Avexa Announces Release of the Independent Expert Report

MELBOURNE, Australia-(Business Wire)-February 5, 2009 - Avexa Limited (ASX:AVX) today released the Independent Expert’s Report prepared by Lonergan Edwards & Associates Limited. The report was commissioned for the purposes of Avexa shareholders’ assessment of the proposed merger of Avexa and Progen Pharmaceuticals Limited (ASX:PGL) (NASDAQ:PGLA). As part of the report, the Independent Expert valued the company as a whole both pre and post merger, including an estimate of the commercial value of apricitabine (ATC), and assessed the impact on shareholders of Avexa’s various options for advancing ATC through its Phase III trial. On the basis of the findings in the Independent Expert Report, the Board of Directors of Avexa reiterates its unanimous support for the Merger.

The Independent Expert concludes that, in the absence of a Superior Proposal, the Scheme of Arrangement with Progen is in the best interests of Avexa shareholders (being technically not fair when assessed based on ASIC Regulatory Guide 111, but being reasonable). The Independent Expert recommends that Avexa Shareholders approve the Scheme in the absence of a Superior Proposal.

Key findings of the report include:

The assessed current value of ATC is estimated between $151.4 million to $225.8 million¹.
Completion of the transaction, and the resulting removal of short-term funding requirements, is likely to result in the Merged Entity’s share price being re-rated (assuming comparable share market conditions) post completion of the merger. On this basis, the Independent Expert believes that the merged entity’s share price, expressed in Avexa terms, is likely to trade at a higher price than the Avexa share price prior to the announcement of the Scheme;
Successful completion of the week 24 Phase III milestone is likely to lead to a further material increase in the value of Avexa shares; and
As an indication of the upside potential of Avexa shares, the Independent Expert assessed the theoretical control value of Avexa shares is in the range of 44.4 cents to 58.6 cents prior to taking into account financing risks, dilution and “in-the-money” options. After the dilutionary impact of assumed future capital raising to fund ATC’s development costs up to the week 24 milestone, the Independent Expert assessed the control value of Avexa shares in the range of 21 cents to 41 cents.

“The Independent Expert Report highlights the tremendous market potential of ATC, which is clearly not reflected in Avexa’s current share price. The report is conservative regarding several aspects of ATC and we believe there is further upside for this program as well as the balance of Avexa’s portfolio,” said Julian Chick, PhD, Chief Executive Officer of Avexa. “This merger enables Avexa to remain on track with ATC’s development, continue partnering discussions, diversify its portfolio, and in the end, achieve its potential while generating meaningful value for shareholders in both the short and long term.”

Avexa expects to dispatch the Scheme Book containing the Independent Expert’s Report to shareholders in mid February 2009. A PDF copy of the report can be found on the Avexa website at www.avexa.com.au, under the ‘News’ heading. The shareholder meeting to consider the Merger is scheduled to be held on 20 March 2009. Today, Progen has lodged with the ASX its notice of meeting for its shareholder meeting and Progen’s Board of Directors reiterates its support for the merger. The Progen shareholder meeting is scheduled for 11 March 2009.

About Avexa

Avexa Limited is a Melbourne-based biotechnology company with a focus on discovery, development and commercialization of small molecules for the treatment of infectious diseases. Avexa has dedicated resources and funding for key projects including ATC, its HIV integrase program, its HCV program and an antibiotic program for antibiotic-resistant bacterial infections. The Company’s lead program is apricitabine (ATC), an anti-HIV drug, that has successfully completed the 48 week dosing of its Phase IIb trial and is currently in Phase III trials worldwide. www.avexa.com.au

About Progen

Progen Pharmaceuticals Limited is a globally focused biotechnology company committed to the discovery, development and commercialization of small molecule pharmaceuticals primarily for the treatment of cancer. Progen has built a focus and strength in anti-cancer drug discovery and development. Progen targets the multiple mechanisms of cancer across its three technology platforms, angiogenesis, epigenetics and cell proliferation. Progen has operations in Australia and the United States of America. www.progen-pharma.com

¹ The valuation of ATC is based on a discounted cash flow methodology adopting certain assumptions such as those relating to the probability of commercialisation, the sales price for ATC, the market potential, the terms of a partnership agreement (in particular the royalty rate), the operating costs required to reach the 24 week milestone and the discount rate.

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