October 1, 2008

pSivida Release: Results From the Six-Month Interim Readout of the Human PK Iluvien(TM) Study

Drug delivery company, pSivida Corp. (NASDAQ: PSDV)(ASX: PVA)(FF: PV3), together with its licensing and development partner, Alimera Sciences, have today reported the interim six-month safety and efficacy results from the first human pharmacokinetic(i) (PK) study of Medidur(TM) FA, which will be marketed under the trade name Iluvien(TM), if approved by the U.S. Food and Drug Administration.

This 36 month, open label Phase II study, running concurrently with the pivotal Phase III FAME(TM) study (Fluocinolone Acetonide in Diabetic Macular Edema), is designed primarily to assess systemic exposure of the corticosteroid, fluocinolone acetonide (FA) after administration of Iluvien in diabetic macular edema (DME) patients. The study is also designed to provide information on the safety and efficacy of Iluvien in a DME population.

A total of 37 subjects were enrolled in the PK study, 20 patients received a low-dose Iluvien (which delivers an approximate 0.23ug per day dose) and 17 patients received a higher-dose Iluvien (which delivers an approximate 0.45ug per day dose).

The six-month interim readout from the PK study showed 25% of the low dose patients and 41% of the higher dose patients had an improvement in best corrected visual acuity (BCVA) of 10 or more letters on an eyechart compared with their baseline vision. In addition, the six-month readout showed 18% of the higher dose patients had an improvement in BCVA of 15 or more letters from baseline. The percentage of low dose patients that had an improvement in BCVA of 15 or more letters from baseline decreased from the 20% seen at the three-month readout due to one patient having developed a cataract and one patient having developed an epiretinal membrane involving the macula prior to the readout. The development of cataracts and epiretinal membranes in a diabetic population are not unusual and are commonly addressed with surgical intervention.

At three months, 29% of higher dose patients and 20% of low dose patients had gained 10 or more letters in BCVA compared to baseline. 18% of the higher dose and 20% of the low dose patients had gained 15 or more letters.

From a safety perspective, 12% of patients in the higher dose group and no patients in the low dose had a recorded intraocular pressure (IOP) of above 30mmHg during the six months. This was unchanged from the three month read-out. At six months, two patients in each group had experienced an adverse event related to cataract formation and one additional patient in each group underwent cataract extraction.

Iluvien is an intravitreal insert (formerly known as Medidur) being developed for the treatment of DME, a disease of the retina that affects individuals with diabetes. DME is one of the leading causes of blindness in people under 65 years of age. Each Iluvien insert is designed to provide a sustained therapeutic effect, up to 24 months for the low dose and up to 36 months for the higher dose. Iluvien is inserted into the patient's eye with a 25-gauge injector system, which allows for a self-sealing wound. This insertion is very similar to an intravitreal injection, a procedure commonly employed by retinal specialists.

The early readout from this PK study and comparison with Bausch & Lomb's Retisert(R) (also developed by pSivida) provides further insight into the dose-response of Iluvien. Retisert releases the same drug, FA, as Iluvien but at a higher dose and faster release rate (initially 0.6 ug per day). In a similarly sized clinical trial of Retisert in DME at 6 months, 27% of patients receiving Retisert had gained 10 or more letters of BCVA and 15% gained more than 15 letters(ii). Iluvien was designed with the hypothesis that by better device design it would be possible to achieve similar efficacy in DME to Retisert, while reducing side effects and improving ease of administration.

"This very encouraging six-month readout from the Iluvien PK study indicates continued improvement of visual acuity and continues to support the hypothesis that Iluvien, can have a substantial impact on DME while minimizing the side effects usually associated with corticosteroids," said Dr. Paul Ashton, Managing Director, pSivida Corp.

Data from the PK study is being evaluated on an ongoing basis with interim looks at months 3,6,12 18, 24 and 36. Except for the month 12 and final month 36 looks, when the database will be fully locked, interim evaluations are based on unaudited data. The last patient was enrolled in this study at the end of February 2008.

(i) The study of absorption, distribution, metabolism and excretion of a drug.

(ii) Data presented at the American Academy of Ophthalmology in 2002

About pSivida Corp.

pSivida is a drug delivery company committed to the biomedical sector, with a primary focus on ophthalmology and oncology. pSivida has two products approved by the Food and Drug Administration (FDA): Retisert(R) for the treatment of uveitis and Vitrasert(R) for the treatment of AIDS-related cytomegalovirus (CMV) retinitis. pSivida has licensed both of these products and the technologies underlying them to Bausch & Lomb Incorporated. pSivida has one product in fully recruited Phase III clinical trials: Iluvien(TM), which delivers fluocinolone acetonide (FA) for the treatment of diabetic macular edema (DME), formerly known as Medidur FA for DME. pSivida has licensed certain drug delivery technology to Alimera Sciences, Inc. for the development of Iluvien and certain other ophthalmic products. pSivida has a worldwide collaborative research and license agreement with Pfizer Inc. under which Pfizer may develop additional ophthalmic products..

pSivida owns the rights to develop and commercialize a modified form of silicon known as BioSilicon(TM), which has potential therapeutic applications. The most advanced BioSilicon(TM) product candidate, BrachySil(TM), delivers a therapeutic P32, a radioactive form of phosphorus used to treat cancer, directly to solid tumors. pSivida recently completed a initial safety and efficacy clinical trial of BrachySil for the treatment of pancreatic cancer and has commenced a dose-ranging clinical trial.

pSivida's intellectual property portfolio consists of 64 patent families, 122 granted patents, including patents accepted for issuance, and 282 patent applications. pSivida conducts its operations from Boston in the United States, and Malvern in the United Kingdom .

SAFE HARBOR STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: Various statements made in this release are forward-looking and involve a number of risks and uncertainties. All statements that address activities, events or developments that we intend, expect or believe may occur in the future are forward-looking statements. The following are some of the factors that could cause actual results to differ materially from the forward-looking statements: inability to raise capital; continued losses and lack of profitability; inability to derive revenue from Retisert; termination of license agreements; inability to pay any registration penalties; inability to develop or obtain regulatory approval for new products; inability to protect intellectual property or infringement of others' intellectual property; inability to obtain partners to develop and market products; competition; risks and costs of international business operations; manufacturing problems; insufficient third-party reimbursement for products; failure to retain key personnel; product liability; failure to comply with laws; failure to achieve and maintain effective internal control over financial reporting; impairment of intangibles; volatility of stock price; possible dilution through exercise of outstanding warrants and stock options or future stock issuances; possible influence by Pfizer; and other factors that may be described in our filings with the Securities and Exchange Commission. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. We do not undertake to publicly update or revise our forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied in such statements will not be realized.