Company says Cytopia’s claim that there will be a $95 million shortfall is incorrect.

Avexa has called a statement from Cytopia referencing a $95 million shortfall in the funding requirements of a proposed merger with Progen Pharmaceuticals inaccurate and misleading. Cytopia is currently trying to facilitate a merger with Progen.

According to previous statements released by Avexa, the merger with Progen would bring $60 million in cash resources to finance the estimated $45 million Phase III trial cost of ATC, an anti-HIV drug candidate, up to the 24-week data milestone. The company expects this milestone to be reached in the second half of 2010.

On February 9, Cytopia released a statement saying that the four-year Phase III trial would need $155 million, leaving the $95 million shortfall. Cytopia also claimed Avexa initially adopted a high-risk strategy to fund a different Phase III trial, raising approximately $100 million, only to cancel the study. Because of these reasons, Cytopia suggested Progen’s shareholders vote against the merger with Avexa.

“There is no shortfall,” says Julian Chick, Ph.D., and CEO of Avexa. “We are steadfast in the belief that the 24-week data milestone is the key value driver for both Avexa and Progen shareholders. We hope that shareholders will take into account the significant potential within the proposal to enhance shareholder value and acknowledge the fact that the merger provides the runway needed to achieve this goal. Independent valuer BDO believes the merged entity share price will trade between $2 and $3 per share, a considerable increase from current levels.”

Avexa entered into the merger agreement with Progen in December 2008. The Melbourne-based Avexa focuses on the development and commercialization of small molecules for the treatment of infectious diseases. With operations in Australia and the U.S., Progen develops small molecules for the treatment of cancer.


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