Entelos Inc - Acquisition of Iconix


Foster City, CA--(Marketwire - August 30, 2007) -


For immediate release                                  30 August 2007

                           ENTELOS, Inc
                   ("Entelos" or "the Company")

              Entelos Acquires Iconix Biosciences, Inc.

Foster City, CA, August 30, 2007 - Entelos, Inc. (LSE: ENTL), a leading life sciences company that leverages its proprietary in silico disease models, known as PhysioLab® platforms, to develop drugs and support pharmaceutical R&D, is pleased to announce that it has entered into an agreement to acquire Iconix Biosciences, Inc. ("Iconix"), a privately held predictive toxicology company located in Mountain View, California, in an all-share transaction. The expected effective date of the acquisition is 31 August 2007.

"We believe the combination of our predictive efficacy models with Iconix's toxicology expertise can create a new paradigm for discovering and developing drugs," commented James Karis, President and CEO of Entelos, Inc. "Drug failures are often due to efficacy or toxicity issues, and while Entelos' predictive disease models address efficacy, Iconix's toxicology databases help to address toxicities. In addition, Entelos' recently announced collaboration with the FDA to build a model of drug-induced human liver injury to identify patients at risk for developing hepatotoxicity and the addition of Iconix will expand our capability for drug safety assessment."

Jim Neal, CEO of Iconix stated: "We believe the merger of our predictive toxicology services into Entelos creates the best value for our shareholders. By combining our powerful approaches to better understand efficacy, safety, and new drug uses, the expanded company will be well positioned to take advantage of the synergies and achieve greater commercial success."

The initial consideration for the acquisition is to be satisfied by the issue of up to 12,776,658 Entelos shares (to be adjusted for net working capital) and a potential maximum earn out payment of $25.0 million if certain financial milestones are achieved. Such deferred consideration is to be also satisfied in Entelos shares, which will be based on a 10-day average closing price for the period prior to an earn out payment.


Highlights of the acquisition:


- Entelos is to acquire Iconix Biosciences Inc., a leading provider of
  toxicology data and services

- Initial consideration of up to $14.1 million (to be adjusted for net
  working capital) will be satisfied by the issue of up to 12,776,658   
  Entelos shares based upon an Entelos share price of 55 pence. The 
  closing price on 29 August 2007, being the latest practicable date 
  prior to this announcement, was 32.5 pence and based on this closing 
  price, the initial consideration for Iconix is valued at up to $8.3 
  million.

- If certain financial milestones are achieved by Iconix one year after
  the acquisition, a maximum earn out payment of $25.0 million will be
  satisfied by the issue of Entelos shares, which will be based on a 10-
  day closing price for the prior period

- Iconix's predictive toxicology capability combined with Entelos'
  predictive in silico disease models will address the pharmaceutical
  industry's two biggest issues around failures: safety and efficacy

- Iconix's DrugMatrix system has been installed at the U.S. Food and Drug
  Administration (FDA) for use by the Center for Drug Evaluation and 
  Research (CDER) to evaluate voluntarily genomic data submissions. In 
  addition, Iconix is a member of the Predictive Safety Testing 
  Consortium, which is developing data and processes to support the 
  regulatory use of new safety biomarkers

- This acquisition of Iconix, as well as Entelos' collaboration with the
  FDA to develop a predictive model of drug-induced human liver injury,
  expands the combined companies' reach into safety assessment

- Iconix's technology will also add significant new capabilities for
  translational medicine and for finding new uses for existing drugs and 
  drug combinations

Iconix is the leading provider of toxicogenomic reference information used by pharmaceutical companies to prioritise chemical compounds in development and minimise or eliminate toxicity. In traditional drug development, safety assessment of drug candidates is performed in vivo in laboratory animals only after lead compounds have been selected and initial efficacy studies have been completed. As a consequence, adverse events and potential side effects of a chemical compound or compound series are often discovered relatively late in the development process. Iconix provides core toxicology databases that contain gene expression patterns for hundreds of drug compounds with known toxicities that can be used to help predict and rapidly test novel molecules for potential toxicities using much shorter and faster in vitro (in a test tube) studies.

Iconix will become part of Entelos' Technology and Services division. As a consequence of the acquisition, Entelos anticipates consolidating certain administrative and operational positions at Iconix to Entelos' headquarters in Foster City, California. Mr. Neal will join Entelos as the company's Chief Business Officer.

Transaction details

The closing initial payment is up to $14.1 million, adjusted for net working capital, to be satisfied by the issue of up to 12,776,658 Entelos shares, with a reference price of 55 pence per share, to Iconix shareholders for the entire share capital of Iconix. Based upon the closing share price of the Company of 32.5 pence as at 29 August 2007, being the latest practicable date prior to this announcement, the initial payment for Iconix is valued at up to $8.3 million.

If certain financial milestones are achieved following closing, Entelos shares will be issued upon the occurrence of certain events for the earn out worth up to a maximum of $25 million. The total number of shares to be issued for the earn out will be calculated using a 10-day average closing price for the period prior to any earn out payment.

Iconix's major investors, who as a result of the transaction will have an interest in Entelos shares, are Abingworth Management, Institutional Venture Partners, Kleiner Perkins Caufield and Byers, and MDS Pharma Services.

All of the shares to be issued in connection with the initial consideration will be subject to a lock up agreement that provides that subject to certain limited exemptions (including with the prior written consent of Entelos) the issued shares will not be disposed of for 12 months following the expected effective date of the merger of 31 August 2007. Earn out shares issued one year after the closing will be subject to a six-month lock up from the date of issue.

Under US GAAP rules, for the year ended 31 December 2006, Iconix reported $4.9 million in revenues and a loss of $11.2 million with gross assets of $7.6 million. Entelos expects Iconix to be cash-flow neutral on a pro-rata cash basis going forward and to add about $1 million to 2007 recognized revenues.

Following the acquisition, an application will be made for the newly issued Entelos shares to be admitted to AIM. Entelos expects to make an announcement in due course of the exact number of shares to be issued once the books have been closed for Iconix as of 31 August 2007.


For further information please contact:

Entelos, Inc.
 
James Karis, President and CEO       Tel: +1 650 572 5400
                                                                            
Alan Blazei, CFO

Jill Fujisaki, VP Investor Relations

Iconix Biosciences

Jim Neal, CEO                        Tel: +1 650 567 5500
                                                                            

Evolution Securities

Bobbie Hilliam, Associate Director   Tel +44 (0) 20 7071 4300
                                                                       
Tim Worlledge, Director

Buchanan Communications

Lisa Baderoon / Mary-Jane Johnson    Tel +44 (0) 20 7466 5000
                                                                       

Notes for Editors

About Entelos

Entelos, Inc. (www.entelos.com) is a US-based life sciences company applying next-generation predictive technologies to revolutionize the way medicines are discovered, developed, and utilized. The Company leverages its proprietary in silico disease models, known as PhysioLab platforms, to help select and develop compounds, assess safety, optimize clinical trials and combination therapies, evaluate in-licensing candidates, and better position products in competitive markets. In addition to internal drug programs in rheumatoid arthritis and women's health, Entelos partners with global pharmaceutical companies and provides customized technology and research services in cardiovascular diseases, asthma, obesity, diabetes, rheumatoid arthritis, hematopoeisis (anemia), cholesterol metabolism, skin sensitization, and liver toxicity. The company recently launched realabTM, a simulation tool to provide web-based access to Entelos' powerful PhysioLab platforms via the Internet.

About Iconix

Iconix Biosciences Inc., the leader in toxicogenomics products and services, has pioneered the integration of chemistry and genomics to enable the pharmaceutical and other industries to develop safer drug candidates and compounds. The company's technologies increase the odds of advancing the right candidates to the clinic, reduce attrition rates in late-stage trials and help keep the costs of drug discovery in check. Iconix provides reference systems and universally recognized expertise to predict safety liabilities, side effects and mechanisms of toxicity for drug candidates and environmental chemicals. Iconix's DrugMatrix system has been installed at the U.S. Food and Drug Administration for use by CDER (Center for Drug Evaluation and Research) scientists and reviewers in a range of toxicogenomics applications and is used by the FDA to evaluate voluntarily genomic data submissions. The company has major research collaborations and technology alliances with Bristol Myers Squibb, Abbott Laboratories and Eli Lilly and has strategic partnerships with leading life sciences companies including Affymetrix and GE Healthcare.


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