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Sepragen Signs Major License Agreement with Dairy Leader, Anchor Products, LTD.

HAYWARD, CA, August 25, 1998 – Sepragen Corporation (OTC BB: SPGNU, SPGNA, SPGNW) announced today completion of a major step in the Company’s history -- the signing of a definitive commercial license agreement for its Sepralac® Process with Anchor Products, Ltd. of New Zealand. Anchor Products, an international leader in the dairy ingredients business with sales of over U.S. $1.38 billion, is headquartered in Hamilton, New Zealand. Sepragen’s Sepralac® Process is a technology that isolates valuable proteins from whey, a low-value cheese by-product. These purified proteins are used as nutraceutical ingredients in a wide range of food products such as infant formula, protein-based sports and nutritional supplement beverages, and fat-free health-enhancing food products.

Under this agreement, Anchor Products will have exclusive manufacturing rights to the Sepralac® Process in Australia and New Zealand and non-exclusive worldwide marketing rights to products produced by the Sepralac® Process. In return, Sepragen will initially receive a total of about $1 million from Anchor Products, comprised of a license fee, an equity investment of $0.5 million (in redeemable preferred stock convertible under certain conditions into common stock at $2.86), and sales of equipment and resins for Anchor Product’s first stage $8 million facility. Sepragen will also receive royalties from Anchor Product’s sales for Sepralac® derived products. If successful, the initial scale of the facility at Anchor Products is expected to be expanded more than ten-fold in the years ahead, which would result in increased product sales and royalties to Sepragen.

Said Ross Townshend, Group General Manager of Anchor Products, "Our Company enjoys economies of scale, and through the New Zealand Dairy Board, a global techno-marketing infrastructure the envy of our competitors. While our core strengths are in large-scale cost-effective manufacture, we are also committed to new development and innovation. We have extensively tested the Sepralac® Process and are convinced that our investment in this technology will provide a further strategic edge. We already have established market opportunities for the high value components that the Sepralac® Process will extract from our abundant raw materials, these market opportunities being incredibly diverse and focussing on all forms of "wellness". "We look forward to continued business with the Sepragen Corporation."

Vinit Saxena, President of Sepragen, regarding Sepragen’s first strategic alliance in the dairy industry, had this to say – "We are pleased to have Anchor Products’ commitment to commercialize this process and look forward to a long, fruitful relationship. Although the Company remains in need of additional financing, this agreement is an important milestone in moving Sepragen from the development stage into commercial business operations. Additionally, it reflects our strategy of using our technology to extract valuable products from commodity raw materials and participating financially in the added value generated through an on-going royalty stream along with sales of equipment and consumables."

Anchor Products processes 5.5 million tons of milk per year into 650,000 tons of dairy products. All of the export sales are directed through the New Zealand industry’s marketing arm, the New Zealand Dairy Board (annual revenues of $4.0 billion), to more than 150 countries in six continents which accounts for about 30% of the world export market. Anchor Products is also a leader in research and development of new dairy products and processes, and has successfully commercialized many leading-edge dairy technology processes.

Sepragen develops and sells processes and products using its proprietary technology for the dairy, citrus juice and biopharmaceutical markets. Although no commercial agreements have been reached yet, it has previously announced evaluation of these processes by several international companies that are leaders in their respective fields. Sepragen also continues to sell equipment and instrumentation to biotechnology companies for use in scale-up and manufacturing of pharmaceuticals. The company currently holds twelve US patents and seven foreign patents relating to its technologies.

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The statements in this release that relate to future events or performance, statements about growth, future regulatory clearances, levels of sales and market size and future manufacturing capacity and efficiencies are forward-looking statements that involve risks and uncertainties, including risks associated with uncertainties related to the development of markets for and commercial acceptance of the company's products and services, the availability of components, competitors' product introductions and other risks identified in the company's SEC filings. Actual results may differ from those described in these forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.


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