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XTL Biopharm Ltd (XTL)

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Monday 22 August, 2005

XTL Biopharm Ltd

VivoQuest-License & Purchase

XTL Biopharmaceuticals Ltd
22 August 2005

      XTLbio Signs License and Asset Purchase Agreement with VivoQuest Inc.

         Strengthens Hepatitis C Small Molecule Pipeline and Discovery

Rehovot, Israel, 22 August 2005: XTL Biopharmaceuticals Ltd. (LSE:XTL)
('XTLbio') announced today that it signed a license (the 'license') and asset
purchase agreement with VivoQuest Inc. ('VivoQuest'), a privately held
venture-backed biotechnology company based in the U.S.

VivoQuest's lead program focuses on development of compounds for the treatment
of Hepatitis C virus (HCV) infection, and has identified multiple lead
candidates in this disease area that have shown significant activity in
preclinical model systems, which is equal to or greater than the most promising
molecules in clinical development today.

These HCV compounds emerged from VivoQuest's proprietary compound library, which
was developed using a breakthrough small molecule chemistry technology known as
Diversity Oriented Synthesis (DOS).  Originally developed at the Harvard
Institute of Chemistry and Cell Biology, DOS is the first practical approach to
synthesizing large numbers of chemical compounds that share the complexity of
natural product molecules.  Since the vast majority of drugs in the market today
are derived from natural product molecules, DOS generates compounds that are
expected to have a higher probability of being successful drugs.

VivoQuest was formed by a team that includes internationally recognized pioneers
in DOS from the Harvard Institute of Chemistry and Cell Biology.  VivoQuest is
one of two companies founded based on DOS technology; the other being Infinity
Pharmaceuticals Inc. For Infinity, DOS was the basis for recent significant
collaborative deals with Amgen, Novartis and Johnson & Johnson.

Under the license, XTLbio has the exclusive worldwide rights to VivoQuest's
intellectual property and technology, including its HCV compounds and compound
library.  XTLbio will be responsible for the further development and
commercialization of VivoQuest's HCV program.

The terms of the license include an upfront fee of $940,000 to be paid in
XTLbio's ordinary shares at the time of closing. The agreement also provides for
additional regulatory and sales milestone payments to be paid in cash or XTLbio
shares, at XTLbio's discretion.  These payments total $34.6 million, $25.0
million of which will be due upon or following regulatory approval or actual
product sales. In addition, the license agreement will require that XTLbio make
royalty payments on product

In addition to the license, XTLbio has signed an asset purchase agreement, under
which XTLbio will acquire from VivoQuest certain assets, including laboratory
equipment, and will assume VivoQuest's lease of its laboratory space. In
consideration, XTLbio will pay $450,000 to VivoQuest in XTLbio's ordinary

Closing of the license and the asset purchase agreement is dependent on meeting
certain closing conditions. Between signing and closing of these agreements,
which will take place no later than September 22, 2005, XTLbio will provide
VivoQuest with up to $400,000 in exclusivity payments.

Michael Weiss, Chairman of XTLbio, commented: 'We are very excited to bolster
our HCV pipeline by bringing in the VivoQuest program, which has already
identified a large number of candidates that pre-clinically compare very
favorably with the most promising anti-HCV compounds presently in clinical
development. XTLbio has traditionally been focused on biology with our Trimera
model and has relied on others for chemistry expertise to identify drug
candidates.  The VivoQuest program provides us with an exciting complementary,
chemistry-based technology with which to pursue our proprietary drug development



Jonathan Burgin, Chief Financial Officer Tel: +972 8 930 4440

Notes to Editors

XTL Biopharmaceuticals Ltd. (XTLbio) is a biopharmaceutical company developing
drugs against hepatitis. Established in 1993, XTLbio became a public company in
2000 and its ordinary shares are listed on the Official List of the UK Listing
Authority and are traded on the London Stock Exchange under the symbol XTL and
on the Tel Aviv Stock Exchange, Israel.

                      This information is provided by RNS
            The company news service from the London Stock Exchange

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