MGI PHARMA acquires Aesgen for $32 million

MGI PHARMA, an oncology-focused biopharmaceutical company, and Aesgen, Inc., a privately held company focused on treating side effects associated with cancer treatments, today announced that they have signed a definitive merger agreement under which MGI PHARMA will acquire all outstanding equity of Aesgen for $32 million in cash.

MGI PHARMA may also be obligated to make performance milestone payments of $33 million upon regulatory approval and $25 million if sales exceed $50 million in the second year following product launch. In addition, MGI PHARMA will pay a 5% royalty on product sales, including sales of Saforis(TM), a product candidate in development for treatment of oral mucositis. This acquisition, which has been approved by the boards of directors of both companies, is subject to approval by the shareholders of Aesgen. MGI PHARMA and Aesgen expect the transaction to close during 2004. Under the agreement, key Aesgen management personnel will assume new roles within the MGI PHARMA organization.

"This transaction is an excellent strategic fit for MGI PHARMA that further strengthens our oncology supportive care franchise," said Lonnie Moulder, president and chief executive officer of MGI PHARMA. "With the addition of Saforis, we now have a phase 3 product candidate that may help manage the debilitating side effects of oral mucositis that patients often experience during chemotherapy."

Saforis(TM) For Oral Mucositis

Saforis is an oral formulation of L-glutamine in a proprietary delivery vehicle designed to increase uptake of glutamine by the oral mucosa. Glutamine is an amino acid essential in the healing and regeneration of mucosal cells. Data from a phase 3 trial of Saforis, conducted in 326 breast cancer patients receiving anthracycline based chemotherapy regimens, was the subject of an oral presentation at ASCO 2004. The primary endpoint of this trial defined as a reduction in clinically significant oral mucositis was met. Data indicated that patients receiving Saforis experienced a 22% risk reduction of clinically significant (WHO greater than or equal to grade 2) oral mucositis compared with placebo. In addition, only 1.2% of Saforis treated patients experienced WHO grade 3 oral mucositis compared to 6.7% of placebo treated patients (p=0.0136). Side effects of Saforis treatment were mild in nature and similar to placebo. A second pivotal, phase 3 trial to support a New Drug Application (NDA) filing with the U.S. Food and Drug Administration (FDA) will be initiated in early 2005.

Chemotherapy and radiation-induced oral mucositis are oncology supportive care areas of significant unmet need that can lead to chemotherapy dose reductions and an increased risk of infection. It is estimated that more than 15% of patients receiving chemotherapy experience significant oral mucositis, and more than 90% of patients receiving combination chemotherapy and radiation therapy for head and neck cancer experience significant oral mucositis. There are no FDA approved drugs for the prevention or treatment of oral mucositis. Current options for the treatment of oral mucositis include coating agents, pain palliation, anti-septic and anti-inflammatory agents, none of which have demonstrated effectiveness in patients with solid tumor malignancies.