Afexa Life Sciences Inc.

Afexa Life Sciences Inc.

August 30, 2011 09:27 ET

Afexa Agrees to Support an Offer by Valeant Pharmaceuticals

EDMONTON, ALBERTA--(Marketwire - Aug. 30, 2011) - Afexa Life Sciences Inc. ("Afexa" or the "Company") (TSX:FXA)- the maker of COLD-FX®- today announced that it has entered into a definitive acquisition support agreement (the "Agreement") with 1625907 Alberta Ltd. ("Acquireco"), a subsidiary of Valeant Pharmaceuticals International, Inc. ("Valeant") pursuant to which Acquireco has agreed to acquire all of the outstanding common shares of Afexa for $0.71 per share in cash (the "Valeant Offer"). The Valeant Offer represents a premium of approximately 30% to the 30-trading day volume weighted average closing price on the Toronto Stock Exchange, a 49% premium over the closing price the day before the hostile bid (the "Paladin Bid") from Paladin Labs Inc. ("Paladin") and a 29% premium to the $0.55 cash consideration under the Paladin Bid or a 49% premium to the share consideration alternative of 0.013 of a Paladin common share, based on the last trading day's closing price. The transaction, which values Afexa at approximately $76 million, will be structured by way of take-over bid. As part of the Agreement, Afexa has a 30 day "go shop" period during which the Company and its advisors are permitted, subject to certain conditions, to solicit and engage in discussions and negotiations with respect to potential competing acquisition proposals that may lead to a superior proposal. The go-shop period ends on September 29, 2011. The Agreement includes a right by Valeant to match any superior proposals and payment by Afexa to Valeant of a termination fee of $3.75 million in certain circumstances including in the event that Afexa gives notice to terminate the Support Agreement to enter into a superior proposal.

Based on the recommendation of the Special Committee and advice from its advisors, including an opinion from Scotia Capital Inc. as financial advisors to Afexa, that the consideration to be offered under the Valeant Offer is fair, from a financial point of view, to Afexa's shareholders, Afexa's Board of Directors unanimously recommended entering into the Agreement and recommends that shareholders accept the Valeant Offer. The Board has been aggressively pursuing various alternatives and has determined that supporting the Valeant Offer on these terms is in the best interests of Afexa.

William B. White, Chairman of the Board of Directors of Afexa said "The Board is pleased that Valeant has come forward with an offer that is significantly higher than Paladin's hostile bid and that they recognize the situation Afexa and the Board finds itself in as a result of that hostile bid by affording us a 30 day "go shop" period. We are pleased to have the support of Valeant's management team and board of directors for a transaction that we believe delivers significantly more value to our shareholders and should deliver significant benefits to our customers and employees. Valeant is being cooperative and sensitive to our situation. We appreciate their significant effort to get to the position of making this offer and understand their need to be compensated in the event a superior proposal does evolve through our process."

Concurrently with the execution of the Agreement, directors and officers of Afexa have entered into lock-up agreements with Valeant, pursuant to which they have agreed to deposit all the Afexa common shares held by them to the Valeant Offer, representing in the aggregate 8.80% of the common shares on a fully-diluted basis.

After September 29, 2011, Afexa is subject to a "no-shop" restriction on its ability to solicit third party proposals, provide information and engage in discussions with third parties, other than certain parties that have submitted a binding superior acquisition proposal prior to the expiration of the go-shop period and certain third parties that make an unsolicited acquisition proposal which the Afexa Board determines in good faith constitutes or is reasonably expected to result in a superior acquisition proposal.

The full and important details of the Valeant Offer will be included in the formal offer and takeover bid circular, which is expected to be mailed to Afexa shareholders by September 9, 2011. The offer will be open for acceptance for a period of not less than 35 days and will be conditional upon, among other things, acceptance by holders of at least 66 2/3% of the outstanding common shares on a fully diluted basis and receipt of all third party approvals.

Provided that the minimum condition is met and Valeant takes up and pays for the Afexa common shares tendered, Valeant is expected to seek to acquire the remaining outstanding Afexa common shares pursuant to a subsequent acquisition transaction or compulsory acquisition, as applicable.

A copy of the Agreement will be filed with the Canadian securities regulators and will be available at the Canadian SEDAR website at

Afexa is being represented by Fraser Milner Casgrain LLP; the Special Committee of Afexa is represented by Osler, Hoskin & Harcourt LLP, while Valeant is being represented by Stikeman Elliott LLP.

Shareholders who want to withdraw shares that have been deposited to the Paladin Bid should contact Georgeson Shareholder Communications Group Inc., the information agent retained by Afexa, North American toll free at 1-866-676-3005 or via e-mail at

About Valeant Pharmaceuticals International, Inc.

Valeant Pharmaceuticals International, Inc. is a multinational specialty pharmaceutical company that develops, manufactures and markets a broad range of pharmaceutical products primarily in the areas of neurology, dermatology and branded generics. More information about Valeant can be found at

About Afexa Life Sciences Inc. (TSX:FXA)

Afexa Life Sciences Inc., founded in 1992, strives to deliver the most trusted health brand on the planet through pioneering evidence-based natural medicines that empower people to achieve their health potential. The Company's patented ChemBioPrint® discovery and standardization technology enables the development of effective and safe medicines from complex natural sources, while ensuring reliable health benefits and batch-to-batch consistency. COLD-FX®, a ChemBioPrint product, is the Company's flagship product and Canada's leading over-the-counter (OTC) cold and flu remedy. It is officially indicated in Canada to help reduce the frequency, severity and duration of cold and flu symptoms by boosting the immune system. COLD-FX has a product license (NPN) and is supported by scientific evidence, including randomized, double-blind, placebo-controlled clinical trials. The Company recently launched COLDSORE-FX in Canada and has a range of polymolecular drugs at various clinical and pre-clinical development stages. This product pipeline includes COLD-FX pediatric, AFX-2 for Chronic Lymphocytic Leukemia, Dilexaponan for cholesterol management, HT-1001 for Oxidative Stress and a product for blood glucose management.

Advisory Regarding Forward-Looking Statements

This news release contains forward-looking information (as defined in the Securities Act (Alberta)) that is based on expectations, estimates and projections as of the date of this news release. These forward-looking statements can often, but not always, be identified by the use of forward-looking terminology such as "plans", "predicts", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases, or statements that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved.

Examples of such forward-looking statements in this news release include, but are not limited to, expectations as to the Valeant Offer, Afexa's ability during the 30-day "go-shop" period to find a superior proposal, the view of Afexa value, the mailing date of the take-over bid circular, applicable government and regulatory approvals, receipt of the change of control consent and other closing conditions and the expectations of Valeant's actions once the minimum conditions are met. Actual results and developments (including earnings and cash flow) are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this News Release.

Forward-looking statements contained in this news release are based on a number of assumptions that may prove to be incorrect, including, but not limited to expectations related to future sales of commercialized products, the timing, duration and results of clinical trials, the timing and results of regulatory reviews, the safety and efficacy of Afexa's product candidates and the indications for which Afexa's product candidates might be developed; competitive conditions in the life sciences and technology industry; general economic conditions; changes in laws, rules and regulations applicable to Afexa.

In addition to being subject to a number of assumptions, forward-looking statements in this news release involve known and unknown risks, uncertainties and other factors that may cause actual results and developments to be materially different from those expressed or implied by such forward-looking statements, including the risks identified in the filings by Afexa with the Canadian provincial securities regulatory authorities, including Afexa's annual information form for the fiscal year ended March 31, 2011.

The Company believes that the expectations reflected in the forward-looking statements contained in this news release are reasonable as at the date hereof, but no assurance can be given that these expectations will prove to be correct. In addition, although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Accordingly, you should not place undue reliance on any forward-looking statements contained in this news release.

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