COLEY PHARMACEUTICAL GROUP ANNOUNCES $35 MILLION PRIVATE FINANCING Funds to Support Ongoing Clinical Development of Coley’s CpG TLR9 Agonists for Cancer and Infectious Disease

WELLESLEY, MA, 25 August 2003 - Coley Pharmaceutical Group, Inc. today announced that it recently closed on $30 million of a $35 million placement of preferred stock; a $5 million tranche will close within the next month. The funding was led by Thomas, McNerney & Partners with additional funds from Venrock Associates, both being new investors in Coley. Existing investors participating in the round include Techno Venture Management (TVM), and Global Life Science Ventures. In conjunction with the financing, James E. Thomas of Thomas, McNerney & Partners, Anthony B. Evnin, Ph.D., of Venrock Associates and Christoph Schroder, Ph.D. of JSB Partners will join Coley’s Board of Directors.

Coley will apply these funds to continue the development of ProMune™, the company’s lead anti-cancer compound, which is in a randomized, controlled, multi-center Phase II clinical trial in non-small cell lung cancer and will shortly enter a randomized, controlled, multi-center Phase II clinical trial in melanoma.  ProMune is currently being studied in multiple cancer indications as both a monotherapy and combination therapy. Coley will also use proceeds from this financing to initiate clinical studies of CpG 10101, the company’s lead anti-viral drug candidate to treat Hepatitis C. In addition, money raised in this round will be used to maintain Coley’s leadership position in the development of proprietary CpG TLR9 agonist technologies, intellectual property and products.

“I view the investment by Thomas, McNerney, Venrock and our existing shareholders as a strong vote of confidence by a world-class group of investors in Coley’s product-driven strategy and a validation of our leading position in CpG products, a new class of drugs.  Coley is at an exciting point of product development as ProMune is producing anti-tumor responses in several advanced cancers in the clinic,” said Robert L. Bratzler, Ph.D., Coley ‘s President and Chief Executive Officer.  “With this additional funding we can also aggressively pursue the clinical evaluation of CpG 10101, our lead TLR9 agonist antiviral drug candidate, which works by inducing the endogenous production of interferon-a’s.  We plan to move CpG 10101 into the clinic later this year.”

“Coley’s technology is broadly applicable to many large markets and has proven its merits in a variety of clinical settings,” said James E. Thomas, Managing Partner of Thomas, McNerney & Partners. “We also believe that Coley is one of a handful of companies that has the validation of strong partners like GlaxoSmithKline and Aventis, but also has maintained full rights for the bulk of its potential applications. Finally, we think Coley has a very impressive patent portfolio in one of the most exciting areas of immunology.”

Board of Directors Updates
Mr. Thomas, along with Drs. Anthony Evnin of Venrock Associates and Christoph Schr�der of JSB Partners will join Coley’s Board of Directors.

Prior to co-founding Thomas, McNerney & Partners, James Thomas led E.M. Warburg, Pincus & Co., L.L.C.’s health care technology private equity practice.  During his 12-year tenure at Warburg, he was directly involved in portfolio company investments in American Medical Systems Holdings, The Medicines Company, NeXagen, Inc., Oxford GlycoSciences, plc, Transkaryotic Therapies, Inc., Visible Genetics, Wright Medical Group, Inc. and Xomed Surgical Products. Mr. Thomas is currently a board member of The Medicines Company, Transkaryotic Therapies and Wright Medical.

Tony Evnin is Managing General Partner of Venrock Associates. He has led financings of many major biotechnology companies over the last 27 years. Dr. Evnin presently serves on the boards of Caliper Technologies, Sonic Innovations, and several private companies including Icagen, Infinity Pharmaceuticals, Memory Pharmaceuticals and Sunesis Pharmaceuticals. He led Venrock's investment in Athena Neurosciences, Centocor, Genetics Institute, IDEC Pharmaceuticals, IDEXX Laboratories, and Sepracor.

Christoph Schroder joined JSB Partners as a partner in April 2001, from BASF Pharma where he was a member of the Executive Board and President, Corporate Operations.  Previously, Dr. Schroder was a director of the Treuhandanstalt, the governmental agency charged with restructuring East German industry following reunification where he was responsible for executing more than 75 divestiture transactions in a range of industries. Dr. Schoder is currently a member of the Supervisory Board of Mulligan BioCapital AG.

About Coley Pharmaceutical Group
Coley Pharmaceutical Group is developing several classes of targeted immunoregulatory drugs with broad potential applications in cancer, asthma, allergy and infectious diseases.  Coley’s CpG TLR9 agonists activate the human immune system to prevent or fight disease. Coley’s lead anti-cancer candidate, ProMune, is being studied in Phase II trials for several different cancer indications; CpG 10101, Coley’s lead anti-viral candidate, is being developed for the treatment of Hepatitis C; and CpG 7279 is being developed with Aventis Pharmaceuticals as part of a development and licensing agreement for the treatment of asthma and allergic rhinitis. In addition to the Aventis partnership, Coley has two license agreements with GlaxoSmithKline for the use of certain CpG TLR9 agonists in specified preventive and therapeutic infectious disease vaccines and certain therapeutic cancer vaccines.  Coley’s patent portfolio includes 72 U.S. patents and patent applications and their worldwide counterparts, including ten issued U.S. patents. Coley is a private company with operations in the United States, Germany and Canada. For further information, please visit www.coleypharma.com.

For More Information Contact:
Robert Bratzler, Ph. D.
President and Chief Executive Officer
Coley Pharmaceutical Group
781/431-9000, ext. 1221
rbratzler@coleypharma.com

Karen Bergman or Michelle Corral
BCC Partners (US)
415/794-8662 or 650/575.1509
kbergman@bccpartners.com or mcorral@bccpartners.com