SAN DIEGO – June 9, 2005 – Verus Pharmaceuticals, Inc., a pediatric-oriented company dedicated to identifying, developing and delivering solutions to address the unmet medical needs of children and those who care for them, today announced the completion of a $98 million initial financing, including a $78 million Series A preferred stock financing. The $78 million Series A financing, believed to be the largest sum ever raised in a Series A round in San Diego, was led by Domain Associates and Prospect Venture Partners and included Paul Royalty Fund, MPM Capital, Montreux Equity Partners, Athenian Venture Partners, Windamere Venture Partners, and private investors. In conjunction with the Series A financing, an additional $20 million in product-specific royalty financing was provided by Paul Royalty Fund; in total, Paul Royalty Fund provided the largest commitment of capital in the overall financing.

Verus' Board of Directors now is comprised of the following members: Cam L. Garner, Chairman and Chief Executive Officer of Verus; Olav B. Bergheim, General Partner of Domain Associates; Alex E. Barkas, Ph.D., Managing Director of Prospect Venture Partners; Todd C. Davis, Principal of Paul Capital Partners; Nicholas J. Simon, General Partner of MPM Capital; David F. Hale, President and Chief Executive Officer of CancerVax Corporation; and Erle T. Mast, Chief Financial Officer of Pharmion Corporation.

“We are very excited about Verus' pediatric-oriented strategy and their initial focus on the treatment of asthma, allergies, and related diseases and conditions,” said Olav B. Bergheim of Domain Associates. “With this financing in place, the company is well-positioned to become the partner of choice for those companies interested in optimizing the development and commercialization of novel, pediatric-oriented products.”

“Verus' management team has extensive experience in building and growing specialty pharmaceutical companies,” said Alex E. Barkas, Ph.D., of Prospect Venture Partners. “We believe this deep industry experience, along with their core competencies in development and commercialization, will enable the team to build a leadership position in this attractive, high growth market.”

“We are very pleased to have such a prominent group of investors validate our pediatric-oriented strategy and view their significant financial commitment as a reflection of the strength of our current set of opportunities and their confidence in our management team,” said Cam L. Garner. “This financing enables us to simultaneously expand our portfolio of pediatric-oriented products and accelerate preparations for our entry into the U.S. market.”

About Verus

Verus Pharmaceuticals is dedicated to improving the lives of children and those who care for them. Verus is building a portfolio of products for the unmet medical needs of children through acquisitions and alliances, with an initial focus on the treatment of asthma, allergies, and related diseases and conditions. Verus is differentiated by its pediatric orientation and its strong financial position and experienced management team, which allows the company to capitalize on an extensive network to build its product portfolio and pursue complementary transactions. The company’s rigorous, disciplined approach to strategic decision-making and core competencies in development and commercialization is expected to provide significant value to its partners. More information about Verus is available on the company’s website at www.veruspharm.com.

Forward-Looking Statements

Verus Pharmaceuticals cautions you that statements included in this press release that are not a description of historical facts may be forward-looking statements. The inclusion of forward-looking statements should not be regarded as a representation by Verus that any of its plans will be achieved. Actual results may differ materially from those set forth in this press release due to the risks and uncertainties inherent in Verus’ business including, without limitation, statements about: its ability to identify appropriate acquisition, licensing, or co-development and/or promotion candidates in the future or be able to take advantage of the opportunities it identifies; difficulties or delays in developing, obtaining regulatory approval, manufacturing and commercializing its products; unexpected performance or side effects of its products that could delay or prevent development or commercialization, or that could result in recalls or product liability claims; the scope and validity of patent protection for its products; competition from other pharmaceutical companies; and its ability to obtain additional financing to support its operations. All forward-looking statements are qualified in their entirety by this cautionary statement and Verus undertakes no obligation to revise or update this press release to reflect events or circumstances after the date hereof.