Epix and Predix Announce Merger Agreement
Monday, April 3, 2006
EPIX Pharmaceuticals, Inc. (NASDAQ: EPIX), a developer of innovative pharmaceuticals for magnetic resonance imaging (MRI), and Predix Pharmaceuticals Holdings, Inc., a privately-held pharmaceutical company focused on the discovery and development of novel, highly selective, small-molecule drugs that target G-Protein Coupled Receptors (GPCRs) and ion channels, today jointly announced the signing of a definitive merger agreement whereby EPIX will acquire Predix in a transaction valued at approximately $90 million, including the assumption of net debt at closing. In addition, Predix shareholders will be paid a possible milestone payment of $35 million in cash, stock or a combination of both based on the achievement of certain clinical or strategic milestones within a specified period of time. The combined company would have a broad pipeline of product candidates, an experienced management team and approximately $125 million in cash and marketable securities at the end of the first quarter. In addition to VasovistT, EPIX’s novel blood pool imaging agent, which is expected to be marketed in Europe by Schering AG and is the subject of ongoing discussions with the FDA regarding its path forward in the United States, the combined company will have:· PRX-00023 in Phase III for anxiety, and expected to enter Phase II for depression in 2007; · EP-2104R in Phase II for imaging arterial and venous blood clots; · PRX-03140 which has completed Phase Ib trials and is expected to enter Phase II for Alzheimer’s disease later this year; · PRX-08066 in Phase Ib development for pulmonary arterial hypertension; and · a portfolio of several pre-clinical product candidates. The intention of the combined company is to license its later-stage products to larger pharmaceutical or biotechnology companies at a point where it can maximize the value of these products; discussions regarding these potential partnerships have been initiated and are ongoing.Michael Astrue, EPIX Interim CEO said, "One of our goals has been to enter into a transformative transaction to make EPIX a growth company once again, with a robust portfolio of product candidates. The EPIX Board of Directors has had the opportunity to evaluate many terrific privately-held therapeutics companies based on criteria we established last September. The result of this process is that we have selected Predix as the first and best choice to create a combined company that gives us many strong opportunities for growth. Predix has three promising products in the clinic, an innovative technology platform that has the ability to generate additional drug candidates, and a dynamic leadership team. We believe that this transaction will create a Massachusetts-based specialty pharmaceutical company with significant and lasting value." Michael G. Kauffman, M.D., Ph.D., President and CEO of Predix, commented, "This transaction combines EPIX’s approved product in Europe, Phase II candidate, preclinical compounds, operating infrastructure, cash and access to capital with Predix’s therapeutic product pipeline, which we believe will allow us to maximize the development and partnership opportunities for our lead therapeutic products. The combination of EPIX’s imaging product portfolio and our therapeutic product pipeline diversifies our risks and provides us with the potential for nearer-term cash flow through royalty revenues. I am excited about the combined capabilities of the two companies because I believe that their complementary nature will enhance our ability to improve patients’ lives by developing products that meet significant, unmet clinical needs and thereby drive significant shareholder value." Following the completion of the transaction, Dr. Kauffman will become CEO of the combined company and a member of the reconstituted Board of Directors, and Dr. Andrew Uprichard, currently EPIX’s President and COO, will become President of the combined company. Christopher Gabrieli will remain Chairman of the Board of the combined company, and four directors of Predix will be added to EPIX’s Board. In addition, EPIX expects to announce the addition of at least one more person to its Board of Directors in the second quarter of 2006.Under the terms of the agreement, which has been approved by the Boards of Directors of both EPIX and Predix, upon completion of the merger EPIX will issue to Predix stockholders shares of EPIX common stock such that Predix stockholders will own approximately 47% of the combined company’s shares outstanding, and EPIX stockholders will own approximately 53%. Predix options and warrants outstanding at closing will also be assumed by EPIX. Predix’s stockholders and option and warrant holders will be entitled to a milestone payment of $35 million upon Predix’s achievement of certain clinical or strategic milestones. At the option of the directors of EPIX, the milestone payment may be paid in cash, stock or a combination of both, although in no circumstance will the total amount of EPIX shares to be issued in the transaction, including upon the exercise of all assumed Predix options and warrants, exceed 49.99% of the combined company’s outstanding shares. The transaction will be structured as a tax-free exchange. The merger is subject to approval by both EPIX’s and Predix’s stockholders, regulatory approval and other closing conditions, and is expected to close in June or July of 2006. Predix stockholders holding approximately 40% of Predix’s voting shares have agreed to vote their shares in favor of the merger. Upon closing, Predix stockholders will have the right to receive 1.248509 shares of EPIX stock for each share of Predix common stock held by them at the closing of the transaction. In connection with the transaction, EPIX will issue approximately 23.275 million shares, including shares underlying Predix’s outstanding options and warrants. In addition, EPIX expects to assume approximately $7.8 million in net debt at the closing of the transaction. Upon the consummation of the transaction, EPIX will have approximately 43.5 million common shares outstanding and it is expected that EPIX’s common stock will continue to trade on the NASDAQ National Market System under the symbol "EPIX".

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