Orexo acquires a UK drug delivery company

Orexo acquires a UK drug delivery company 

Orexo AB (publ) (Orexo) (NASDAQ-OMX:ORX) today announced the acquisition of
PharmaKodex Ltd (PharmaKodex), a UK drug delivery company with expertise in the
reformulation and development of  prescription and consumer health medicines
containing small molecule drugs.  The company has a number of ready to partner
preclinical and early clinical projects focused on improving oral, sublingual
and transdermal medication.  

Orexo will acquire the company for a consideration payable in two tranches, with
the first tranche paid in new Orexo shares and the second tranche payable either
in new Orexo shares or cash at Orexo's option.  As consideration for the first
tranche, the board of directors has today resolved in accordance with the
authorization from the Annual General Meeting held on 3 April 2008, to issue
843,992 new Orexo shares to the former shareholders of PharmaKodex.  Additional
Orexo shares, representing the same total value in Sterling as the first
payment, may be issued in August 2009 unless Orexo opts to pay the second
tranche amount in cash. The transaction also provides for further conditional
payments, based on the financial profits from licenses of existing PharmaKodex
programs and technologies and certain milestones, but no royalties will be due
on such programs or technologies.

The company's pipeline includes a preclinical program for rapid, sustained
relief of migraine, in addition to its clinical stage lead program PKX219 which
is a fast-acting, easy-to-use combination of buprenorphine and naloxone for
opioid-addiction therapy, with clinical studies ongoing in 2009 and a
prospective launch date subject to the necessary approvals of 2010/2011.

The acquisition is part of Orexo's fundamental strategy to develop superior drug
products using well established, effective drug molecules by applying the very
best technology to make delivery of those drugs faster, safer and/or more
effective.  

In the integration of PharmaKodex, five employees are included. The acquired
company currently has sufficient cash to cover all of its costs in 2009 and into
2010, by which time additional license income on certain of the acquired
technologies is anticipated.  

Torbjörn Bjerke, President and CEO of Orexo, said:
“I am delighted to announce our acquisition of PharmaKodex, a drug delivery
company with some excellent technologies which enhance Orexo's ability to
continue to provide truly superior products able to become first choice
therapies for large unmet medical needs.  This represents an expansion of
Orexo's original business model, which is to develop the optimum product for
existing well-defined drug molecules, to solve safety, delivery or clinical
needs with those molecules in order to create better and more competitive drug
products. This is the philosophy that lies behind the development of AbstralTM
and SublinoxTM, and will underpin Orexo's growth over the next few years.

Orexo has identified a number of both problematic and unmet medical needs for
which a combination of Orexo and PharmaKodex technologies make a fast drug
formulation possible, and we will be pursuing these opportunities from the first
day.  These include major new product opportunities for some of the world's
largest pharmaceutical and consumer health companies, providing excellent
chances of enhancing Orexo's profitability within 12 months and probably within
2009.

PharmaKodex preclinical and early clinical programs will enhance Orexo's
pipeline in the areas of pain and opioid addiction, and provide opportunities
for new product launches in 2010/2011, subject to the relevant approvals. This
agreement adds to the three other partnerships made by Orexo this year for
AbstralTM in China and in Israel and on Ox17 for GERD, and is an important
element for Orexo in becoming a sustainably-profitable pharmaceutical company as
soon as possible.”


Rod Richards, PharmaKodex, said:
“PharmaKodex has built dynamic capabilities in sublingual and oral delivery. Our
early development programs and intellectual property are very synergistic with
the broad pipeline and technologies of Orexo.  We believe that this transaction
is the ideal opportunity to accelerate these development programs and that it
provides value for PharmaKodex shareholders and employees.”


For further information, contact:
Torbjörn Bjerke, President and CEO, Orexo AB
Tel: +46 (0)708-66 19 90
E-mail: torbjorn.bjerke@orexo.com  

Robin Wright, SVP Corporate Development
Tel: +46 (0) 18 780 8891
E-mail: robin.wright@orexo.com 

Rod Richards (PharmaKodex)
Tel: +44 7990 898165
E-mail: rod.richards@pharmakodex.com 
Webcast telephone conference
A webcast telephone conference will take place today, 23 February, at 10:00 a.m.
CET.  Access the webcast on: http://webcast.zoomvision.se/clients/orexo/090223/.
It is also possible to participate by telephone on +44 203 043 24 36
(International) or +1 866 458 40 87 (USA) or +46 (0)8 505 598 53 (Sweden). For
further information please visit www.orexo.com
More about PharmaKodex
PharmaKodex was spun out from Vectura Group plc and Unilever plc in May 2006 to
develop the proprietary formulation and delivery product assets from both
companies.  PharmaKodex is privately owned and funded by a syndicate of blue
chip International investors including Apposite Capital, SROne and Unilever
Ventures.  The company is based in Bath, UK.

Like Orexo, PharmaKodex exploits its proprietary drug delivery and formulation
technologies to develop improved medicines using existing drug molecules, for
example by providing faster acting, safer and/or more effective products as well
as identifying novel synergistic combinations, which are protected by strong
intellectual property.  

PharmaKodex has two main delivery technology families derived from its original
parent companies and further developed by the company.  First, its oral
platform, ‘Accustar' comprises a number of novel technologies including: i)
‘Solid Syrup'  for improved mouthfeel and capable of rapid dissolution as well
as controlled drug delivery; ii) ‘Taste Transformation' for neutralizing bitter
tasting drugs without delaying absorption and iii) ‘Xerosol' aimed at improving
transmucosal drug delivery via the sublingual or buccal routes. Second, its
transdermal platform, ‘Pandermal', is a ‘patch-free' unit dose transdermal
delivery system capable of delivering high drug payloads in metered doses and
with controllable skin fluxes.  In addition, PharmaKodex has two enabling
technologies and a novel oral controlled-release platform. All of the
intellectual property associated with these technologies will become the
property of Orexo as part of the transaction.


About Orexo
Orexo is a pharmaceutical company focusing on developing treatments for pain and
inflammation. The company has three products on the market as well as a
competitive product portfolio in late stages of development. Sales and product
development are mainly carried out through worldwide partnership agreements with
larger pharmaceutical companies. Orexo has 128 employees, and has its head
office located in Uppsala, Sweden. More information can be found at
www.orexo.com


Note:
This is information that Orexo AB (publ) is required to disclose pursuant to the
Swedish Securities Markets Act. The information was provided for public release
on February 23 at 08:00 a.m. CET.