Healthcare Industry News:  oral mucositis 

Biopharmaceuticals Oncology Mergers & Acquisitions

 News Release - October 12, 2006

Endo Pharmaceuticals Acquires RxKinetix, Inc.

Acquisition Broadens Pipeline With Supportive Care Oncology Products

CHADDS FORD, Pa., Oct. 12 (HSMN NewsFeed) -- Endo Pharmaceuticals Holdings Inc. (Nasdaq: ENDP ) announced today that its wholly owned subsidiary, Endo Pharmaceuticals Inc., has acquired all of the outstanding stock of RxKinetix, Inc., a privately held company headquartered in Boulder, Colo., that develops new formulations of approved products for oral mucositis and other supportive care oncology conditions. The company and its 21 employees will now operate as part of a newly created wholly owned subsidiary of Endo Pharmaceuticals Inc.

The transaction includes an up-front payment of up to $20 million, with the potential for up to an additional $95 million in earn-out payments based on clinical development and regulatory milestones. The acquisition is expected to be dilutive to Endo's 2006 adjusted earnings by approximately $0.02 per adjusted diluted share based on incremental research and development expense. This excludes transaction-related expenses and the one-time charge for the write-off of acquired in-process R&D expense of approximately $26 million, subject to final purchase price allocation, to be taken in the fourth quarter of 2006.

RxKinetix's lead product is RK-0202, a topical oral-rinse with the active ingredient formulated in its proprietary ProGelz® drug delivery platform. RK-0202 is in clinical Phase II for the prevention of oral mucositis (OM), painful mouth sores that often occur in cancer patients undergoing radiation and chemotherapeutic treatment. RxKinetix also has other products in early- stage development based on the ProGelz technology.

"The acquisition of RxKinetix is consistent with our strategic goal of expanding into therapeutic areas that are complementary to pain," said Peter A. Lankau, President and Chief Executive Officer of Endo. "Endo has expanded its commercial presence among oncologists with the recent launch of Opana® ER and Opana® tablets, and Rapinyl(TM), our quick-dissolving fentanyl tablet in development for breakthrough cancer pain, is currently in Phase III trials. A product such asRK-0202, if approved, would be a natural extension of this franchise, and we look forward to working with our new colleagues in the development of this and other cancer-related palliative care treatments in the RxKinetix pipeline. We intend to continue to seek similar specialist-focused opportunities in supportive care oncology and other complementary therapeutic areas."

Lankau added that Endo plans to conduct additional Phase II trials of RK- 0202 to continue to characterize the clinical profile of the product in the intended patient population -- head and neck cancer patients undergoing combination treatment of radiation and chemotherapy.

About oral mucositis

During the course of high-dose cancer therapy and bone marrow transplantation, patients often develop painful and debilitating oral inflammation, or mucositis, in the mouth. The resulting weight loss, dehydration and, in some cases, infection often lead to dose-limitation of chemotherapy and radiation therapy, and contribute considerably to cancer and transplant-related morbidity and mortality. Further, these side effects add to related medical costs by prolonging hospital stays, increasing antibiotic, fluid, and analgesic use, and requiring patients to receive parenteral nutritional support. Of the estimated 900,000 chemotherapy-treated patients in the United States, 400,000 may develop the debilitating complications of oral mucositis as a result of their treatments.

About Endo

Endo Pharmaceuticals Holdings Inc. is a fully integrated specialty pharmaceutical company with market leadership in pain management products. Through its Endo Pharmaceuticals Inc. subsidiary, the company researches, develops, produces and markets a broad product offering of both branded and generic pharmaceuticals, meeting the needs of healthcare professionals and consumers alike. More information, including this and past press releases of Endo Pharmaceuticals Holdings Inc., is available online at

Forward-Looking Statements

This press release contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, that are based on management's beliefs and assumptions, current expectations, estimates and projections. Statements that are not historical facts, including statements which are preceded by, followed by, or that include, the words "believes," "anticipates," "plans," "expects" or similar expressions and statements are forward-looking statements. Endo's estimated or anticipated future results, product performance or other non- historical facts are forward-looking and reflect Endo's current perspective on existing trends and information. Many of the factors that will determine the Company's future results are beyond the ability of the Company to control or predict. These statements are subject to risks and uncertainties and, therefore, actual results may differ materially from those expressed or implied by these forward-looking statements. The reader should not rely on any forward-looking statement. The Company undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise. Several important factors, in addition to the specific factors discussed in connection with these forward-looking statements individually, could affect the future results of Endo and could cause those results to differ materially from those expressed in the forward-looking statements contained in this press release. Important factors that may affect future results include, but are not limited to: market acceptance of the Company's products and the impact of competitive products and pricing; dependence on sole source suppliers; the success of the Company's product development activities and the timeliness with which regulatory authorizations and product launches may be achieved; successful compliance with extensive, costly, complex and evolving governmental regulations and restrictions; the availability on commercially reasonable terms of raw materials and other third party manufactured products; exposure to product liability and other lawsuits and contingencies; dependence on third party suppliers, distributors and collaboration partners; the ability to timely and cost effectively integrate acquisitions; uncertainty associated with pre- clinical studies and clinical trials and regulatory approval; uncertainty of market acceptance of new products; the difficulty of predicting FDA approvals; risks with respect to technology and product development; the effect of competing products and prices; uncertainties regarding intellectual property protection; uncertainties as to the outcome of litigation; changes in operating results; impact of competitive products and pricing; product development; changes in laws and regulations; customer demand; possible future litigation; availability of future financing and reimbursement policies of government and private health insurers and others; and other risks and uncertainties detailed in Endo's filings with the Securities and Exchange Commission, including its Registration Statement on Form S-3 filed with the SEC on March 21, 2006. Readers should evaluate any statement in light of these important factors.

Source: Endo Pharmaceuticals

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