KALYPSYS TO PROVIDE MERCK WITH NEXT-GENERATION LEAD DISCOVERY CAPABILITY

3/25/2003

Kalypsys, Inc. announced today that it has entered into an agreement that provides Merck & Co., Inc. with its proprietary, high-throughput lead discovery system. Kalypsys and Merck will also collaborate to extend the capabilities of the system. When installed, the Kalypsys system is expected to increase Merck's screening capacity and enable high-throughput target and pathway-based screening across multiple therapeutic areas.

"We plan to utilize the Kalypsys system to accelerate our research programs and further optimize our drug discovery process," said Dr. Merv Turner, Senior Vice President at Merck Research Laboratories. "This investment will yield immediate benefits and further enhance our competitive position among the industry leaders in drug discovery."

Dr. Berta Strulovici, Executive Director of Basic Research at Merck said, "Kalypsys' industrial lead discovery technologies are complementary to our existing capabilities and will enable us to routinely screen our entire compound collection in either biochemical or cellular formats in an efficient and cost effective manner."

"We are delighted to have Merck as our first corporate partner," said Pratik Shah, PhD, Chief Business Officer at Kalypsys. "Our technologies have enabled us to make excellent progress in internal drug discovery programs in our first year of operations. This collaboration is a valuable external validation, accomplished even in a very tough environment. The partnership also enables us to keep this part of our platform at the cutting edge."

Kalypsys uses compact, integrated and stand alone systems based on proprietary hardware and software that reliably and rapidly run diverse biological assays in 1536-well format. The same systems used for compound library screening can also be used to screen libraries of antibodies, recombinant proteins or genes for drug or target discovery. The system is also designed as an open platform that can incorporate customer-selected external devices. Kalypsys is using these technologies in addition to its proprietary compound library, compound synthesis tools and genome-wide functional screening technologies to carry out discovery programs for itself and its partners.

About Kalypsys

Kalypsys is a biopharmaceutical company that uses advanced automation technologies to first evaluate drug candidates in cellular models of disease and then optimize the safety and efficacy of select candidates. Through the use of its technology, Kalypsys is able to make better decisions earlier in the discovery process. Kalypsys is developing drug leads in multiple therapeutic areas including cancer, inflammation, metabolic diseases and cardiovascular disorders. In addition to carrying out drug discovery programs based on internal research, Kalypsys seeks to enhance partners' discovery programs through technology transfer or collaborative relationships. Kalypsys completed a $43 million series A financing round in April of 2002, led by the Sprout Group, co-led by Tavistock Life Sciences and including CMEA Ventures, Lombard Odier Darier Hentsch & Cie, 5AM Ventures, Novartis Bioventure Fund, Aravis Ventures, Alejandro Zaffaroni and the Singapore E.D.B.

For more information on Kalypsys, please visit http://www.kalypsys.org.

For further information please contact: Pratik Shah, Ph.D. of Kalypsys, +1-858-754-3333; or Liz Thompson, Ph.D. of Atkins + Associates, +1-858-527-3492, for Kalypsys.