This Year's Highlights

• In Phase II(b) trial FluBlØk (patented recombinant influenza vaccine) achieved protective immunogenicity titers in 97% of elderly subjects (compared to less than 30% for licensed vaccines) and 67% protection in severely immunocompromised cancer patients.
• FDA grants "accelerated approval" status based on FluBlØk field trial that showed 100% protection against lab. documented influenza for strains contained in the vaccine and drifted strains, and a more than 54% reduction in the incidence of CDC-ILI.
• FluBlØk licensed for Japan market to UMN Pharma - entrepreneurial Japanese company - for multi-million dollar up-front payment, double digit royalties and other consideration.

Anticipated Highlights

• Completed IPO and a strategic manufacturing alliance for FluBlØk
• FluBlØk completes licensing trial (elderly field study). PSC files BLA on "accelerated" basis in Q1 2007. Final three clinical trials conducted in 2006/07 establish dose for children and qualify FluBlØk for regular approval - all age groups - in 2008.
• FDA approval of FluBlØk for ages 18 and above for 2007/08 flu season and for all age groups for 2008/09 influenza season.

Corporate Mission

Protein Sciences Corporation is a privately-held biotechnology company based in CT. Our business is developing and manufacturing protein-based vaccines, diagnostics and therapeutics using recombinant DNA technology. A Phase II/III field trial of our patented recombinant influenza vaccine, FluBlØk?, achieved 100% protection against circulating and drifted strains and a 54% reduction in influenza-like illness compared to placebo. This result validated our underlying BEVS technology. The FDA notified us that our patented expresSF+ cell® line was ?acceptable? for vaccine manufacturing and that FluBlØk had been granted "accelerated approval" status. Recent FDA communications provide a roadmap for regular approval and a manufacturing schedule that gives us with a cost and speed advantage compared to current and future influenza vaccines. We expect to receive marketing approval in time for the 2007/08 influenza season.

We are manufacturing a trivalent vaccine for pandemic influenza (bird flu) that consists of antigens derived from H2, H5 (A/Vietnam) and H7 (or H9) viruses. This vaccine can be customized for each country to which it is being licensed depending on the needs of that country. Since we do not use live influenza viruses at any stage of development, we are able to create and manufacture pandemic influenza vaccines quickly and safely. In 1997 we successfully developed and delivered a vaccine against the Hong Kong ?Bird Flu? in just eight weeks, a world record. Our vaccine conferred ?sterile immunity? to chickens that were challenged with the live virus ? no vaccinated chickens became ill or were unable to ?shed? the virus. The U.S. National Institutes of Health vaccinated 200 healthcare workers and researchers against the potential pandemic virus. With two doses vaccinated individuals developed antibody titers that are believed to be protective against the potential pandemic virus.