MANCHESTER, England, March 2 /PRNewswire/ -- Epistem Plc (LSE:EHP) the UK biotechnology and research services company announced today that they have signed a research and development collaboration with Novartis to identify new drug targets and therapeutics across a variety of disease areas.

The collaboration combines Epistem's stem cell expertise and drug discovery programme, with Novartis's insights into disease pathways bioinformatics.

Under the terms of the agreement, Novartis will pay Epistem an upfront cash payment of US$4.0 million and will provide research funding for 2 years. Novartis has an option to exclusively license targets for development of biotherapeutic products in exchange for license fees, milestone payments and royalties. For each product developed from targets licensed under the agreement, Epistem is eligible to receive up to US$45.0 million in milestones. Furthermore, if leads are commercialised Epistem is eligible to receive tiered royalties on worldwide sales.

Matthew Walls, Epistem CEO, commented: The collaboration will enable us to accelerate the development of our existing targets with a world class pharmaceutical collaborator and to jointly explore disease opportunities in regenerative medicine.

Dr Jeffrey Moore, Novel Therapies Division Managing Director said: The collaboration will leverage each group's strengths to make novel discoveries leading to advances in treating unmet medical needs across several disease areas.

Notes to Editors:

About Epistem

Epistem is a biotechnology company commercialising its expertise in epithelial stem cells in the areas of oncology, gastrointestinal and dermatological diseases. Epistem develops innovative therapeutics and biomarkers and provides contract research services to drug development companies. The Group's expertise is focused on the regulation of adult stem cells located in epithelial tissue, which includes the gastrointestinal tract, skin, hair follicles, breast and prostate. Epistem does not conduct research in the areas of embryonic stem cells or stem cell transplantation.

For further information on the Company, please visit http://www.epistem.co.uk or contact:

Matthew Walls +44(0)161-606-7258 CEO Epistem Holdings Plc. Neil Mackison / James Steel +44(0)203-142-8700 Piper Jaffray Ltd. Mike Wort / Anna Dunphy +44(0)207-861-3838 Financial PR/IR De Facto Communications

Matthew Walls, +44(0)161-606-7258, CEO, Epistem Holdings Plc.; Neil Mackison / James Steel, +44(0)203-142-8700, Piper Jaffray Ltd.; Mike Wort / Anna Dunphy, +44(0)207-861-3838, Financial PR/IR, De Facto Communications