Rho Ventures: 2004 News

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Advancis Pharmaceutical Acquires Keflex Brand from Lilly

Acquisition to Begin Advancis' Sales of Antibiotic Products; Keflex to be Added to Company's Pulsatile Drug Development Pipeline

GERMANTOWN, MD
July 1, 2004

Advancis Pharmaceutical Corporation (Nasdaq: AVNC), a pharmaceutical company focused on developing and commercializing novel anti-infective products, today announced it has acquired the U.S. rights to the KeflexÂ brand of cephalexin from Eli Lilly and Company (Lilly) (NYSE: LLY).

Under the terms of the agreement, Advancis paid Lilly $11 million for the exclusive rights to manufacture, market and sell Keflex (cephalexin capsules, USP) in the United States. With the acquisition, Advancis acquires Keflex trademarks, technology, and new drug applications (NDAs) supporting the approval of Keflex. Following a transition period, Advancis will assume product inventory and begin marketing and distributing the Keflex brand.

Cephalexin is the third most prescribed outpatient antibiotic in the United States, with over 24 million prescriptions written and sales of $140 million in 2003. Keflex is the most-recognized brand of cephalexin in the United States with more than 15 million prescriptions written each year. Although the majority of these prescriptions are substituted with generic cephalexin, Lilly's Keflex net sales in 2003 were approximately $4 million. First introduced in the 1970s, Keflex is most commonly prescribed for skin and skin structure infections.

In addition to assuming sales and marketing responsibilities for Keflex, Advancis expects to begin clinical development of an enhanced cephalexin utilizing Advancis' proprietary once-a-day pulsatile dosing technology called PULSYS™. Cephalexin is currently dosed two to four times daily for a period of seven to fourteen days. Advancis' initial preclinical data support the Company's intention to develop a once-daily version of cephalexin. With the acquisition of Keflex, Advancis now has under development PULSYS versions of three of the top five most-prescribed antibiotics in the United States; the other products are amoxicillin, partnered with Par Pharmaceutical and amoxicillin/clavulanate, partnered with GlaxoSmithKline.

"The acquisition of Keflex is an illustration of our ongoing mission to develop and acquire antibiotic products that we believe can be improved through our novel pulsatile approach," said Edward M. Rudnic, Ph.D., chairman, president, and CEO of Advancis. "In addition, we believe the acquisition and subsequent sales of Keflex will enable us to prepare for the eventual commercialization of PULSYS products, including our recently announced lead product under development, Amoxicillin PULSYS."

The acquisition of Keflex marks a significant step in Advancis' transition to a fully integrated pharmaceutical company with commercial product sales. The Company expects to gain valuable experience in product sales and marketing, key account management, manufacturing, distribution, billing, and other essential commercial operations that could be leveraged for future proprietary products. Revenue from this product is expected to be used to develop the acquired assets and build these commercial capabilities in preparation for PULSYS products. Advancis expects to begin recognizing revenue from Keflex sales on July 1, 2004.

"Unlike most specialty pharma business models," Dr. Rudnic continued, "Advancis is in a unique position to greatly improve acquired products and ultimately launch re-invigorated brands. We believe that the near-universal recognition of the Keflex name and proven safety record for the compound will help pre-position the PULSYS version of the drug for launch."

The PULSYS technology has been developed to create anti-infective products that are taken once-daily, with a lower dose and a shorter duration of therapy. Cephalexin has been added to the Advancis preclinical product development pipeline and is the Company's tenth pulsatile antibiotic product program under preclinical or clinical development. Although preclinical data on Keflex PULSYS are promising, additional studies will be necessary to qualify cephalexin PULSYS as a clinical candidate. Advancis believes that cephalexin's relatively short half-life and rapid absorption make it a compelling candidate for the Company's proprietary pulsatile dosing approach. Additionally, limited indication overlap with other Advancis product candidates, the large number of cephalexin prescriptions, and the lack of brand competition in the cephalexin market make a PULSYS version of Keflex an attractive commercial opportunity.

About Keflex:
Keflex* (cephalexin capsules, USP) is a first-generation cephalosporin antibiotic shown to be active against strains of both gram-positive and gram-negative aerobes in vitro and in clinical infections. Keflex is indicated for treatment of the following infections: respiratory tract infections, otitis media, skin and skin structure infections, bone infections, and genitourinary tract infections. More information on Keflex and prescribing information are available at www.advancispharm.com/products/keflex .

About Advancis Pharmaceutical:
Advancis Pharmaceutical Corp. (Nasdaq: AVNC) is a pharmaceutical company focused on the development and commercialization of pulsatile drug products that fulfill substantial unmet medical needs in the treatment of infectious disease. The Company is developing a broad portfolio of anti-infective drugs based on its novel biological finding that bacteria exposed to antibiotics in front-loaded staccato bursts, or "pulses," are killed more efficiently and effectively than those under standard treatment regimens. Based on this finding, Advancis has developed a proprietary, once-a-day pulsatile delivery technology called PULSYS™. By examining the resistance patterns of bacteria and applying its delivery technologies, Advancis has the potential to redefine infectious disease therapy and significantly improve drug efficacy, shorten length of therapy, and reduce drug resistance versus currently available antibacterial products. For more on Advancis, please visit www.advancispharm.com.

This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. These statements are based on Advancis' current expectations and assumptions. These statements are not guarantees of future performance and are subject to a number of risks and uncertainties that would cause actual results to differ materially from those anticipated. The words, "believe," "expect," "intend," "anticipate," and variations of such words, and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward- looking. The actual results realized by Advancis could differ materially from these forward-looking statements, depending in particular upon the risks and uncertainties described in the Company's filings with the Securities and Exchange Commission. These include, without limitation, risks and uncertainties relating to the Company's financial results and the ability of the Company to (1) reach profitability, (2) prove that the preliminary findings for its product candidates are valid, (3) receive required regulatory approvals, (4) successfully conduct clinical trials in a timely manner, (5) establish its competitive position for its products, (6) develop and commercialize products that are superior to existing or newly developed competitor products, (7) develop products without any defects, (8) have sufficient capital resources to fund its operations, (9) protect its intellectual property rights and patents, (10) implement its sales and marketing strategy, (11) successfully attract and retain collaborative partners, and (12) retain its senior management and other personnel. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today's date. Advancis undertakes no obligation to update or revise the information in this announcement, whether as a result of new information, future events or circumstances or otherwise.