Entelos Acquires Iconix Biosciences, Inc.

Foster City, CA - Entelos, Inc. , a leading life sciences company that leverages its proprietary in silico disease models, known as PhysioLab platforms, to develop drugs and support pharmaceutical R&D, announced that it has entered into an agreement to acquire Iconix Biosciences, Inc. ("Iconix"), a privately held predictive toxicology company located in Mountain View, California, in an all-share transaction. The expected effective date of the acquisition is 31 August 2007.

"We believe the combination of our predictive efficacy models with Iconix's toxicology expertise can create a new paradigm for discovering and developing drugs," commented James Karis, President and CEO of Entelos, Inc. "Drug failures are often due to efficacy or toxicity issues, and while Entelos' predictive disease models address efficacy, Iconix's toxicology databases help to address toxicities. In addition, Entelos' recently announced collaboration with the FDA to build a model of drug-induced human liver injury to identify patients at risk for developing hepatotoxicity and the addition of Iconix will expand our capability for drug safety assessment."

Jim Neal, CEO of Iconix, stated: "We believe the merger of our predictive toxicology services into Entelos creates the best value for our shareholders. By combining our powerful approaches to better understand efficacy, safety, and new drug uses, the expanded company will be well positioned to take advantage of the synergies and achieve greater commercial success."

The initial consideration for the acquisition is to be satisfied by the issue of up to 12,776,658 Entelos shares (to be adjusted for net working capital) and a potential maximum earn out payment of $25.0 million if certain financial milestones are achieved. Such deferred consideration is to be also satisfied in Entelos shares, which will be based on a 10-day average closing price for the period prior to an earn out payment.

Highlights of the acquisition:

• Entelos is to acquire Iconix Biosciences Inc., a leading provider of toxicology data and services
• Initial consideration of up to $14.1M (to be adjusted for net working capital) will be satisfied by the issue of up to 12,776,658 Entelos shares based upon an Entelos share price of 55 pence. The closing price on 29 August 2007, being the latest practicable date prior to this announcement, was 32.5 pence and based on this closing price, the initial consideration for Iconix is valued at up to $8.3M.
• If certain financial milestones are achieved by Iconix one year after the acquisition, a maximum earn out payment of $25.0 M will be satisfied by the issue of Entelos shares, which will be based on a 10-day closing price for the prior period
• Iconix's predictive toxicology capability combined with Entelos' predictive in silico disease models will address the pharmaceutical industry's two biggest issues around failures: safety and efficacy
• Iconix's DrugMatrix system has been installed at the U.S. Food and Drug Administration (FDA) for use by the Center for Drug Evaluation and Research (CDER) to evaluate voluntarily genomic data submissions. In addition, Iconix is a member of the Predictive Safety Testing Consortium, which is developing data and processes to support the regulatory use of new safety biomarkers
• This acquisition of Iconix, as well as Entelos' collaboration with the FDA to develop a predictive model of drug-induced human liver injury, expands the combined companies' reach into safety assessment
• Iconix's technology will also add significant new capabilities for translational medicine and for finding new uses for existing drugs and drug combinations

Iconix is the leading provider of toxicogenomic reference information used by pharmaceutical companies to prioritise chemical compounds in development and minimise or eliminate toxicity. In traditional drug development, safety assessment of drug candidates is performed in vivo in laboratory animals only after lead compounds have been selected and initial efficacy studies have been completed. As a consequence, adverse events and potential side effects of a chemical compound or compound series are often discovered relatively late in the development process. Iconix provides core toxicology databases that contain gene expression patterns for hundreds of drug compounds with known toxicities that can be used to help predict and rapidly test novel molecules for potential toxicities using much shorter and faster in vitro (in a test tube) studies.

Iconix will become part of Entelos' Technology and Services division. As a consequence of the acquisition, Entelos anticipates consolidating certain administrative and operational positions at Iconix to Entelos' headquarters in Foster City, California. Mr. Neal will join Entelos as the company's Chief Business Officer.

SOURCE: Entelos, Inc.