SemBioSys Amends DHA-rich Oil Agreement with Martek 

11/01/07 SemBioSys Genetics Inc., a biotechnology company developing a broad pipeline of protein-based pharmaceuticals and non-pharmaceutical products has announced that it has reached an agreement with Martek Biosciences Corporation to amend the collaboration agreement between the two parties related to the DHA-rich plant oil program. Under the terms of the amended agreement, SemBioSys will receive a one-time license fee and potential additional license and royalty payments from Martek, and in return Martek has been granted an exclusive license to the results of the collaboration and is entitled to select an alternative seed oil production system to meet its future DHA supply. Martek negotiated the original agreement with SemBioSys in 2003 to investigate the development of safflower as a source of DHA for use in the food ingredient and nutraceutical markets. Given the competitive market dynamics around DHA supply from different sources, Martek has decided it is important to have the flexibility to pursue a traditional commodity crop as well as specialty crops, like safflower, as a source of DHA-rich plant oil. Regardless of the crop used by Martek as a source of DHA-rich oil, under the amended agreement, SemBioSys will receive a royalty on gross margin of DHA-rich plant oil product sales.

"We believe that the amended agreement provides us with the best outcome given Martek's need for flexibility in such a competitive market," said Andrew Baum, President and CEO of SemBioSys Genetics Inc. "The amended agreement locks in a specific payment to us from Martek based on progress to date in our DHA-rich plant oil program. We still intend to complete the ongoing work to establish 5% DHA expression in our model plant, Arabidopsis. We are currently engaged in discussions with Martek concerning the potential extension of our partnership beyond the Arabidopsis work. Importantly, the amended agreement also allows SemBioSys to pursue production of EPA and ARA in safflower with other partners. These two high-value specialty ingredients have achieved wide adoption in the food supplement market, and both had previously been restricted by the original agreement."

As part of the amended agreement SemBioSys will receive an immediate license fee payment of $750,000 and an additional license payment of up to $250,000 upon delivery of seed and upon achievement of expression of at least 5% of DHA in Arabidopsis by SemBioSys prior to June 28, 2007. SemBioSys is also entitled to receive an additional $500,000 milestone payment on achievement of proof-of-concept expression in a commercial crop by a Martek selected partner. SemBioSys will receive a guaranteed minimum royalty on gross margin of DHA-rich plant oil product if sold by Martek and incremental royalties on the gross margins as a function of the level of DHA expression obtained in Arabidopsis and DHA expression levels in the commercial crop, provided that Martek employs intellectual property used or developed under the original agreement to produce DHA-rich plant oil.

"Martek and SemBioSys continue to recognize the potential long-term value of plant biotechnology in providing lower-cost, large and sustainable sources for important nutrients such as DHA. SemBioSys has been and continues to be a valuable partner to Martek and the results of our collaboration to date are encouraging regarding the ultimate commercialization of DHA derived from a plant source," said Steve Dubin, President and CEO of Martek Biosciences Corporation.