Merck KGaA acquires manufacturing rights for Stimuvax from Oncothyreon

Oncothyreon Inc. announced today that Merck KGaA of Darmstadt, Germany has licensed the right to manufacture Stimuvax and, through its affiliate EMD Serono Canada Inc., purchased current inventory and certain assets utilized for the manufacture of Stimuvax from Oncothyreon for consideration which includes net payments to Oncothyreon totaling approximately U.S. $13 million.

Merck KGaA currently holds the clinical development and commercialization rights for Stimuvax under license from Oncothyreon. Stimuvax is a therapeutic vaccine in Phase 3 clinical development for non-small cell lung cancer.

In conjunction with this transaction Merck KGaA, through its affiliate EMD Serono Canada Inc., has assumed control of Oncothyreon's Edmonton, Canada, facility, which is primarily utilized for the manufacture and development of Stimuvax. EMD Serono Canada intends to offer employment to the majority of Oncothyreon's 52 employees in Edmonton. In addition, Merck KGaA will be responsible for all further development costs related to Stimuvax, including commercial-scale manufacturing process development, and for the cost of goods at commercialization. The royalty rates payable to Oncothyreon on future net sales of Stimuvax, if any, have been adjusted to reflect that Oncothyreon is no longer responsible for these costs. Potential payments upon achievement of certain milestones under the previous agreements between Merck KGaA and Oncothyreon remain unchanged. The previously existing collaboration and supply agreements have been replaced by an amended and restated license agreement.

"We believe that the license of manufacturing rights for Stimuvax to Merck KGaA is in the best interest of both Oncothyreon and the development of this product," said Robert L. Kirkman, M.D., President and Chief Executive Officer of Oncothyreon. "Merck KGaA will be able to bring its resources and manufacturing expertise to the development of a commercial manufacturing process for Stimuvax, which has become a key component of its oncology pipeline. At Oncothyreon we will be able focus our resources on our proprietary pipeline of targeted small molecules in oncology, while retaining our substantial economic upside if Stimuvax is commercialized."

"We are also very pleased that EMD Serono Canada will offer employment to most of our Edmonton employees," continued Dr. Kirkman. "This group has worked with dedication and enthusiasm to bring Stimuvax to its current stage, and we are grateful that Merck KGaA has recognized the knowledge and expertise they will bring to the ongoing development of this exciting product."

"Merck Serono's acquisition of manufacturing rights for Stimuvax reflects our confidence in its future role in the treatment of cancer and also our commitment to expanding our oncology portfolio so that we can continue to provide oncologists and patients with innovative treatment options," said Hanns-Eberhard Erle, Executive Vice President Technical Operations, Merck Serono, a division of Merck KGaA.

"In addition, with the Edmonton facility we are proud to be adding a group of experienced and dedicated individuals to our workforce who will form a vital arm of the team that supports the ongoing development of Stimuvax," Erle continued.

About Stimuvax

Stimuvax is an investigational therapeutic cancer vaccine designed to induce an immune response to cancer cells that express MUC1, a glycoprotein antigen widely expressed on common cancers. MUC1 is over-expressed on many cancers such as lung cancer, breast cancer, prostate cancer and colorectal cancer. Stimuvax is thought to work by stimulating the body's immune system to identify and destroy cancer cells expressing MUC1. Merck KGaA currently is conducting a global Phase 3 trial of Stimuvax known as START (Stimulating Targeted Antigenic Responses To NSCLC). START is a randomized, double-blind, placebo-controlled study that will evaluate patients with documented unresectable stage III NSCLC who have had a response or stable disease after at least two cycles of platinum-based chemo-radiotherapy. The Phase 3 trial is expected to enroll more than 1,300 patients in over 30 countries. For more information on the START trial, or to find a participating center and eligibility criteria, log on to www.nsclcstudy.com or www.clinicaltrials.gov.

About Oncothyreon

Oncothyreon is a biotechnology company specializing in the development of innovative therapeutic products for the treatment of cancer. Oncothyreon's goal is to develop and commercialize novel synthetic vaccines and targeted small molecules that have the potential to improve the lives and outcomes of cancer patients. For more information, visit www.oncothyreon.com.