Using "Directed Evolution" to Isolate Specific Gene Variant Critical for Reactions in Biodesulfurization Process

Energy BioSystems Corporation (Nasdaq:ENBC) presented findings today that validate the approach to improve the enzyme that is the prime reaction determinant in a bacterial strain critical for removing sulfur from petrochemical products. These key findings in the biodesulfurization field were presented by Dr. Philip Pienkos of Energy BioSystems at the 100th General Meeting of the American Society for Microbiology in Los Angeles, California.

Worldwide concern over the burning of high sulfur fuels has led to increasingly stringent regulations regarding the level of sulfur acceptable in petroleum streams such as gasoline and diesel. In fact, the Clinton Administration proposed on May 17th new rules to eliminate 90 percent of the pollutants from the diesel smokestacks of heavy trucks and passenger buses beginning in 2006. These regulations would require petroleum refiners to cut 97 percent of the amount of sulfur now found in their diesel fuels.

Biodesulfurization (BDS) is a revolutionary biocatalytic approach that has many advantages over hydrodesulfurization, the industry standard. The commercialization of BDS, however, will require increases in the rate and extent of reaction in order to meet regulatory and economic goals. Improvements will come from a biocatalyst with enhanced kinetic properties and expanded substrate range.

In the presentation today, Dr. Pienkos discussed Energy BioSystem's programs in "directed evolution" of the BDS biocatalyst. This approach involved the isolation of a bacterial strain capable of growth with biodesulfurized diesel as the sole sulfur source. Using its proprietary gene shuffling technology known as RACHITT (RAndom CHImeragenesis on Transient Template), Energy BioSystems has determined that a variant dszC gene in this strain is responsible for this phenotype. A combination of growth selections and high throughput screening have identified chimera that have improved properties of both the rate and the extent of the biocatalytic reaction to remove sulfur from diesel.

"We've been working for several years to commercialize this biocatalyst, and now we've identified dszC as the prime determinant of both rate of reaction and extent of reaction," said Energy BioSystem's President and CEO Peter Policastro. "For the first time, we've got the tools necessary to attack both problems at the same time, and our RACHITT gene shuffling technology will result in better enzymes for this important field."

Since 1993, Energy BioSystems has been a leader in applying molecular biology and microbial processes to remove sulfur from petrochemical products for cleaner reactions and lower costs. Energy BioSystems' RACHITT technology is part of the company's directed evolution technology platform that rapidly creates hybrid genes that code for proteins with desired characteristics. New genes are created in a controlled laboratory setting by combining genes or gene fragments to produce chimeric genes that will direct the synthesis of these highly optimized proteins.

The company is also expanding use of the technology to pharmaceutical, agricultural, and industrial enzyme applications. On May 23rd, Energy BioSystems announced a major licensing agreement with Genencor International, one of the world's leading industrial biotechnology companies. Under the agreement, Genencor will use Energy BioSystem's RACHITT technology to develop gene-based products for the cleaning, textiles, grain processing, animal feed, and food ingredients industries.

Energy BioSystems Corporation (Nasdaq:ENBC), of The Woodlands, Texas, is a biotechnology company that is applying proprietary, directed evolution techniques to accelerate development and commercialization of biocatalyst-based processes for the pharmaceutical, ag-bio, industrial enzyme, chemical, biodesulfurization, and petroleum refining and petrochemicals markets. Additional information about Energy BioSystems is available at the company's web site:

This document contains forward-looking statements that are subject to certain risks, uncertainties and assumptions, including but not limited to, the Company's need for additional funds, the ability to raise sufficient funds on acceptable terms, the pending dispute with Maxygen relative to their allegations concerning confidentiality, the technical uncertainty and risks associated with commercialization of the Company's technology, the Company's reliance on environmental regulations and the uncertainty of the adoption of any newly proposed regulations, the market acceptance of the Company's technology, the Company's dependence on collaboration partners, competition, and the ability to enforce and defend the Company's patents and proprietary technologies. Should one or more of such risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated in such forward-looking statements. For a discussion of such risks and assumptions, see "Risk Factors" included in the Company's annual report on Form 10-K for the year ended December 31, 1999.