ISLET TECHNOLOGY'S ENGINEERING SUBSIDIARY RECEIVES PHASE II NIH SBIR GRANT

October 1, 2002

St. , MN, June 26, 2002 - Islet Technology announced today that Artium

Technologies, Inc., its wholly-owned engineering subsidiary, has received a

$750,000 Phase II National Institutes of Health (NIH) Small Business Innovation

Research (SBIR) Grant. This Phase II contract entitled " Optical Diagnostics for

the Analysis and Selection of Encapsulated Islets " will fund Artium's continued

work on a project integral to Islet's development of technology to encapsulate

insulin-producing islets for transplantation to cure Type I diabetes. The Artium

subsidiary, which was merged with Islet Technology in March 2002, is based in

Sunnyvale, California.

Bill Drake, president and CEO of Islet, said that the project funded at Artium

" involves the development of a process to selectively sort encapsulated islets

using laser-based optical diagnostics to remove blank spheres and capsules with

possible exposed tissue or other faults. " He added that, " this step is critical

to optimizing the parameters of our encapsulation process. " The optical

techniques also allow sorting by islet size so that the effect of size on in

vivo function can be investigated.

Under Dr. Bachalo's leadership as President, Artium has previously received

several NIH SBIR grants. Dr. Bachalo is also VP of Scientific Affairs and a

Director of Islet and prior to this position, was a scientific advisor to Islet

for three years. He has participated in the generation of over 100 published

scientific papers, holds several patents, and has received numerous

international awards. Dr. Bachalo is also a visiting scholar at Stanford

University and visiting scientist at Scandia National Laboratories.

Islet Technology is committed to making islet transplantation a reality by

becoming the leading supplier of insulin-producing islet cells for

transplantation. Islet is developing technology in the areas of islet isolation

and cell encapsulation which will make islet transplantation possible without

requiring immunosuppression (anti-rejection drugs). Additional information about

Islet Technology, a privately-held company, can be found at www.islet.com.

Mark E. Armstrong

NW Rep, PAI

casca@...

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