TSO₃: New Phase of Testing on Prions at the National Research Council

April 27, 2004

Québec City, April 27, 2004 – TSO3 Inc. (“TSO3”) is undertaking a third phase of testing in collaboration with the National Research Council of Canada (NRC) in Winnipeg, as part of TSO3’s research program on prions, the infectious proteins that cause Creutzfeldt-Jakob Disease, the human version of “mad cow” disease.

The aim of this third phase of testing is to confirm the capacity of the 125L Ozone Sterilizer by TSO3 to deactivate the strains of prions. The experiments are carried out on transgenic mice from the laboratory of Dr. Stanley Prusiner (a Nobel Prize winner in 1997 for his research on prions). This species of transgenic mouse is known as the animal most sensitive to prions. The protocol utilized compares ozone sterilization to the usual steam sterilization, and to a steam cycle that is much hotter which is considered as the only option available that could reduce some of the risk of prions, without guaranteeing the total disappearance of infectiousness.

“The best scenario would be that all the animals inoculated from ozone-sterilized plaques are still alive on the 180th day and present no signs of the disease, and that those inoculated from plaques sterilized in an autoclave (steam under pressure) are sick. This result would show that ozone is more effective than the steam that is currently recommended for sterilizing prions for lack of a more effective solution,” said Simon Robitaille, Vice President, Operations, and Director of Research at TSO3.

It has been shown that Creutzfeldt-Jakob Disease can be transmitted from one patient to another by surgical instruments, while no sterilization method currently in use can deactivate the infectious prions that cause the disease. In 2001, TSO3 undertook a research program to validate the effectiveness of its sterilization process in regards to prions. The first step consisted of validating the effectiveness of ozone with a yeast protein that is a twin of the prion, with very positive results. In 2002, the second phase of testing carried out on real prions (in vitro) at the NRC in Winnipeg, with financial and technical assistance from the Industrial Research Assistance Program (NRC-IRAP) showed the potential of the 125L Ozone Sterilizer when it was impossible to detect the presence of prions with the methods available, after only a quarter of the standard sterilization cycle.

TSO3 has since met with key figures in the international scientific community from England, Europe, the United States and Canada to obtain a consensus regarding the protocol to utilize for the subsequent phase, which will eventually allow the Company to submit requests to the regulatory authorities of the countries concerned for the commercial phase.

The Company had been waiting since the fall of 2003 for the transgenic mice required for the testing. These mice are particularly sensitive to manipulations and the producers had to cope with challenges to the stability of the genes inserted into the genome of the mice from previous models.

The nature of the tests

Experiments consist of taking the brains from sick mice and making a homogenate that is spread on plaques to dry and then sterilized in the ozone sterilizer while other samples are sterilized with steam, in order to compare the effectiveness of the ozone sterilizer to the autoclave. Next, the residual prions are recovered from the plaques and then injected into the brains of the test mice.

This third phase of testing is expected to take six months.

The next step

If the results are conclusive, the following step will be to inoculate mice with strain of BSE (Bovine Spongiform Encephalopathy) prions that are the direct cause of “mad cow” disease in cattle, and the variant that causes Creutzfeldt-Jakob Disease (vCJD) in humans. TSO3 intends to complete this research in England with the help of a surgical model utilizing implants in materials analogous to surgical instruments, but this time over a 365-day (one-year) period.

In parallel, the development a “biological prion indicator” will also get underway with a non-infectious yeast protein called SUP-35, whose physical-chemical properties allow it to take the shape of a prion and react like one. This protein will be utilized by TSO3 in the development of a prion indicator to monitor prion deactivation, in the form of a small, throwaway measurement device designed to confirm repeatedly and reliably whether a sterilization and prion deactivation cycle has been successfully achieved.

On September 9, 2002, TSO3 announced the signing of a licensing contract with the Université de Montréal and Polyvalor that gave TSO3 the right to exploit the patents related to the invention of a “biological prion indicator” based on the SUP-35 yeast.

The market potential

A market study carried out for TSO3 shows that the respondents were very favourable towards the introduction of a new sterilization technology for the elimination of prions: 90% of the European respondents and 75% of the American respondents expressed interest. Although vCJD has affected mainly the European population, the American respondents expressed a higher level of interest than expected for a new sterilizer that would eliminate prions.

The study also showed that the respondents would be interested in obtaining a “biological prion indicator.” About 90% of the respondents in the health field, in both Europe and America, expressed interest for a prion indicator, saying they would be ready to pay up to US$10 per indicator. This indicator alone could therefore represent a business opportunity worth at maturity nearly US$100 million per year for TSO3.

About the NRC

The National Research Council (NRC) is the Government of Canada’s premier organization for research and development and has been active for over 80 years. NRC’s mandate is, among others, to undertake, to assist and to promote scientific and industrial research in different fields of importance to Canada.

NRC is composed of 19 different institutes and national programs, spanning a wide variety of disciplines and offering a broad array of services. NRC is located in every province in Canada and plays a major role in stimulating community-based innovation.

Technology and Industry Support includes a number of industry-facing services, such as the NRC Canada Institute for Scientific and Technical Information and the NRC Industrial Research Assistance Program (NRC-IRAP), which focuses on the needs of small- and medium-sized businesses.

For more information on NRC, visit the organization’s Web Site at: www.nrc.ca

About TSO3

TSO3 Inc. is located in Québec City, Québec, Canada, and was founded in 1998. TSO3 currently has 45 employees, 17 of whom work exclusively in the Research and Development department. The company’s mission is to develop and market innovative and comprehensive sterilization solutions.

TSO3 has perfected a novel sterilization process using ozone as a sterilizing agent. The first product based on this technological platform is the 125L Ozone Sterilizer, which is intended for hospital sterilization units. The 125L – named after its 125-litre/4.3-cubic-foot capacity – was designed to sterilize the new generation of surgical and diagnostic instruments made of non-heat-resistant materials such as polymers and other plastics. The ozone sterilization process is a safe, efficient, fast and cost-effective response to evolving sterilization needs.

The 125L Ozone Sterilizer was licensed by Health Canada in May 2002 and TSO3 was granted U.S. Food and Drug Administration (FDA) approval September 3, 2003.

The Company’s R&D team has also undertaken the development of a smaller, point-of-use ozone sterilization device for operating rooms and private clinics, and is planning the development of an industrial-sized device for manufacturers of medical instruments, among others.

The statements in this release and oral statements made by representatives of TSO3 relating to matters that are not historical facts (including, without limitation, those regarding the timing or outcome of any financing undertaken by TSO3,are forward-looking statements that involve certain risks, uncertainties and hypotheses, including, but not limited to, general business and economic conditions, the condition of the financial markets, the ability of TSO3 to obtain financing on favourable terms and other risks and uncertainties.

The TSX has neither approved nor disapproved the information contained herein and accepts no responsibility for it.

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