Micap announces option agreement with BioProgress plc (“BioProgress”) - 23rd August 2004

 Micap, the UK technology licensing company specialising in the micro encapsulation of active ingredients within yeast cells, today announces that it has granted a six month option to Bioprogress to allow it to evaluate exclusively micro-encapsulation technology developed for smoking cessation products(“SCPs”) in water soluble films.

The intent is that if successful this will lead to an exclusive licensing agreement between Micap and BioProgress.

BioProgress has developed ‘in-the-mouth’ dissolving films as an alternative to gums, patches and other current delivery methods for nicotine and has been working with a US-based company to evaluate the opportunity for SCPs. Micap’s technology potentially enables the release of nicotine at a faster rate than current delivery methods, and may enable the US-based company and BioProgress to develop a totally new and improved product for the SCPs market place.

According to reports from Euromonitor plc, the smoking cessation aids category was the strongest performer in the UK OTC healthcare market in 2003. The global market for SCPs in 2002 was US$1.4 billion and is continuing to grow, driven by public education campaigns regarding the health risks of smoking and the development of a range of product delivery formats, including gum, patches, pills and lozenges.

Micap has been examining the utilisation of its technology with nicotine and SCPs for some time, as is reflected in the patent application disclosed in the flotation prospectus of July 2003.

Commenting on the option agreement, Mike Brennand,
Chief Executive of Micap, said:

“Independent research has shown that rapid release of nicotine provides significantly quicker relief of cravings. For this reason we believe that Micap’s technology which increases the rate of release of nicotine, combined with Bioprogress’ delivery platform, could provide attractive SCPs for what is a potentially vast market”.

Graham Hind, Chief Executive of BioProgress, said:

"We are constantly looking for complementary technologies which are protectable and which can add significant value and enhance the performance of our own film technologies. The market for SCPs is growing strongly but there are several cultural and other circumstances where a gum may not be an appropriate or desirable delivery method, while patches can be slower in acting. The consumer has received enthusiastically the concept of ‘in-the-mouth’ delivery and we see this as a further exciting opportunity for BioProgress. The success of this project means there may be other opportunities for Micap’s technology in our dissolving films”.

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About Micap
Micap listed on AIM in August 2003 and is a UK technology licensing company specialising in the micro encapsulation of active ingredients within yeast cells.

Micro encapsulation is a process whereby tiny droplets of liquid or particles of solid material are coated with a continuous film of polymeric material. Microcapsules have several benefits, including conversion of liquids to solids; separating reactive compounds; protecting substances against environmental factors; and improving the material handling properties. Micap's unique proprietary technology involves using killed yeast cells as natural capsules to protect the active ingredient. Yeast encapsulation can protect active ingredients against high temperatures, the effects of the sun, pressure and degradation through exposure to the air. The natural affinity of yeast cells for mucous membranes can also be exploited for targeted drug delivery.

About BioProgress
BioProgress listed on AIM in May 2003 and is engaged in the research, development, and design of patented encapsulation systems that use water soluble and biodegradable films for the dietary supplement, pharmaceutical and other sectors. The Company’s patent portfolio comprises 80 patents within 24 patent families and has product development agreements and strategic alliances with several global companies. BioProgress aims to provide a cost effective and animal-free encapsulation process for pharmaceutical drugs in liquids, tablets and powders, thereby addressing the needs of the entire market for oral dosage forms while providing novel delivery mechanisms not possible with traditional processes.

The Company has also developed patented and licensed the world’s first flushable ostomy pouch that offers a newly enhanced quality of life not previously possible for the end user. Market research shows the global ostomy market to be worth $1 billion annually.

The Company’s business model provides it with several significant revenue streams including sales of encapsulating machines and film, plus licence and fees for research development services.