Catalytica Pharmaceuticals Obtains Exclusive License for Chiral Technology with Penn State

Catalytica Pharmaceuticals, Inc., a subsidiary of Catalytica, Inc. (Nasdaq: CATAL), today announced it has signed exclusive license and development agreements with The Pennsylvania State University (Penn State) for new chiral pharmaceutical process technology with important potential applications for the development of processes for a broad spectrum of new drugs.

The new agreement grants Catalytica exclusive worldwide rights to commercial development of the university's work in asymmetric catalysis as developed by Penn State Assistant Professor of Organic Chemistry Xumu Zhang. The license covers all applications of the technology in the manufacture of pharmaceutical and animal-health products. The development agreement includes the ongoing sponsorship of research in Professor Zhang's laboratory by Catalytica in these areas.

Professor Zhang's recent work in asymmetric catalysis is aimed at facilitating the development of efficient, high-yield processes for the manufacture of pharmaceutical compounds known as chiral drugs, a broad category of medications whose therapeutic effectiveness is dependent on the shape and configuration of a drug molecule in addition to its chemical composition.

Though chemically identical, chiral molecules may take either of two mirror-image forms and are therefore said to be either "left-handed" or "right-handed," depending upon the configuration of the molecule in space. The effectiveness of pharmaceuticals often is based on the precise matching of the drug molecule with the structure of receptors inside the body. As a result, it is frequently the only one of the two mirror-image forms of a molecule that provides therapeutic results. Techniques for producing only this useful configuration, like Professor Zhang's recent work, have the ability to increase the efficiency and lower the cost of the drug-manufacturing process.

According to James A. Cusumano, Chairman of Catalytica and Chief Executive Officer of Catalytica Pharmaceuticals, the new asymmetric catalysis technology has applications for many drugs currently in development. "We see this technology as offering a significant potential benefit for the production of pharmaceuticals for which only one specific chiral form of the drug molecule is of therapeutic interest. We look forward to continued innovation from Penn State and Professor Zhang in this field and to our mutual opportunity in exploiting this technology."

Thomas J. Monahan, Director of Penn State's Intellectual Property Office, explaining the choice of Catalytica Pharmaceuticals as an exclusive licensee, said the company is "an ideal partner for this technology by virtue of Catalytica's commitment to process development as well as the opportunity for commercialization. The entrepreneurial culture of Catalytica is also well suited to compliment the continued research program in Professor Zhang's laboratories."

Catalytica Pharmaceuticals, Inc., a Catalytica majority-owned subsidiary, is a one-source provider of innovative chemical process development, drug development, and manufacturing for the healthcare industry.

Catalytica Inc., through its subsidiaries, provides catalytic technologies and advanced products which improve manufacturing processes and solves environmental problems economically. The three subsidiaries are Catalytica Pharmaceuticals, Inc., which serves the healthcare industry; Catalytica Combustion Systems, Inc., which produces the XONONTM combustion technology for the energy market; and Catalytica Advanced Technologies, Inc., which creates new catalytic technologies. Find Catalytica on the world wide web at www.catalytica-inc.com

For more information on Professor Zhang's research, please see the Penn State web site at www.chem.psu.edu/profs/zhang.html

This news release contains forward-looking statements regarding Catalytica's future development and prospects for the Penn State license and development agreement. These statements involve risks and uncertainty, including without limitation, the ability to develop applications for the technology in a timely and cost-effective manner, product development delays, changes in the company's competitive position, and the impact of FDA and other regulations on chemical manufacturing. Investors are encouraged to review Catalytica's Form 10-K/A for the year ending December 31, 1996 (Part II, Item 7) and Form 10-Q for the period ending September 30, 1997, and the Proxy Statement dated July 16, 1997 for a more complete discussion of factors that could affect Catalytica's future performance.

Contact:

Catalytica, Inc., Lloyd Baylis, 650-960-3000
Penn State, Barbara Kennedy or Don Genson, 814-863-8453