Transition Therapeutics Announces Receipt of Stem Cell Therapeutics Corp. Shares

    TORONTO, Oct. 3 /CNW/ - Transition Therapeutics Inc. ("Transition" or the
"Company") (TSX: TTH, NASDAQ:   TTHI) today announced that it has received
23,272,633 common shares of Stem Cell Therapeutics Corp. ("Stem Cell")
(TSXV:SSS) pursuant to the terms of a share purchase agreement entered into on
October 4, 2004.
    Under the terms of this agreement, the final $1,650,000 milestone payment
was due from Stem Cell to Transition on September 30, 2008. Stem Cell has
elected to make this payment in the form of Stem Cell common shares from
treasury. Pursuant to the terms of the agreement, the shares were issued at a
price of approximately $0.07 per Stem Cell share resulting in Transition
receiving 18.35% of the post issuance outstanding common shares of Stem Cell.
The shares received are the only shares that Transition owns of Stem Cell. The
Company does not intend to acquire any additional Stem Cell shares in the
    Sale of Stem Cell Therapeutics Inc. ("SCT") by Transition Therapeutics
Inc.: On October 4, 2004, Stem Cell entered into a share purchase agreement to
acquire all of the issued and outstanding shares of SCT (the "SCT Shares")
from Transition. Pursuant to this agreement, Stem Cell agreed to pay
Transition an aggregate purchase price of $3,500,000 as consideration for the
SCT Shares. The purchase price was payable in instalments beginning at closing
when the amount of $325,000 was paid and thereafter payments were required on
the anniversary of closing in each of the following four years in the amounts
of $475,000, $400,000, $650,000 and $1,650,000, respectively. All prior
payments have been paid in cash. At Stem Cell's election, the final payment
was made through the issuance of common shares.

    About Transition
    Transition is a biopharmaceutical company, developing novel therapeutics
for disease indications with large markets. Transition's lead products include
ELND005 (AZD-103) for the treatment of Alzheimer's disease and TT-223 for the
treatment of diabetes. Transition has an emerging pipeline of preclinical drug
candidates acquired externally and developed internally using its proprietary
drug discovery engine. Transition's shares are listed on the NASDAQ under the
symbol "TTHI" and the Toronto Stock Exchange under the symbol "TTH". For
additional information about the Company, please visit

    Notice to Readers: Information contained in our press releases should be
considered accurate only as of the date of the release and may be superseded
by more recent information we have disclosed in later press releases, filings
with the OSC, SEC or otherwise. Except for historical information, this press
release may contain forward-looking statements, relating to expectations,
plans or prospects for Transition, including conducting clinical trials. These
statements are based upon the current expectations and beliefs of Transition's
management and are subject to certain risks and uncertainties that could cause
actual results to differ materially from those described in the
forward-looking statements. These risks and uncertainties include factors
beyond Transition's control and the risk factors and other cautionary
statements discussed in Transition's quarterly and annual filings with the
Canadian commissions.

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For further information:

For further information: on Transition, visit or contact: Dr. Tony Cruz, Chief Executive
Officer, Transition Therapeutics Inc., Phone: (416) 260-7770, x.223,; Elie Farah, President & Chief Financial
Officer, Transition Therapeutics Inc., Phone: (416) 260-7770, x.203,; Transition Therapeutics Inc., 101 College
Street, Suite 220, Toronto, Ontario, M5G 1L7, Canada

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