BioCancell

Investment to total $0.73m in equity and $2.92m in convertible bonds; will include 3 institutional investors

Jerusalem, Israel -- BioCancell Therapeutics, Inc. (TASE:BICL) today announced that its Board of Directors had approved a private placement of equity, convertible bonds and warrants to Tikcro Technologies Ltd ($2.5 million), Clal Biotechnology Industries Ltd ($1 million) and the Provident Fund of the Employees of the Hebrew University of Jerusalem Ltd ($0.15 million). Of these amounts, each investor will allocate 20% to receive common stock at a price of 78.2 cents per share (approx 37% above the current market price), and 80% to a 4-year note bearing interest at a rate of 10% per annum, convertible at a price per share of 88.9 cents.

In addition, each investor will receive a five-year warrant, equal to the total number of shares underlying the investor’s convertible note and equity investment, exercisable at 88.9 cents per share. All prices are subject to an adjustment mechanism should the share’s market price fluctuate by more than 5% before the closing of the investments.

Until BioCancell raises an additional $15 million, the investors in this placement will receive full ratchet anti-dilution protection, entitling them to additional securities on a pro-rata basis, should the Company allocate securities to another party at a lower price in the future. Likewise, should the Company allocate securities in the future on better terms than those announced today, those terms will also be applied retroactively to this placement.

As part of the placement, Tikcro will sign a voting agreement with BioCancell stockholders Clal Biotechnology, Avraham Hochberg and Avi Barak, effectively enabling Tikcro, Clal and Hochberg to each nominate their own candidate to BioCancell’s Board of Directors, as long as they continue to hold 7% of outstanding stock (including shares underlying the convertible bonds).

The placement is subject to the approval of a General Meeting of BioCancell’s stockholders and the approval of the Tel Aviv Stock Exchange Ltd.

BioCancell’s technology is both Personal and Targeted. The approach is based on the identification of particular genes that are highly expressed only in tumors ("Target Genes"). The regulatory sequences of these Target Genes are used to drive the expression of a toxin gene exclusively within tumor cells, enabling targeted tumor-cell destruction, leaving normal cells intact. In effect, the plasmid acts as “smart bombs”, activated only inside their targets thus destroying only the cancerous cells, while leaving healthy cells intact.

The patient's eligibility for the treatment is determined by analyzing the patient's tumor for the expression of the specific Target Genes. The diagnosis of the expression of the Target Genes are, therefore, a prerequisite for treatment and is made possible through the Company's proprietary diagnostic technology that enables detection of even a single malignant cell. Only those patients with high expression levels of the Target Genes in their tumor are eligible for treatment with high confidence of success.

Discovered by Professor Avraham Hochberg in humans, H19 is an oncofetal gene that encodes RNA (with no protein product) that is expressed at high levels in over 30 types of human cancer tissues, while existing at a nearly undetectable level in the surrounding normal tissues, thus making it an optimal weapon in the fight against cancer.

The gene is expressed abundantly in the human placenta and in several embryonic tissues, but is repressed post-natally and only re-expressed with the appearance of cancer, within cancer cells. Studies show that H19 fulfills an important role in the process of tumorigenesis, and it is thought that the gene enables tumor cells to survive and proliferate under stress conditions.

BioCancell Therapeutics Inc. is a biopharmaceuticals corporation specializing in the development of Patient-Oriented, Targeted Therapy for the treatment of numerous types of cancer. The Company's proprietary technology constitutes a novel paradigm for the targeted destruction of cancer cells, with no effect on normal surrounding tissue and no observed side effects, allowing for long-term, safe treatment and prevention of cancer.

BioCancell was co-founded in 2004 by Professor Avraham Hochberg, Professor of Molecular Biology at the Hebrew University of Jerusalem, based on technology developed by him over the past 15 years.

Between 2006-2008, BioCancell has successfully completed private rounds of funding and an initial public offering totalling $9 million. Its securities are traded on the Tel Aviv Stock Exchange, with the major stockholders being Clal Biotechnology Industries, a member of the IDB group of companies, and Prof. Hochberg.

This press release contains "forward-looking" statements, including statements with respect to the further development and potential safety and efficacy of BC-819, in the treatment of superficial bladder cancer and BioCancell's development strategy. Any statements contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. There are a number of important factors that could cause the results of BioCancell to differ materially from those indicated by these forward-looking statements, including, among others, the risk that the U.S. Food and Drug Administration may require changes to the protocols and informed consents for clinical trials of BC-819, which changes may have a material adverse effect on the timing of, and BioCancell's ability to conduct, those clinical trials, risks related to the clinical advancement of its BC-819 plasmid, including, but not limited, to the risk that clinical trials for this product candidate may not demonstrate safety and efficacy sufficient to obtain the requisite regulatory approvals or to result in a marketable product and risks related to the potential for others to develop products containing or based on BC-819. BioCancell does not undertake any obligation to update forward-looking statements.

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