DeveloGen receives Grant for DiaPep277® Program

Goettingen, Germany/Rehovot, Israel — July 4, 2006: DeveloGen, a biopharmaceutical company engaged in the discovery and development of novel therapeutic drugs for the treatment of metabolic disorders, today announced the award of a grant of up to EURO 475,000 by the Office of the Chief Scientist (“OCS”) of the Ministry of Industry, Trade and Labour of the State of Israel to DeveloGen Israel Ltd., DeveloGen’s wholly-owned subsidiary located in Rehovot, Israel.

The OCS awarded the grant for DeveloGen’s DiaPep277® program for the treatment of autoimmune diabetes. The OCS has provided continuous support for this program. The grant for 2006 is four times greater than the grant awarded in the previous year. Carsten Dehning, Chief Financial Officer of DeveloGen said: “DeveloGen is very appreciative of the continuing support of the OCS for our type 1 diabetes program. We believe the grant is an expression of the confidence of the OCS in the DeveloGen technology and recognition of the significant progress made towards providing a safe treatment for this debilitating disease.”

DiaPep277®

DiaPep277, is a synthetic peptide immunomodulator, which is being developed exclusively by DeveloGen for the treatment of type 1 diabetes. The product has completed phase II development with good safety profile and has shown the ability to preserve the endogenous insulin production in newly diagnosed type 1 diabetes patients. The product has entered phase III clinical development in 2005, as DeveloGen is conducting a global study in Europe, South Africa and Israel.

Type 1 diabetes

Type 1 diabetes is an autoimmune disease, in which the immune system destroys the insulin-producing beta-cells of the pancreas, resulting in diminished and eventually non-existing insulin production. As a consequence, patients become life-long dependent on exogenous insulin therapy. Until now there has been no safe and effective way of stopping the immune destruction and curing the disease.

DeveloGen

DeveloGen AG is a biopharmaceutical company engaged in the discovery and development of novel therapeutics for the treatment of metabolic disorders. The Company’s most advanced drug candidate DiaPep277® is currently in phase III clinical trials and targets type 1 diabetes in adult and juvenile patients. Further Diapep277 is being explored in a phase II clinical trial for Latent Autoimmune Diabetes in Adults (LADA) patients. Additionally, DeveloGen has a deep and highly complimentary discovery pipeline focused on small molecule inhibitors acting as a novel class of insulin sensitizers targeting type 2 diabetes as well as beta-cell regeneration growth factors for the potential treatment of type 1 and type 2 diabetes. DeveloGen is headquartered in Goettingen, Germany with operations in Rehovot, Israel. For more information on DeveloGen, please visit our website at www.develogen.com.

Contact Information

Kathrin Shem-Tov

Manager Corporate Affairs

DeveloGen AG

Contact via E-mail