SkinMedica Inc has finalized its purchase of the NouriCel product line and related assets from Advanced Tissue Sciences. The transaction gives SkinMedica ownership of NouriCel, NouriCel-MD and related intellectual property, know-how, inventory and certain manufacturing equipment. The offer, tendered by SkinMedica in January 2003, was closed following the confirmation made by The United States Bankruptcy Court for the Southern District of California on Wednesday, March 19, 2003. NouriCel-MD, a part of the NouriCel product line, is the primary cosmetic ingredient contained in TNS Recovery Complex, SkinMedica's topical skin care product available only through physicians.

"The purchase of the NouriCel product line is strategically important for SkinMedica as ownership of the NouriCel business will enable us to further develop and grow our cosmeceutical business unit," said Rex Bright, President and CEO of SkinMedica. "NouriCel is the primary ingredient in our lead product, TNS Recovery Complex. It is commercially available to physicians, where it has grown to become a significant cosmeceutical product. We believe the ownership rights to NouriCel will provide certain economic advantages that will allow us to capture increased value from product sales."

As part of the agreement, SkinMedica will make a $5 million cash payment to Advanced Tissue Sciences and will issue a $2 million, two-year, promissory note secured by the assets purchased from Advanced Tissue Sciences. Further, the purchase will terminate SkinMedica's existing obligations to Advanced Tissue Sciences, including the companies' NouriCel development, license and supply agreement.

"The TNS Recovery Complex has been rapidly adopted by our patients whom we find are very pleased with both the non-irritating nature of the product and its results," said Arnold Klein, a Professor of Medicine and Dermatology at the David Geffen School of Medicine at UCLA. "This is an encouraging development in that it represents the convergence of biotechnology with dermatology. As a physician and medical scientist, I look forward to further contributions by the biotechnology industry to dermatology and fully expect SkinMedica to be one of the leaders in this movement."

In a separate development, SkinMedica has concurrently finalized a NouriCel supply agreement with Smith & Nephew Wound Management (La Jolla), which acquired Advanced Tissue Sciences' manufacturing facilities as a part of the bankruptcy procedure. The supply agreement will provide SkinMedica with an ongoing supply of NouriCel-MD for use in the manufacture of TNS Recovery Complex. Smith & Nephew Wound Management (La Jolla) is owned by the British firm Smith & Nephew plc.