Canadian biotechnology company achieves commercially viable levels of insulin production in safflower

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

"During the third quarter we exceeded our targeted levels of insulin expression in safflower, our commercial crop system. We achieved 1.2 percent accumulation of insulin per total seed protein. These results confirm both the
economic and scientific potential of plant-produced insulin," said Andrew Baum, President and CEO of SemBioSys Genetics Inc. "Despite the efforts of other groups no one has ever demonstrated commercially viable production of insulin in plants let alone in a flexible and scalable seed-based plant system like safflower. We believe this scientific achievement is a major step forward in the production of proteins that face cost and supply barriers for
successful commercialization. In the near term, we expect to announce the specific regulatory path we intend to follow in the United States and announce the results of bioequivalence studies that compare safflower-produced insulin to commercially available products."

Financials

Total revenues for the three-month and nine-month periods ended September 30, 2006 were $123,039 and $390,570 respectively, compared with $682,678 and $1,731,092 for the corresponding periods in 2005. Total revenue for the three-month and nine-month periods ended September 30, 2006 consisted entirely of contract research compared with contract research revenue of $378,347 and $1,051,457 for the corresponding periods last year. The difference related to contract research is a result of the completion of collaboration agreements with Dow AgroSciences LLC and Arcadia Biosciences, Inc. since 2005, such that the contract research revenue from the third quarter of 2006 relates solely to the ongoing collaboration agreement with Martek Biosciences Corporation. In 2006 there were no license fees earned compared with $304,331 and $679,635 generated during the three-month and nine-month periods ended September 30, 2005 as a result of the agreements with Lonza Inc. and Arcadia moving from a research and development stage to a commercialization stage.

Total expenditures for the three-month and nine-month periods ended September 30, 2006 were $2,949,791 and $10,706,226 respectively, compared with $2,616,685 and $6,842,304 for the corresponding periods last year.
Research and development expenses for the three-month and nine-month periods ended September 30, 2006 were $1,360,045 and $3,843,207, compared with $1,186,560 and $3,266,128 for the corresponding periods last year. The difference is primarily attributable to increased personnel and related support costs. This includes an enhanced quality control and assurance program, the further development of a stronger preclinical and clinical team to allow the Company to advance its insulin program, and the development of prospective future pipeline candidates. The Company has also expanded the plant growth team and infrastructure both indoors and in the field. It is expected that the Company's research and development costs will continue to increase as it enters clinical development.

General and administrative expenses for the three-month and nine-month periods ended September 30, 2006 were $903,753 and $2,695,669 respectively, compared with $867,271 and $2,565,659 for the corresponding periods last year.

Intellectual property costs for the three-month and nine-month periods ended September 30, 2006 were $217,269 and $2,561,564 respectively, compared with $325,561 and $774,321 for the corresponding periods last year. The difference in intellectual property costs for the current quarter over the corresponding period from last year is due to the fact that a large portion of the costs relate to patent maintenance and prosecution which do not occur uniformly. With the exclusion of the one time Syngenta intellectual property acquisition of $1.52 million that was incurred in the second quarter of 2006, the year to date increase over the prior year period is $270,337.

Business development costs for the three-month and nine-month periods ended September 30, 2006 were $134,182 and $586,279 respectively, compared with $133,707 and $372,197 for the corresponding periods last year. The difference for the nine-month period is primarily as a result of accelerated activities related to the commercialization of the Company's products and a further assessment of new product candidates.

Net loss for the 2006 third quarter was $2,659,025 or ($0.16) per share, compared to a net loss of $1,845,181 or ($0.15) per share for the same period last year. Net loss for the nine-month period ended September 30, 2006 was $9,771,546 or ($0.59) per share compared with $4,799,115 or ($0.38) for the same nine-month period last year. As of September 30, 2006 the Company had cash and cash equivalents totaling $20,614,674 compared to $28,513,095 on 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(TM) and docosahexaenoic acid (DHA) rich safflower oil. The upcoming milestone events expected in 2006 and the first half of 2007 include:

- Clarification of the regulatory pathway for safflower produced insulin with the FDA
- Bioequivalence results, in vivo and in vitro, comparing safflower-produced insulin to commercially available insulin products
- Execution of a Contract Manufacturing Agreement to manufacture insulin for preclinical and early stage clinical trials
- Initiation of a new pharmaceutical product development program
- Scale-up of ImmunoSphere(TM) Shrimp Feed Additive in the United States and Chile for commercial launch
- Achievement of a key DHA proof-of-concept milestone
- Achievement of commercial levels of Apo AI expression in safflower and animal data from plant-derived Apo AI

About SemBioSys Genetics Inc. (www.sembiosys.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(TM) 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.