SemBioSys Genetics Inc. (TSX:SBS), a biotechnology company developing a broad pipeline of protein-based pharmaceuticals and non-pharmaceutical products, today announced its 2006 second quarter operational and financial results.

Second Quarter Highlights

• Achieved its commercial target levels of human insulin accumulation in safflower with 1.2 percent of total seed protein, exceeding its target of one percent total seed protein by 20 percent, subsequent to the end of the quarter.
• Announced the completion of key milestones in its GLA rich safflower oil project with Arcadia Biosciences, Inc. with the delivery of safflower seeds from plant lines containing gamma linolenic acid (GLA), transformed utilizing Arcadia's proprietary genes.
• Announced an agreement with Syngenta Crop Protection AG to acquire technology assets and in-license intellectual property related to the manufacture of biopharmaceuticals in safflower, which allow SemBioSys to further increase its efficiency in the development of transgenic safflower.
• Successfully planted safflower in the United States as part of the commercial scale-up of ImmunoSphereTM Feed Additive.

“Achieving commercial levels of insulin accumulation in safflower is the most significant milestone for the Company to date. We expect to have results from bioequivalence studies in animals comparing safflower-produced insulin to commercially available insulin in the fourth quarter of this year,” said Andrew Baum, President and CEO of SemBioSys Genetics Inc. “We believe safflower-produced insulin can dramatically impact the economics of insulin manufacturing and act as an enabling technology in two ways. Safflower-produced insulin has the potential to be a cost-effective method to meet the increased demand for insulin required by new delivery methods, such as inhalation, which requires five to ten times the insulin as injectable methods. Safflower-produced insulin also has the potential to provide insulin to people in the developing world, who otherwise would not have access to it because there is not enough supply or they cannot afford it.”

Financials

Total revenues for the three-month and six-month periods ended June 30, 2006 were $167,445 and $267,531 respectively, compared with $561,697 and $1,048,414 for the corresponding periods in 2005. In 2006 there were no license fees earned compared with $248,126 and $375,304 generated during the three-month and six-month periods ended June 30, 2005 as a result of the agreements with Lonza Inc. and Arcadia Biosciences, Inc. moving from a research and development stage to a commercialization stage. In addition, the difference related to contract research is a result of the completion of collaboration agreements with Dow AgroSciences LLC and Arcadia since 2005, such that the contract research revenue from the second quarter of 2006 relates primarily to only the ongoing collaboration agreement with Martek Biosciences Corporation.

Total expenditures for the three-month and six-month periods ended June 30, 2006 were $5,007,483 and $7,756,437 respectively, compared with $2,233,213 and $4,225,619 for the corresponding periods last year.
Research and development expenses for the three-month and six-month periods ended June 30, 2006 were $1,375,635 and $2,483,161, compared with $1,202,242 and $2,079,568 for the corresponding periods last year. The difference is primarily related to the continued development of a stronger preclinical and clinical team to allow the Company to further advance the insulin program, and prospective future pipeline candidates. The Company also expanded the plant growth team and infrastructure both indoors and in the field.

General and administrative expenses for the three-month and six-month periods ended June 30, 2006 were $819,659 and $1,791,919 respectively, compared with $857,973 and $1,698,388 for the corresponding periods last year.

Intellectual property costs for the three-month and six-month periods ended June 30, 2006 were $2,081,258 and $2,344,295 respectively, compared with $240,160 and $448,760 for the corresponding periods last year. This difference is primarily attributable to the acquisition of technology assets and in-licensing of intellectual property from Syngenta. In exchange for these assets the Company issued warrants that allow Syngenta to purchase an aggregate of 550,000 common shares of SemBioSys at an exercise price of $13.21 per share. This resulted in a charge to intellectual property expense of $1.52 million during the second quarter, which is consistent with the Company’s accounting policy of expensing these costs as incurred. The term of the warrants is five years. The warrants are not listed on the Toronto Stock Exchange.

Business development costs for the three-month and six-month periods ended June 30, 2006 were $267,292 and $452,097 respectively, compared with $181,191 and $238,490 for the corresponding periods last year. The difference is primarily related to accelerated activities related to the commercialization of the Company’s products and a further assessment of new product candidates.

Net loss for the 2006 second quarter was $4,608,182 or ($0.28) per share, compared to a net loss of $1,558,076 or ($0.12) per share for the same period last year. Net loss for the six-month period ended June 30, 2006 was $7,112,521 or ($0.43) per share compared with $2,953,934 or ($0.23) for the same six-month period last year.
As at June 30, 2006 the Company had cash and cash equivalents totaling $22,874,534 compared to $28,513,095 at December 31, 2005.

Outlook

The Company’s priorities for 2006 are to complete bioequivalence studies of safflower-produced insulin and to advance the development of its non-pharmaceutical products, including ImmunoSphere™ and docosahexaenoic acid (DHA) rich safflower oil. With the experience gained from the successful completion of insulin accumulation in safflower the Company now expects commercial levels of expression results in safflower of apolipoprotein AI (Apo AI) in late 2006 or early 2007. The upcoming milestone events expected in 2006 include:

• Bioequivalence results comparing safflower-produced insulin to commercially available insulin products
• Initiation of a new pharmaceutical product development program
• Scale-up of ImmunoSphere™ product in the United States and Chile for commercial launch in late 2007
• Achievement of key DHA proof-of-concept milestone

Additional information about the Company, including the MD&A and financial results may be found on SEDAR at www.sedar.com.

Calgary, Alberta-based SemBioSys Genetics Inc. is a biotechnology company focused on the development, commercialization and production of biopharmaceuticals and non-pharmaceutical products based on its plant genetic engineering skills and proprietary oilbody-oleosin technology platform - the Stratosome™ Biologics System. Its two lead pharmaceutical product candidates are insulin and a developmental cardiovascular drug called Apo AI. It also has a series of non-pharmaceutical products addressing animal and aquaculture health, nutritional oils and human topical markets. SemBioSys currently has funded partnership agreements with Martek Biosciences Corporation, Lonza Inc. and Arcadia Biosciences, Inc.