TORONTO (August 23, 2004) — Transition Therapeutics Inc. has signed a licensing agreement with Novo Nordisk A/S to develop the Islet Neogenesis Therapy (“I.N.T.”) for the treatment of diabetes. The I.N.T. technology represents a novel approach to regenerate insulin producing cells in the body and is currently under development for the treatment of both type I and type II insulin dependent diabetics. The agreement includes an equity investment of CAN$ 6 million, upfront payments and development milestones potentially totaling up to US$ 48 million, commercial milestones and royalties. Transition had previously announced on June 24, 2004 Novo Nordisk’s decision to exercise its option to license Transition’s I.N.T. technology.

“The signing of this agreement with Novo Nordisk represents a key milestone for Transition and provides significant validation of our work to date,” said Tony Cruz, Chairman and CEO of Transition. “This relationship will allow us to advance key I.N.T.(TM) programs while working closely with a world leader in diabetes care.”

“The I.N.T.(TM) technology is supporting our efforts of developing a cure for diabetes. Although this project is at an early stage we are excited about the results obtained so far and look forward to exploring the potential of this technology”, said Dr. Peter Kurtzhals, Senior Vice President for Discovery at Novo Nordisk.