Viral Genetics Announces Licensing Deal With University of Colorado and V-Clip Pharmaceuticals, Inc.

Viral Genetics, Inc. (PINKSHEETS: VRAL), a biotechnology company that discovers and develops immune-based therapies for HIV and AIDS using its thymus nuclear protein ("TNP") compound, has entered into several agreements with the University of Colorado and V-Clip Pharmaceuticals, Inc. relating to the exclusive worldwide rights to patent applications and know-how developed by Dr. Karen Newell, PhD, of the University of Colorado at Colorado Springs in the fields of diagnosing and treating HIV/AIDS, Hepatitis C, and Herpes.

The rights have been acquired under an Exclusive License Agreement between the University of Colorado, Viral Genetics, and V-Clip Pharmaceuticals, Inc. V-Clip Pharmaceuticals was formed specifically for the acquisition of the license and its shareholders are Viral Genetics, University License Equity Holdings, Inc. (the University of Colorado's equity holding arm), Karen Newell, Evan Newell, PhD, Robert Berliner, and Dr. Robert Melamede. Following the successful completion of tests described below, Viral Genetics has the right to acquire V-Clip Pharmaceuticals in exchange for shares, options and warrants.

The licensed rights include several important patent applications that may explain the mechanism of action of the Company's TNP compound, including the reductions in HIV viral load observed in the Company's recent South African HIV/AIDS clinical trial.

The rights relate to modulating the immune system up or down, and to causing a process called apoptosis. This is accomplished using small protein fragments (called peptides) to displace other "bad" peptides that have been picked up by immune system cells. These so-called bad peptides sometimes result from the body's natural attempts to fight off viruses, bacteria, and various diseases, including HIV/AIDS. Apoptosis is the body's process of killing off harmful cells, and is believed to be an important factor in the control of a variety of illnesses.

A key area of Dr. Newell's research is based upon the idea that certain of these harmful peptides result in a harmful immune response that may not only hurt a person's ability to fight off an illness, but perhaps even cause certain autoimmune diseases. As a result, she developed a model for the types of chemical compounds that could displace these harmful peptides and allow the immune system to respond more beneficially. After preliminary analysis of TNP it is believed that it contains several peptides that fit the model's profile. Viral Genetics, V-Clip and Dr. Newell now plan to move forward with various studies of the TNP components to verify this.

To this end, Viral Genetics has agreed to complete these tests at an approximate cost of $600,000. Viral Genetics intends to finance this testing itself, which would require private placement or other sales of Viral Genetics securities, or through grant funding from public and private sources. It is Viral Genetics' intention to acquire V-Clip upon successful completion of this testing.

"Upon completion, the proposed studies would provide the 'proof of principle' necessary to move forward with clinical trials in US. With this information we will be seeking an optimized and purified version of the current TNP compound to determine if it is capable of a stronger antiviral result while maintaining the low toxicity and side effect profile seen in Viral Genetics' prior studies. As importantly, the results of the proposed studies are expected to help identify a next and possibly improved generation of rationally designed biological therapies for HIV/AIDS," said Dr. Newell.

Dr. Newell is Associate Professor in the Department of Biology at the University of Colorado, Scientific Director of the CU Institute of Bioenergetics, the Clement and Margaret Markert Endowed Professor of Biology, Associate Director, Center for Computational Biology, and Adjunct Assistant Professor at Dartmouth Medical College. She has authored or co-authored several dozen peer-reviewed papers predominantly focused on immunology and cellular metabolism, and she has over 30 issued or pending patents.

"We look forward to the results of Dr. Newell's studies. These studies may shed important insight unto the mechanism of TNP and hopefully we will discover which peptides within TNP have the greatest anti-HIV effect. This would allow us to optimize the compound prior to the next round of clinical trials," said Dr. Eric Rosenberg, Associate Professor of Medicine at Harvard Medical School and Chairman of the Viral Genetics Scientific Advisory Board.

The Exclusive License Agreement includes various royalties and milestone payments that are payable to the University of Colorado upon certain events including sales of diagnostic or therapeutic products, certain FDA milestones, and other events. Viral Genetics has also agreed to various other performance milestones.

"Dr. Newell's basic scientific research and discoveries appear to compliment the over 10 years of human clinical experience we at Viral Genetics have. The acquisition of these rights holds significant promise to finally close the circle on our understanding of TNP including identifying exactly what it is and exactly how it works," said Haig Keledjian, President of Viral Genetics.