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AGI Therapeutics plc signs $19 million exclusive license agreement with Axcan Pharma for delayed/controlled release omeprazole.

Dublin, Ireland, 27th September 2006 - AGI Therapeutics plc ("AGI" or the "Company") (AIM, IEX: AGI), a speciality pharmaceutical company focused on gastrointestinal drug products, today announces that it has entered into an exclusive license agreement with Axcan Pharma, Inc. ("Axcan") (NASDAQ: AXCA, TSX: AXP) for North American rights to AGI's delayed/controlled release omeprazole formulation, AGI-010. Axcan is a leading marketer of pharmaceutical products for gastrointestinal diseases and disorders in North America and Europe, with revenues in 2005 of over US $250 million.

Under the terms of the agreement, Axcan has been granted exclusive marketing rights to AGI-010 in the US and Canada in return for an initial license fee of US $1.5 million, further payments of US $17.5 million on the achievement of specified milestones, and royalties on product sales. The parties will be jointly responsible for and share certain development costs of AGI-010 up to and including its regulatory approval in the US. Axcan will be responsible for commercializing AGI-010 in the US and Canadian markets, while AGI will have an option to co-promote the product in the US. Axcan has been granted an option to license AGI-010 for markets outside North America and additional milestone payments could become payable to AGI in the event that Axcan exercises this option.

In addition to today's agreement, Axcan may elect to license rights from AGI to develop other controlled release PPI products using AGI's CHRONAB technology and intellectual property under a similar commercial structure.

AGI is developing AGI-010, a delayed/controlled release formulation of the proton pump inhibitor drug (PPI) omeprazole, based on its CHRONAB technology which it believes will optimize the treatment of nocturnal acid breakthrough (NAB), a common symptom of gastroesophegeal reflux disease (GERD). GERD is the most prevalent of the major gastrointestinal disorders and is most commonly treated with PPI drugs which achieve global annual sales in excess of US $20 billion. NAB is estimated to occur in at least 50 per cent of GERD patients on PPI therapy.

In March 2006, AGI announced the preliminary outcome of a combined human pharmacokinetics and pharmacodynamics study designed to characterize the in-vivo drug release profile, pharmacokinetics and the intra-gastric pH profiles of delayed release/controlled release formulations of omeprazole (AGI-010). Preliminary data from the study demonstrated that delayed/controlled release characteristics were clearly achieved. AGI has subsequently conducted a programme of formulation optimization to further enhance the drug release profile of AGI-010 and further studies will now be conducted on the optimized product in the course of the co-development to be undertaken by AGI and Axcan.

Commenting on the agreement, Dr John Devane, Chief Executive of AGI said:

"We are delighted to announce our first partnership agreement with Axcan. It fits very well with our business model of entering into development and commercialisation agreements for products that address larger, established markets. Axcan is an excellent choice of partner for our delayed/controlled release omeprazole formulation and we are confident that their extensive knowledge of developing and marketing products for the gastrointestinal market will contribute to commercial success. Nocturnal acid breakthrough continues to be a significant shortcoming of current PPI therapy for GERD patients and with AGI-010 we look forward to being able to better address the needs of these patients with a more effective and improved therapy."

Frank Verwiel, M.D., President and Chief Executive Officer of Axcan, added:

"We are pleased to combine AGI's expertise in product discovery with Axcan's capability in development and as a result be able to bring to the gastrointestinal market an innovative controlled release version of omeprazole, and are looking forward to our partnership. We are currently in the process of finalizing our development strategy and one of the alternatives we are evaluating is the option of qualifying for bioequivalence development under the US FDA regulations. Should the product qualify, this strategy could lead to accelerated development and launch of this innovative product."

Contact Information

For further information please see www.agitherapeutics.com

About GERD and NAB

GERD results in the reflux of gastric contents into the esophagus, causing symptoms (e.g. heartburn or acid regurgitation) that are sufficient to interfere with quality of life. NAB is defined as the presence of at least 60 continuous minutes of intragastric pH < 4 during the overnight period (10pm - 6am) in patients taking a PPI drug twice daily before meals.

GERD is the most common of the major gastrointestinal disorders and its prevalence in the general population is estimated to range from 20 to 40 per cent. Proton pump inhibitors are commonly used drugs in the treatment of GERD and are one of the largest selling drug classes with global annual sales in excess of US$20 billion. NAB is estimated to occur in more than 70 per cent of h.pylori-negative and in up to 50 per cent of h.pylori-positive patients on PPI therapy and modification of the dosage regime of existing PPI drugs has only had limited success in controlling the symptoms of NAB despite improving acid suppression.

About AGI Therapeutics plc

AGI is a speciality pharmaceutical company which is focused on the development and commercialisation of differentiated drug products for gastrointestinal (''GI'') diseases and disorders. AGI's common shares are listed on the Alternative Investment Market of the London Stock Exchange ("AIM") and on the Irish Enterprise Exchange of the Irish Stock Market ("IEX") as "AG1".

The Company has a portfolio of product candidates derived from the Known Molecular Entity (''KME'') approach to drug re-profiling and development. KME is a re-profiling methodology used by the Company to identify existing therapeutic drugs which typically have been marketed for a number of years, have established safety profiles and can be developed for new clinical indications or with improved profiles in their existing clinical indications. In this way, the Company seeks to reduce the risk, time and cost of new product development as compared to the development of new chemical entities.

AGI has developed a range of product candidates to treat a variety of prevalent GI diseases and disorders, including irritable bowel syndrome (IBS), functional dyspepsia, ulcerative colitis and gastro-esophageal reflux disease (GERD). The Company is targeting areas of the GI therapeutic drug products market for its product candidates where there are currently unmet medical needs or where the effectiveness of existing drug therapies can be further improved.

The Company has six clinical stage product candidates which are either isomers or new drug delivery formulations of existing approved drugs, and which have established safety and tolerability profiles in their currently approved clinical indications. These product candidates are all in clinical development, including five Phase II trials.

AGI intends to complete its ongoing clinical trials and, dependent on the results of these trials, the Company will initiate late stage clinical development of lead product candidates and will also seek to enter into licensing and development agreements with pharmaceutical companies so as to enhance the global market reach for its products and achieve optimal revenue and value opportunities for the Company.

About Axcan Pharma, Inc.

Axcan is a leading multinational specialty pharmaceutical company focused on gastroenterology. The company develops and markets a broad line of prescription products to treat a range of gastrointestinal diseases and disorders such as inflammatory bowel disease, irritable bowel syndrome, cholestatic liver diseases and complications related to pancreatic insufficiency. Axcan's products are marketed by its own specialized sales forces in North America and Europe. Its common shares are listed on the NASDAQ Global Market under the symbol "AXCA" and on the Toronto Stock Exchange under the symbol "AXP" .

Statements contained within this press release may contain forward-looking comments which involve risks and uncertainties that may cause actual results to vary from those contained in the forward-looking statements. In some cases, you can identify such forward-looking statements by terminology such as 'may', 'will', 'could', 'forecasts', 'expects', 'plans', 'anticipates', 'believes', 'estimates', 'predicts', 'potential', or 'continue'. Predictions and forward-looking references in this press release are subject to the satisfactory progress of research which is, by nature, unpredictable. Forward projections reflect management's best estimates based on information available at the time of issue.

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