Fremont, CA and Negoya, Japan (February 8, 2005) – Sanwa Kagaku Kenkyusho Co., Ltd and Quark Biotech Inc. announce today that the companies have entered into an agreement for Quark to license the phase II compound BT16 to Sanwa for the treatment of dyslipidemia. The license provides Sanwa with exclusive development, manufacturing and marketing rights for the compound in Japan and other Asian countries. According to the agreement, Quark will receive an upfront payment as well as payments at development milestones with additional royalties on sales.

Mr. Satoshi Terao, Vice President R&D of Sanwa commented, “We are very excited at licensing BT16 from Quark Biotech Inc. Since we are focusing our R&D efforts on diabetes-related areas, the potential of BT16 as a metabolic syndrome therapy makes this product a very important addition to our R&D pipeline.”

Dr. Daniel Zurr, chief executive officer of Quark Biotech Inc. shared, “We are pleased to be collaborating with Sanwa, an established and respected Japanese pharmaceutical company that pioneers development of new drugs for the treatment of the metabolic syndrome constituents. We are continuing to seek additional licensees in Europe and US to work closely with Sanwa to expedite the development of this important therapy and eventually bring added benefits to patients.”

BT16 was found to have a potent efficacy of suppressing triglyceride levels in animal and human studies. Further studies demonstrated that it has also insulin-sensitizing properties and the possibility of this compound being developed as a metabolic syndrome therapy in the future has been suggested. All studies have shown BT16 to be safe and well tolerated.

Dyslipidemias, including elevated triglyceride states, are blood lipid disorders that result in abnormal lipid and lipoproteins levels in the blood stream, leading to a significantly increased risk of cardiovascular diseases. Cardiovascular disease is a leading cause of mortality worldwide. Dyslipidemia currently affects approximately 10 percent of the global population and its prevalence is increasing. An estimate of 20 to 30 percent of the dyslipidemic population needs alternative therapies to current treatments.

About Sanwa

Sanwa, a fully-integrated pharmaceutical company headquartered in Nagoya, Japan, is a division of Suzuken, the second largest pharmaceutical wholesaler in Japan. Sanwa’s established therapeutic and diagnostic products serve the diabetes, cardiovascular and inflammation marketplaces. Additional information is available at http://www.skk-net.com.

About Quark

Quark Biotech, Inc. is a privately held development-stage, biopharmaceutical company headquartered in Fremont, CA. Through innovative combination of gene silencing and DNA microarray technology, Quark has pioneered and patented its BiFARTM platform for high-throughput functional profiling, allowing significant advances in the identification of target genes and proteins. This technology allows the company to develop conceptually novel drugs that provide previously unavailable benefits to patients. Quark is currently harvesting novel targets identified using this enabling foundation technology. Quark has focused development efforts on treatment of fibrotic and ischemic diseases of the eye, kidney and lungs, in indications with clear unmet medical needs.

Quark corporate product development teams and research facilities are based in Fremont, CA with research facilities also in Ness-Ziona, Israel. Additional information is available at www.quarkbiotech.com.