Prana Biotechnology Limited announced that Schering A.G. will fund and license discoveries on new drug targets, especially in the area of diagnostics, in an agreement with Prana Biotechnology and Neuroscience Victoria. The commercial arrangements are subject to ongoing confidentiality, but will provide up to $7.5 million of funding for new discovery research over the life of the projects, with additional milestone payments and royalties from discoveries.

Dr. Ross Murdoch, Prana's Chief Operating Officer, said, "Through Prana's efforts in the area of neurological diseases we have identified multiple potential diagnostic and therapeutic targets which we believe worthy of exploration. Our commitment is to continually strengthen the technological base of the company through in-house and collaborative research; increasing the possibility of success and in turn lessening our reliance on any single technology. This collaboration with Schering A.G. is inline with our commitment and will allow funding of additional exciting technologies that although separate, complement our existing premier platform technology based on the Metal Protein Attenuating Compound ("MPAC") class of compounds. This collaboration will expand Prana's project areas bringing significant additional funding and scientific expertise into the company's laboratories."

"In addition to this partnership with Schering A.G.," Dr. Murdoch continued, "the company continues to be engaged in very positive, dialogue with a number of other global pharmaceutical companies regarding future collaborations around our MPAC platform technology. The success of our most recent Phase II human trials has fuelled excitement in the possibility that the MPAC class can provide novel Alzheimer's disease therapies. The potential for this class to provide therapeutics outside AD is also looking increasingly promising."

Commenting on the outlook for 2003, Executive Chairman Geoffrey Kempler said, "Today's announcement with Schering is just the beginning of what we believe will be a series of announcements on collaborative and commercial deals to move our innovative and proprietary technologies closer to reality. Schering and our scientific management have a history of strong collaborative success, and we believe they are a logical partner to extend our reach into novel drug targets and innovative diagnostic technologies. We anticipate that the next collaboration to be announced by the company will be around developments arising from our most recent human clinical trials."

"In the last 12 months," Mr. Kempler noted, "we have brought our MPAC technology to the point of commercialization, and now, in collaboration Schering A.G., we are going to extend our reach into the field of diagnostics and other drug targets. We are on track for 2003 benchmarks, and have as our top priority for the year "continuing commercial validation" of our neurodegenerative disease theory."