TranXenoGen currently holds a worldwide exclusive license to
several patents relating to cloning and sperm-mediated
transgenesis. The patent portfolio covers techniques for the
reprogramming of somatic cell nuclei for the generation of cloned
and/or transgenic animals. The patents have a priority date of
February 1993, which the Company believes will lead to a
number of licensing opportunities in the cloning field based on
activities currently being undertaken in the industry.

Insulin

Insulin is the protein produced by the body to regulate and
control blood sugar levels. Diabetes is a chronic disease in
which the body’s ability to produce or respond to insulin is
impaired. In 2003, there was an estimated 194 million people
worldwide with diabetes. Insulin and oral anti-diabetics
dominate the market for managing diabetes.

TranXenoGen is currently developing its Gene-Testes Transfection
and Direct-Egg Transfection technologies to generate transgenic
chickens that express Insulin in chicken eggs. Insulin was chosen
as one of the Company’s initial products because it is an approved
product, and thus reduces the regulatory approval risk with a
$12 billion high-growth market. The market growth is being driven
by alternative delivery methods coming on to the market and an
increasing market demand caused by the aging of the population
and an increase in obesity.

Human Serum Albumin

Human Serum Albumin is a naturally occurring protein found in
human blood plasma and is currently used to expand blood volume
in critical care situations, including the treatment of patients suffering
excessive blood loss following surgery or traumatic injury. In 2003,
the market for Human Serum Albumin was estimated to be
approximately $1 billion in North America alone. In addition to the
therapeutic market, HSA is widely used as an Excipient in the
formulation of many drugs.

Human Serum Albumin is derived from both recombinant sources
and human blood, and, given the general move away from
human-derived materials, the Company believes that this presents
an opportunity for the Company’s transgenic technologies.

TranXenoGen is currently developing its Gene-Testes Transfection
and Direct-Egg Transfection technologies to generate transgenic
chickens that express Human Serum Albumin in their eggs.

Cell Lines

TranXenoGen as part of its avian stem cell program has developed
two avian embryonic-like cell lines that are available for both
commercial and research use. The cell lines, designated
SCL-1 and GCL-3, were derived from embryonic disk cell and
primordial germ cells, respectively, and maintain an embryonic
phenotype in culture. Both cell lines grow as mesynchemal-type
cells and are 15-20 mm in size.

Both cell lines grow very well in Dubellco’s Modified Eagle’s Media
(DMEM) supplemented with 10% fetal bovine serum (FBS). We use
standard passaging by trypsinization and replating at dilutions of 1:10
but higher dilutions are not detrimental to the cells. The cells are not
contact inhibited to growth. Exact population doubling has not been
determined but is reasonable based upon growth characteristics of
the passaged cells. The cells are negative for mycoplasma and are
deposited with the ATCC.

¹Hehir KM, Baguisi AB, Pennington SE, Bates, JM, DiTullio PA: A Potential
Antitumor Peptide Therapeutic Derived from Antineoplastic Urinary Protein,
manuscript accepted for publication in the journal Peptide.