Press Release

Osmetech signs licensing agreement with LGC for genetic testing technology

Osmetech plc, (" Osmetech " or "the Company") the international diagnostics business, announces that it has signed an exclusive agreement with LGC Limited ("LGC") to license its DNA probe technology ("HyBeacons(R) ") for genetic test applications in all world markets, excluding India.

Discussions for a similar license to be granted for infectious disease applications, including sexually transmitted diseases, are also at an advanced stage with LGC.

The HyBeacon technology is intended for use with Osmetech 's molecular diagnostics instrument ("Genedrive") and other platforms. HyBeacons have unique characteristics which make them suitable for diagnostic and point-of-care applications.

Osmetech acquired Molecular Sensing plc ("MS") in October 2004, which has been working closely with LGC for approximately one year, during which time scientific proof of principle has been established demonstrating the compatibility of HyBeacon tests with the Genedrive.

A recent study of clinical samples has been completed at the medical microbiology department of the Royal Free Hospital in London to evaluate the HyBeacon Chlamydia detection assay run on the Genedrive instrument. Although this study was not optimised or performed under FDA clinical trial guidelines, the results were excellent, exhibiting a high degree of accuracy in comparison with other widely practised nucleic acid amplification tests.

Molecular diagnostics is the fastest growing market segment within the $20bn+ global diagnostics market, with annual growth of 20%+ expected to continue for the foreseeable future. The human genome project continues to produce genetic information that will lead to new and improved diagnostic tests for the detection of disease or the pre-disposition for disease. This in turn is expected to create both cost efficiencies and treatment benefits for healthcare in general.

The majority of molecular diagnostic testing is currently performed in batches in larger hospitals and laboratories. The growth in molecular diagnostics is expected to be most evident in small to medium sized hospitals now looking to perform much of this testing in-house. This is the setting in which it is envisaged that the Genedrive/HyBeacon device will be targeted.

James White , Chief Executive, Osmetech plc said:

'We are delighted to be working with LGC and its HyBeacon technology, which will provide us with the chemistry for our instrument platform. The Genedrive instrument, proprietary consumable and HyBeacon chemistry should provide us with a powerful combined product offering.

'The Genedrive uses well understood and widely adopted PCR-based technology to produce a simple, cost effective and rapid test, thereby meeting the key performance characteristics to meet the requirements of the fast growing molecular diagnostics market.

'The OPTI business already has the operational structure, distributor network and customer base necessary to exploit these exciting growth opportunities.'

Dr Paul Debenham , LGC's Director of Life Sciences, said:

'LGC continues to advance its genetic test HyBeacon technology across the spectrum of applications for which rapid point-of-care testing is in demand.

'We are excited to see HyBeacons being put into use by Osmetech for this first licence in medical diagnostic applications. We are looking forward to its ongoing development and our collaboration with Osmetech in identifying new testing capabilities.'

Osmetech was advised on the licence agreement by Mark Lubbock and Jonathan Lewin of international law firm, Ashurst. LGC was advised by its in-house legal team and by John Wilkinson and Shirley McCulloch of international law firm, Bird & Bird.

Ends

Enquiries

Osmetech James White , Chief Executive 020 7849 6027

madano partnership Matthew Moth 020 7378 7033

LGC Imelda Topping 020 8943 7563 Corporate Communications Manager

Notes to Editors:

About LGC

LGC ( www.lgc.co.uk ) is Europe 's leading independent analytical laboratory providing advanced chemical, biochemical and forensic analysis, diagnostic services, DNA testing and genetic screening, research, method development, consultancy, training and analytical outsourcing.

LGC operates in a diverse range of markets, in both the public and private sectors, including foods, pharmaceuticals, biotechnology, environment and chemicals and is the national measurement laboratory for chemical and biochemical analysis.

LGC's services are designed to help organisations produce high quality data on which to base scientific and commercial decisions. Reference materials supplied by our market-leading distribution business, LGC Promochem, underpin the quality of measurement in many industrial sectors including pharmaceuticals. LGC Promochem distributes reference standards and ATCC biomaterials throughout Europe and in India .

Growing at around 15% per annum and majority-owned by Legal & General Ventures since April 2004, LGC is based in Teddington, Middlesex, with additional laboratory facilities in Runcorn, Cheshire, in Edinburgh, Scotland and in Luckenwalde, Germany. Further offices are located in France , Germany , Italy , Poland , Spain , Sweden and India .

About Genedrive and Polymerase chain reaction (PCR)

Genedrive is a new instrument for rapid DNA diagnostics and can be used for the detection of infectious and inherited diseases, SNPs (genetic variations) and forensic markers (DNA fingerprinting).

The instrument amplifies DNA directly from the clinical sample using robust and sensitive PCR methods and detects it using a novel fluorescence optics system.

When combined with HyBeacon probes, the entire process from sample collection to test result can be achieved in less than 30 minutes, opening the possibility of real point-of-care molecular diagnostics.

Assays that have been developed for the OPTI Gene include Chlamydia, the thrombosis markers, Factor V Leiden and Factor II, and the important pharmacogenomic marker CYP2D6.

Polymerase chain reaction (PCR) is a technique which is used to amplify the number of copies of a specific region of DNA, in order to produce enough DNA to be adequately tested. It has quickly become one of the most widely used techniques for identifying disease-causing viruses and/or bacteria or matching against other DNA samples.

PCR is relatively simple to perform, rapid and inexpensive. The principle steps in a PCR are repeated for a number of cycles, with the phials containing the sample heated and cooled during each cycle. The speed at which the heating and cooling process occurs within each cycle will be a key factor in determining the time to result.

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