Genaera Corporation Announces First Quarter Financial Results

Genaera's research and development expenses for the quarter ended March 31, 2008 were $3.8 million compared to $3.5 million for the same period in 2007. The increase was due to increases in expenses related to the trodusquemine (MSI-1436) program for obesity and type 2 diabetes and a net increase in indirect expenses due to an increase in stock-based compensation related to stock options granted, partially offset by decreases in realignment costs and other indirect costs. These increases were partially offset by decreases in expenses related to the squalamine program for the treatment of wet age-related macular degeneration, the LOMUCIN(TM) program for the treatment of cystic fibrosis and the anti-IL9 antibody program.

Genaera's general and administrative expenses for the quarter ended March 31, 2008 were $2.2 million compared to $1.4 million for the same period in 2007. The increase was due to increases in stock-based compensation expense and an increase in legal fees.

The Company's cash, cash equivalents and short-term investments balance was $17.1 million at March 31, 2008.

About Genaera

Genaera Corporation is focused on advancing the science and treatment of metabolic diseases. The Company has significant market opportunities with a first-in-class molecule, trodusquemine (MSI-1436), that has the potential to redefine the treatment paradigm for obesity and type 2 diabetes and is presently in a phase 1 trial in obesity. In addition, Genaera has a value- driven, fully out-licensed partnership with MedImmune, Inc. for a second core program that is presently undergoing phase 2 clinical testing in asthma. Genaera is committed to directing resources to its core program and the aggressive clinical development of its key assets to build stockholder value. For further information, please see our website at http://www.genaera.com.

This announcement contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties, known and unknown. Forward-looking statements reflect management's current views and are based on certain expectations and assumptions. Such statements include, among others, statements regarding the preliminary results, clinical development plans and prospects for Genaera's programs including trodusquemine (MSI-1436) and the IL-9 antibody program. You may identify some of these forward-looking statements by the use of words in the statements such as "anticipate," "believe," "continue," "develop," "expect," "plan" and "potential" or other words of similar meaning. Genaera's actual results and performance could differ materially from those currently anticipated and expressed in these and other forward-looking statements as a result of a number of risk factors, including, but not limited to: Genaera's history of operating losses since inception and its need for additional funds to operate its business; the costs, delays and uncertainties inherent in scientific research, drug development, clinical trials and the regulatory approval process; the risk that clinical trials for Genaera's product candidates including trodusquemine (MSI-1436) and the IL-9 antibody program may be delayed or may not be successful; the risk that Genaera may not obtain regulatory approval for its products, whether due to adequacy of the development program, the conduct of the clinical trials, changing regulatory requirements, different methods of evaluating and interpreting data, regulatory interpretations of clinical risk and benefit, or otherwise; Genaera's reliance on its collaborators, in connection with the development and commercialization of Genaera's product candidates; market acceptance of Genaera's products, if regulatory approval is achieved; competition; general financial, economic, regulatory and political conditions affecting the biotechnology and pharmaceutical industry; and the other risks and uncertainties discussed in this announcement and in Genaera's filings with the U.S. Securities and Exchange Commission, all of which are available from the Commission in its EDGAR database at www.sec.gov as well as other sources. You are encouraged to read these reports. Given the uncertainties affecting development stage pharmaceutical companies, you are cautioned not to place undue reliance on any such forward-looking statements, any of which may turn out to be wrong due to inaccurate assumptions, unknown risks, uncertainties or other factors. Genaera does not intend (and it is not obligated) to publicly update, revise or correct these forward-looking statements or the risk factors that may relate thereto.

                              GENAERA CORPORATION
                      CONDENSED STATEMENTS OF OPERATIONS
                                  (Unaudited)
                     (In thousands, except per share data)

                                                     Three Months Ended
                                                          March 31,
                                                    2008            2007

    Revenues                                      $ 1,309           $ 207

    Costs and expenses:
    Research and development                        3,838           3,470
    General and administrative                      2,185           1,432
                                                    6,023           4,902
    Loss from operations                           (4,714)         (4,695)
    Interest income                                   176             367
    Loss before income taxes                       (4,538)         (4,328)
    Income tax benefit                                281             147
    Net loss                                      $(4,257)        $(4,181)
    Net loss per share --
     basic and diluted                            $ (0.24)         $(0.24)

    Weighted average shares outstanding --
     basic and diluted                             17,463          17,443



                             CONDENSED BALANCE SHEETS
                                   (Unaudited)
                                  (In thousands)

                                            March 31, 2008   December 31, 2007

    Cash, cash equivalents and short-term
     investments                               $17,098            $20,900
    Prepaid expenses and other current
     assets                                        804                356
    Fixed assets, net                              344                374
    Other assets                                    56                 56
      Total assets                             $18,302            $21,686

    Current liabilities                         $2,499             $3,377
    Other liabilities                               63                 70
    Stockholders' equity                        15,740             18,239
    Total liabilities and stockholders'
     equity                                    $18,302            $21,686

SOURCE Genaera Corporation

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