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Merck to Acquire SmartCells, Inc.

WHITEHOUSE STATION N.J. and BEVERLY, M.A., Dec. 2, 2010 - Merck & Co., Inc., (NYSE:MRK) and SmartCells, Inc., today announced that they have entered into a definitive agreement under which Merck will acquire SmartCells, a private company developing a glucose responsive insulin formulation for the treatment of diabetes mellitus.

"Maintaining control of blood glucose levels represents a daily challenge for people living with diabetes," said Nancy Thornberry, senior vice president and head, diabetes and obesity franchise, Merck Research Laboratories. "Through the acquisition of SmartCells we have obtained innovative technology that may enable us to develop glucose-responsive insulins. If this investigational technology is ultimately approved for use with patients, it could provide an important new therapy for the treatment of diabetes. This holds the potential to significantly impact the treatment of this disease."

Under the terms of the agreement, Merck will acquire all outstanding stock of SmartCells, Inc. In return SmartCells shareholders will receive an upfront cash payment and be eligible to receive clinical development and regulatory milestones for products resulting from the transaction for potential aggregate payments in excess of $500 million. Sales-based payments for products resulting from the transaction will also be payable. SmartCells' board of directors has unanimously approved the transaction.

"At SmartCells, we have made important progress in rapidly advancing from early concept towards clinical development," said Todd C. Zion, Ph.D., president, co-founder and chief executive officer. "This acquisition positions our novel technology for success in the hands of a leading pharmaceutical company with proven expertise and exceptional resources to deliver breakthrough diabetes products to patients."

SmartCells has developed a technology platform that makes it possible to auto-regulate the release of a therapeutic based on the plasma concentration of a designated molecular indicator. In the case of insulin, the technology employs an approach whereby an insulin therapeutic is available only in the presence of a specific glucose concentration range. If this approach is successful in the clinic, it has the potential to produce insulin analogs that may result in a lower risk of hypoglycemia (low blood sugar) compared with standard insulin analogs and improve control over both fasting and post meal glucose levels.

About SmartCells

SmartCells, Inc. is focused on developing glucose-regulated SmartInsulin products for the treatment of diabetes. The company's core technology was originally developed at The Massachusetts Institute of Technology by its president, co-founder and chief executive officer Dr. Todd Zion. SmartCells has since developed the platform into several clinical candidates with the support of grant awards from the National Institutes of Health and equity investments from members of Boston Harbor Angels, Angel Healthcare Investors, Beacon Angels and Cherrystone Angel Group. For more information, visit www.smartinsulin.com.

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