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Xanodyne Pharmaceuticals, backed by MPM Capital-led syndicate, approved to acquire pain management portfolio

18th July 2005

Xanodyne Pharmaceuticals, Inc., a specialty pharmaceutical company, today announced that the Bankruptcy Court for the District of Delaware has approved its bid to acquire the pharmaceutical assets of aaiPharma.

Xanodyne Pharmaceuticals, Inc., a specialty pharmaceutical company focusing on innovative products in the therapeutic areas of women's health and pain management, today announced that the Bankruptcy Court for the District of Delaware has approved its bid to acquire the pharmaceutical assets of aaiPharma (PINK SHEET: AAIIQ). The deal terms included $209.25 million cash and additional non-cash consideration.

Xanodyne, a private company financed by an equity syndicate led by MPM Capital, and co-led by Apax Partners, headquartered in Greater Cincinnati, is dedicated to providing patient care in women's health and pain management.

Other new investors included Perseus-Soros BioPharmaceutical Fund and affiliates of AIG Global Investment Group, while Silver Point Finance provided Xanodyne a term debt and revolver facility. The new investors were also joined in the financing by existing investors, Healthcare Ventures, Essex Woodlands, Blue Chip Venture Company and Coleman Swenson Hoffman Booth. Xanodyne was a logical buyer of the aaiPharma portfolio and through this acquisition is strengthening its offering of high quality, effective pain management pharmaceuticals to physicians and their patients.

This acquisition will bring a number of currently marketed pain management agents into the Xanodyne portfolio, including Darvon(R) and Darvocet(R), two drugs with a strong heritage in pain management. The purchase also includes three pain products that are presently in clinical development and one other early-stage development product. The combined business will have pro-forma 2005 revenues of approximately $100 million, and will create a new force in the specialty pharmaceuticals sector.

"We have believed for some time that the two businesses fit very well together," said William Nuerge, chief executive officer of Xanodyne.

"Xanodyne brings a pipeline of women's healthcare products and a strong commercial capability and infrastructure for both women's healthcare and pain management products, while aaiPharma has a broad range of currently marketed and pipeline pain products. With this acquisition, Xanodyne has a comprehensive portfolio of pain management and women's health products, including six key development compounds - three in each of its main therapeutic areas of focus - as well as the ability to develop and commercialize its assets. I am not aware of any evolving specialty pharmaceutical company with the combination of people, products, performance, pipeline and potential that we now have at Xanodyne."

According to Steven St. Peter, M.D., general partner, MPM Capital, "The portfolio includes some of the most widely prescribed pain products and a growing business in women's health.  The products in development are very synergistic, and this management team knows exactly how to launch and position these products." 

"For MPM, this deal represents an important dimension of our investment strategy," said Ansbert Gadicke, M.D., general partner, MPM Capital. "We are actively looking to identify diversely held assets that can be combined with a commercial product portfolio and a development pipeline to create robust cash flow and fund future product development."

"Xanodyne's strong management team and employee base, new products pipeline, commercial capabilities, and strong performance were very attractive to us," said Adele Oliva, partner, Apax Partners, L.P. "Our organization, as well as the entire investor group, has great confidence in Xanodyne's ability to be a major player in pain management and women's healthcare and achieve its vision of growth."

"We are delighted to be joined by a superb new investment syndicate as Xanodyne's management team continues towards its objective of becoming a leading pain management and women's health care products company.  It was very important to identify an equity sponsor capable of understanding the development-stage assets, growth potential of the products, complexity of the situation, and having the financial scale to complete the transaction," said James H. Cavanaugh, Ph.D., chairman of Xanodyne.

Nuerge added, "A significant feature of the transaction will be an on-going relationship between Xanodyne and aaiPharma Development Services, and we hope to be one of aaiPharma Development Services' preferred customers.

We are committed to using their cutting edge technology and top-notch development services to complete our current pipeline and further extend it."

Ludo Reynders, Ph.D., chief executive officer of aaiPharma Inc., re-enforced that point, "By letting Xanodyne focus on their commercial expertise, aaiPharma is freed to focus on its strengths in product development.

The relationship is very symbiotic by design."

A new Board of Directors has been established to guide the organization. James Cavanaugh, Ph.D. (Healthcare Ventures), James Currie (Essex Woodlands), and William Nuerge (Xanodyne CEO) remain on the Board and will be joined by Ansbert Gadicke, M.D. (MPM), Steven St. Peter, M.D. (MPM), Adele Oliva (Apax Partners) and Dennis Purcell (Perseus-Soros). Cavanaugh continues as chairman of the board.

Xanodyne was advised by Bear, Stearns & Co., Inc. and Dinsmore & Shohl LLP; the equity sponsors were advised by Lazard and Weil, Gotshal & Manges (bankruptcy counsel) and Palmer & Dodge (corporate counsel).


About Xanodyne

Xanodyne Pharmaceuticals, Inc. is a privately owned, fully integrated, branded specialty pharmaceutical company focusing on innovative products in the therapeutic areas of women's health and pain management. The company, located in the greater Cincinnati area, has a nationwide sales force and currently markets numerous pharmaceutical products. More information regarding Xanodyne can be accessed at http://www.xanodyne.com/.

About MPM

MPM Capital L.P. is a global investment management firm focused solely on life sciences investing. One of the largest investment management firms dedicated to the life sciences sector, MPM Capital has offices in Boston and San Francisco. MPM's portfolio ranges from start-ups to large capitalization public companies, with a primary focus on biopharmaceutical and medical device companies nearing commercialization of products or those companies that already offer product-driven opportunities. The firm manages over $2.1 billion in assets through the MPM BioVentures Family of venture capital funds and the MPM BioEquities public market funds. More information on MPM can be found at http://www.mpmcapital.com/.

About Apax Partners

Apax Partners is one of the world's leading private equity investment groups, operating across the United States, Europe and Israel. Apax Partners has raised or advised approximately $20 billion around the world. With more than 30 years of direct investing experience, Apax Partners' Funds provide long-term equity financing to build and strengthen world-class companies. It pursues a multi-stage equity investment strategy, investing in late venture, growth capital and buyouts. Apax Partners' Funds invest in companies across its 6 chosen global sectors of telecommunications, IT, retail and consumer, media, healthcare and financial/business services. For additional information refer to http://www.apax.com/ or contact Laura Brightsen, Director Marketing, 212-419-2461.

For further information contact:

Xanodyne Contact
Susan McDonald of Justice & Young Public Relations
T: +1 513 388 4700 ext. 3014
E: smcdonald@jypublicrelations.com

Syndicate Contact
Shari Annes of MPM Capital
T: +1 650 888 0902
E: sannes@mpmcapital.com