Proximagen Neuroscience plc - Hits milestone and triggers $6m equity investment from Upsher-Smith

14 Oct 2008

~ Positive pre-clinical results achieved ahead of schedule on PRX 1 programme ~

Proximagen Neuroscience plc (AIM: PRX), the drug discovery and development company focused on neurodegenerative diseases, is pleased to announce that it has hit its first milestone under the terms of the worldwide licensing agreement (the "Agreement") signed with Upsher-Smith Laboratories Inc ("Upsher-Smith") on 14 July 2008. This milestone triggers a $6 million (£3.5m*) equity investment in Proximagen at c.£2.27* per share, a premium of approximately 90% to the closing share price of Proximagen on Monday 13 October 2008.

The milestone was triggered ahead of schedule as Proximagen reported positive pre-clinical results on the PRX1 programme. Following this first equity investment, Upsher-Smith will hold 7.1% of the enlarged share capital of Proximagen.

The Agreement of 14 July 2008 covers the development and commercialisation of Proximagen's proprietary PRX1 programme for the symptomatic treatment of Parkinson's disease. As part of the Agreement, Proximagen has already received an upfront payment and over the course of the Agreement will receive milestone payments making the total deal worth up to $232 million (£134.1 million*), plus up to double-digit royalties on global product sales. Upsher-Smith will be responsible for the worldwide development and commercialisation of PRX1 under the direction of a joint steering committee on which there is representation from Proximagen.

Proximagen will issue 1,522,843 ordinary 1p shares of Proximagen Neuroscience plc
("Ordinary Shares") to Upsher-Smith. Application will be made to admit the Ordinary Shares to AIM with trading anticipated to start on or before 31 October 2008. Following the above issue, the Company's issued share capital will be 21,581,715 Ordinary Shares.

Commenting on the milestone, Mark Evenstad, President of Upsher-Smith Laboratories Inc, said: "Upsher-Smith is very pleased with the results of the pre-clinical studies undertaken as the milestone event triggering this equity investment. The results for the pre-clinical studies support going forward with worldwide development and commercialisation of the PRX1 programme. Upsher-Smith is committed to advancing pharmacotherapy and improving patients lives. The PRX1 programme will allow us to make great strides in this direction. In addition, our work with Proximagen in conjunction with the activities undertaken since signing the agreement, including the management and conduct of the pre-clinical studies undertaken during that period, has further enhanced our high regard for Proximagen. They have exhibited rigor and discipline in the utilisation and management of financial and human resources with regard to these activities. We are very enthusiastic about this venture with Proximagen and our substantial equity investment in Proximagen. Based on our experience to date, Proximagen management appears singularly committed to its stewardship of Proximagen's resources to create value for its
shareholders."

Commenting on the milestone, Kenneth Mulvany, CEO of Proximagen Neuroscience plc, said: "We are delighted to have reached this milestone and to be receiving a significant equity investment from our partner Upsher-Smith, ahead of schedule. Our PRX1 programme has shown strong results to date and we look forward to working with Upsher-Smith to progress this compound for Parkinson's disease into the clinic. Proximagen has a very strong cash balance which positions it competitively amongst its
peer group. With multiple strategic partnerships in place, I am pleased to report that Proximagen is now very well positioned for corporate growth. We will also continue to invest in our other programmes and exploit further commercial opportunities."

* Exchange rate used: £1=$1.73 (13 October 2008)

For further information, please contact:

 Proximagen Neuroscience plc                        Tel: 020 7848 6938
 Kenneth Mulvany, Chief Executive 
 James Hunter, Finance Director

 Buchanan Communications                            Tel: 020 7466 5000
 Mary-Jane Johnson, Tim Anderson, Catherine Breen

 Canaccord Adams Limited (NOMAD)                    Tel: 020 7050 6500
 Chris Theis, Adria Da Breo Richards

About Proximagen
Proximagen is a drug discovery and development company that is primarily focused on the identification and subsequent out-licensing of novel therapeutics to improve the quality of life for patients suffering from neurodegenerative disease such as Parkinson's disease and Alzheimer's disease.

Proximagen is building a development pipeline to address the significant medical needs of these patients and has made substantial progress in five proprietary programmes. Proximagen anticipates out-licensing its programmes at early stages up to and including Phase II proof of concept studies and commercialising carefully selected in-licensed and collaborative programmes.

Proximagen joined the AIM market of the London Stock Exchange in March 2005. For more information please visit the Company's web site: www.proximagen.com.

PRX1 - Meeting a high unmet market need
Proximagen's PRX1 programme has been designed to provide a 'super' version of L-DOPA, the current gold-standard treatment for PD, to overcome the problems associated with the current treatment of PD. The results from the PRX1 development programme are deemed by scientific experts to be highly significant and the drug candidate has the potential to become the drug of first choice for addressing motor symptoms associated with PD. The worldwide market for PD therapeutics is estimated to be valued at more than $2.5 billion per annum (source: IMS Health).

The PRX1 drug candidate has shown significantly increased biological half-life (the period of time required for the concentration or amount of drug in the body to be reduced by one-half) in pre-clinical studies compared with L-DOPA. This could represent a significant advancement in the current treatment of patients, since the existing L-DOPA controlled release preparations increase the half-life of L-DOPA by less than two hours. By increasing the plasma half-life in patients, the desired effect of Proximagen's drug candidate, compared to the traditional L-DOPA, would be to reduce the peak and trough blood levels associated with involuntary movements in PD, reduce the number of daily doses needed and thereby improve patients' sleep and general quality of life.

Furthermore, in pre-clinical studies, the administration of the PRX1 drug candidate at dose equivalents to L-DOPA produced maximal reversal of motor disability with virtually no dyskinesia side effects.

About Upsher-Smith
Upsher-Smith Laboratories is a U.S.-based company which develops, manufactures and markets pharmaceuticals in a number of therapeutic areas.  Upsher-Smith's team of 650 employees are singularly committed to improving patient's lives through improved drug therapies. The evolution of Upsher-Smith is driven by the ever-changing needs of patients, physicians, pharmacists, and healthcare organizations. Upsher-Smith perspective is not "more products," but the right products that make people's lives better. At every level of our business, we are driven to be the best.

Upsher-Smith is highly focused on building a strong neurology pipeline. Research and
Development efforts are targeted towards Parkinson's disease, Epilepsy and Alzheimer's disease. In addition, Upsher-Smith has many commercialized products in the areas of women's health, cardiology and dermatology. Strategically, Upsher-Smith is committed to developing and providing innovative, novel pharmacotherapy that creates a significant improvement in the lives of patients suffering from diseases of the Central Nervous System.

For more information, please visit Upsher-Smith's website at www.upsher-smith.com.

^ Top of page