they felt held promise. PrepaCyte was one of them.

But money was needed for that retooling, and Haider set about trying to raise $3.5 million from private investors. The
terrorist attacks of Sept. 11, 2001, drove financial markets into a tail spin, and BioE's offering, which had raised
about $800,000, became part of the wreckage.

The company rescinded the offering and set about giving refunds to investors. "Everything just stopped," Haider
recalled. "We gave the investors the opportunity to get their money back. It was the right thing to do, even though it
might have killed the company."

Instead of cashing out, the investors stayed put, Haider said, and their money was rolled into another private offering
that began in January 2002. To date, BioE has raised $11 million from private investors, having shunned venture
capitalists. "Once you get venture capitalists involved, then they want to run the company," said Douglas Eayrs, a
Maple Grove-based medical technology consultant to emerging companies, including BioE.

The company also has received several grants totalling about $2 million from the National Institutes of Health Small
Business Innovation grant program. The pool of grant money and individual investment continues to keep the company
afloat, since it is not currently generating any revenue.

BioE officials plan a public offering of stock in 2006 or 2007, depending on market conditions. To help move toward
that goal, it recently named to its board Jim Powell, the former president and chief operating officer of SurModics
Inc., an Eden Prairie-based biotech firm. (Powell also signed on as an investor.)

"I think I can be somewhat helpful in how they present their story to investors," Powell said. "Great technology isn't
worth anything unless you can tell the story. They're telling it OK now, but as the stakes get higher, they'll be
facing a more sophisticated audience."

To market

Aside from a public offering, a more immediate goal for the company is gaining permission from the Food and Drug
Administration (FDA) to market the PrepaCyte system. BioE expects PrepaCyte to become the first FDA-compliant cell-
separation product of its kind on the market -- probably by the first quarter of 2005.

The FDA told the company early on that the system will be regulated as a medical device, allowing the company to skip
expensive and time-consuming clinical trials. An FDA spokeswoman would not comment on the BioE application.

An existing market for the product will be private and public cord blood banks that would buy the PrepaCyte system to
process the blood.

Parents pay private banks a fee to store their child's cord blood, especially if diseases such as leukemia run in their
family. At public cord banks, the mother donates her umbilical cord for research or clinical use.

But clearly BioE executives and investors find the prospect of contributing to the development of new therapies the
most promising aspect of their business.

"This is an emerging area, which makes it a little bit tougher for some investors," Eayrs said. "But they're positioned
in an area that's just in the early stages of what could potentially be a huge new paradigm shift in medicine."

Janet Moore is at [log in to unmask]

SOURCE: Minneapolis Star Tribune, MN
http://www.startribune.com/stories/535/4679482.html

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