AstraZeneca has agreed to acquire 100 per cent of Novexel's shares for $350 million in cash payable at completion and will pay up to an additional $75 million to Novexel shareholders if specified development milestones are reached. AstraZeneca will also transfer to Novexel shareholders an amount equivalent to the cash balance of Novexel at closing, approximately $80 million. Under a separate agreement, AstraZeneca and Forest have agreed that following completion of the acquisition, Forest will pay Novexel, then an AstraZeneca group company, a sum equal to half of the acquisition costs of Novexel and half of any such specified development milestone payments in return for rights to CAZ104 in North America and the buy down of payment obligations in relation to CEF104 to Novexel from previous existing license arrangements. Effectiveness of the agreement is contingent on expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.

CAZ104 is a combination of NXL-104 and ceftazidime, a third generation cephalosporin to which resistance has emerged. The addition of NXL-104 to ceftazidime extends its coverage of resistant Gram-negative pathogens including bacteria producing extended spectrum beta-lactamases. CAZ104 will be developed in serious infections requiring intensive care unit stays such as intra-abdominal, urinary tract and hospital acquired pneumonia. It is expected to move into Phase III development in late 2010 and to be filed with regulators in the US and EU in 2012.

CEF104 is a combination of NXL-104 and ceftaroline, Forest’s broad spectrum anti-MRSA cephalosporin which is currently in late stage development. The addition of NXL-104 is designed to enhance the Gram-negative activity of ceftaroline to include resistant Gram-negative pathogens. The combination will be developed in indications where a mixed Gram-negative and Gram-positive profile can be of use, such as skin and diabetic foot infections. It is expected to move into Phase II development in late 2010.

Development costs of the two combination treatments will be shared between AstraZeneca and Forest. Forest will have rights to commercialise the antibiotic combinations in North America while AstraZeneca will have rights to commercialise these products in the rest of the world with the exception of CEF104 in Japan, where Takeda retains the rights for ceftaroline. AstraZeneca also will pay undisclosed royalties to Forest on AstraZeneca's international sales of the NXL-104 and ceftaroline combination. In addition to NXL-104 and its combinations, the Novexel pipeline includes a Phase II oral anti-MRSA compound and several early stage and preclinical compounds.

Forest signed an agreement with Novexel in January 2008 granting Forest rights to develop CEF104 in North America. AstraZeneca entered into an agreement with Forest in August 2009 to secure the rights to commercialise ceftaroline outside North America and Japan.

"Building AstraZeneca’s anti-infective portfolio has become a strategic priority as antibiotic-resistant bacteria poses a growing threat to human health," said Anders Ekblom, AstraZeneca Executive Vice-President of Development. "The innovative structure of this agreement allows us to build on our existing collaboration with Forest to create value, share costs, and reduce exposure to risk while developing two novel antibiotic combinations that address a growing problem for clinicians and patients. Utilising Novexel's NXL-104, these combinations have the potential to outwit bacteria that would otherwise be resistant to antibiotics."

Antibiotic Resistance and Beta-Lactamase
As a class, beta-lactam antibiotics such as cephalosporins, penicillins and carbapenems have been very successful in treating bacterial infections. However, bacteria develop resistance to beta-lactams by producing a beta-lactam-destroying enzyme known as beta-lactamase. The effectiveness of beta-lactam antibiotics has been successfully restored and extended by using beta-lactamase inhibitors (BLI) which prevent this enzyme from destroying the antibiotic. Unfortunately in recent years new beta-lactamases have emerged with increased levels of resistance. Very few compounds are known to inhibit the significant range of over 500 currently known beta-lactamases, creating an opportunity for combinations with novel beta-lactamase inhibitors, such as NXL-104, to treat serious resistant infections. NXL-104 is a novel injectable beta-lactamase inhibitor believed to have the broadest spectrum coverage of the latest generation of beta-lactamase inhibitors.

Gram-positive and Gram-negative infections
Gram-positive bacteria, of which MRSA is just one example, are often the primary pathogens in skin, sinus, ear, and outpatient lung infections. Patients with these infections are generally managed on wards. Gram-negative bacteria, another category including for example E. coli & Pseudomonas, are often the primary pathogens in urine, gut and inpatient lung infections. These patients are sicker and often progress to be managed in intensive care units.

Gram-positive infections have been the focus of infection research for a number of years, resulting in a choice of MRSA treatment options becoming available. However, with the recent rapid growth in resistance of Gram-negative pathogens to commonly used antibiotics, this area in now emerging as a major medical unmet need in both the established and emerging markets. Gram-negative pathogens are particularly problematic in the hospital setting, where they are increasing in prevalence and resistance and can cause severe life-threatening infections. Across the industry, the pipeline for new Gram-negative antibiotics is relatively empty compared with that of Gram-positive agents.

About AstraZeneca
AstraZeneca is a major international healthcare business engaged in the research, development, manufacturing and marketing of meaningful prescription medicines and supplier for healthcare services. AstraZeneca is one of the world's leading pharmaceutical companies with healthcare sales of US$ 31.6 billion and is a leader in gastrointestinal, cardiovascular, neuroscience, respiratory, oncology and infectious disease medicines. For more information about AstraZeneca, please visit: www.astrazeneca.com.