CHARLOTTESVILLE, VA — Monday, February 9, 2004 — David G. Kalergis, JD/MBA, CEO of Diffusion Pharmaceuticals LLC, today announced that the company has received a $1.2 million grant (N00014-04-C-0146) from the Office of Naval Research (ONR) to support the transition of its novel small-molecule drug, trans sodium crocetinate (TSC), from animal to human testing. More than ten years of animal testing have proven that TSC, Diffusion’s lead compound, significantly increases the rate of oxygen delivery to hypoxic (oxygen-deprived) tissues, extending life and reducing physiological damage. ONR considers TSC a potential breakthrough treatment for wounded war fighters dying from hemorrhagic shock due to severe blood loss. Kalergis also announced that Veena Rao-Mirmira, PhD/MBA, Major General David C. Meade, (U.S. Army, ret.); and Tracey Linkous, CTM, have joined the company effective January 1, 2004, as Director of Research & Development, Director of Planning and Military Relations and Director of Communications, respectively. Prior to 2004, Dr. Rao-Mirmira, General Meade and Ms. Linkous each served in various consulting capacities with the company.

ONR has supported the development of TSC since 1995, funding research activities at several academic laboratories throughout the country. In 2001, the Company acquired the rights to develop the drug commercially.

“The decision by ONR to transition the drug into human testing and provide funding support is a significant step in bringing to reality the promise of TSC for improved treatment of currently unmet medical needs,” said Kalergis. “Developing the drug for ONR as a hemorrhagic shock treatment for wounded war fighters is a priority, and this work is also directly applicable to other potential uses of the drug in life-threatening conditions,” he continued. Examples include respiratory disorders, stroke, myocardial infarction (heart attack), congestive heart failure, and trauma. “Injury from hypoxia is also often a serious complication of many surgical procedures,” he said.

The Company is currently raising additional private equity to supplement the ONR grant. Proceeds of the offering will be used for working capital and to fund the Company’s expanding drug-development program.

As Director of Research and Development, Dr. Rao-Mirmira will have responsibility for developing and executing the Company’s non-clinical drug-development strategy. This involves managing supplier relationships with drug manufacturers, formulators and toxicology testing providers to ensure that FDA requirements for human-quality pharmaceuticals are fulfilled. In addition, she will be responsible for setting up and overseeing Diffusion’s laboratories.

Dr. Rao-Mirmira previously served as a Group Leader and a Senior Process Engineer for Intel Corporation, Santa Clara, California. She received her Bachelor of Science in Chemical Engineering with Distinction in June, 1989, from the University of Minnesota and a PhD in Chemical Engineering from Stanford University in 1994. In May, 2003, she completed her MBA at the University of Virginia’s Colgate Darden School of Graduate Business Administration.

General Meade will be responsible for guiding the military aspects of the Company’s drug-development program, as well as strategic planning activities. He is a distinguished former military combat commander and planner, whose assignments have included a tour as the Army’s Director of Strategy, Plans and Policy (Pentagon) and as the Commanding General, 10th Mountain Division, Ft. Drum, NY (with 1 Brigade in Somalia.) From October 1994, through January 1995, he served as Commander of the Joint U.S./UN/Multi-National Forces and 10th Mountain Division in Haiti during which time he led the invasion and occupation of Haiti. Gen. Meade is a graduate of Dickinson College, where he currently serves on the Board of Trustees, and the University of Virginia.

Ms. Linkous first began working with Diffusion Pharmaceuticals in January 2003 as a consultant specializing in media relations and communications. Now, as the Company’s full-time Director of Communications, she will oversee the development of the company’s messaging, positioning, branding, marketing and corporate communications, and will help facilitate the Company’s development as it navigates from its current preclinical stage through the FDA approval process.

About Diffusion Pharmaceuticals
Diffusion Pharmaceuticals LLC is an expansion-stage drug development company commercializing the new drug trans sodium crocetinate (TSC). TSC is a patented small- molecule therapeutic that treats oxygen deprivation at the cellular level (“hypoxia”). Hypoxia is the underlying cause of death or injury in numerous life-threatening conditions, including respiratory disorders, stroke, myocardial infarction (heart attack), congestive heart failure, and trauma. Injury from hypoxia is also often a serious complication of many surgical procedures. More than ten years of animal testing have proven that TSC significantly increases the rate of oxygen delivery to hypoxic tissues, extending life and reducing physiological damage. Diffusion’s drug-development program is currently transitioning from animal to human testing, with a first-in-human clinical trial planned for completion mid-2005. The company, which is privately held, is located in Charlottesville, Virginia, an emerging biotech and drug-development center. For more information, visit www.diffusionpharma.com.