Genome Therapeutics and Genesoft Pharmaceuticals Announce Definitive Merger Agreement

Business Wire, Nov 18, 2003

Business Editors/Health/Medical Writers

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WALTHAM, Mass. & SAN FRANCISCO--(BUSINESS WIRE)--Nov. 18, 2003

Merged Companies Combine Expertise to Create Leading

Anti-Infectives Biopharmaceutical Company

Launch of FDA-Approved FACTIVE(R) (gemifloxacin mesylate tablets)

Planned for Summer 2004

Conference Call with Management Today at 8:30 AM ET

Genome Therapeutics (Nasdaq: GENE) and Genesoft Pharmaceuticals Inc., a privately-held pharmaceutical company, have entered into a definitive agreement to merge in an all-stock transaction. Pending successful completion of the merger, Genome Therapeutics and Genesoft will become a leading, integrated biopharmaceutical company focused on the commercialization and development of new anti-infective therapeutics.

The merged company will focus on the 2004 launch of FACTIVE(R) (gemifloxacin mesylate tablets), which received FDA approval for two indications this year, the Ramoplanin clinical development program and the maturation of the companies' earlier stage assets. The combined company will keep the name Genome Therapeutics, and continue to trade on the Nasdaq National Market under the ticker "GENE" until a new name for the company is selected. A conference call with senior management from both companies is scheduled for today at 8:30 AM ET (details below).

Revenues from the launch of FACTIVE(R), an orally administered, broad-spectrum fluoroquinolone antibiotic, will drive the merged company's near-term growth as a biopharmaceutical company. FACTIVE(R) currently has FDA marketing approval for the treatment of community-acquired pneumonia of mild to moderate severity (CAP)* and acute bacterial exacerbations of chronic bronchitis (ABECB)**. FACTIVE(R) is expected to be launched during the summer of 2004. Strengthened by a robust pipeline led by Ramoplanin, which is in development for the prevention, treatment and control of serious hospital-based infections, the merged companies' product development and managerial synergies position the new company as a leader in the anti-infectives market.

"Merging with Genesoft is a transforming event for our company, as we will immediately realize our goal of becoming a biopharmaceutical company with a high-profile product and a complementary near-term product candidate in late-stage clinical trials," stated Steven M. Rauscher, Chairman and CEO of Genome Therapeutics, who will serve as President and CEO of the new company. "Initially, we will be focusing our efforts on ensuring the successful launch of FACTIVE(R) to coincide with next year's respiratory tract infections season, thus positioning the company as a key participant in the commercialization of anti-infective therapeutics."

"The increase in bacterial resistance to numerous antibiotic classes is quickly becoming a serious concern for physicians, who are recognizing the need to use the most potent antibiotic as first-line treatment in order to stem this growing problem," said Gary Patou, M.D., President of Genesoft. "Increasingly, physicians are realizing that their prescribing decisions can not only affect the individual patient receiving a drug, but also can have a larger societal impact. FACTIVE(R), a unique fluoroquinolone, and Ramoplanin, a first-in-class antibiotic, could help address this challenge."

Product Portfolio

FACTIVE(R) has FDA approval for two indications: community-acquired pneumonia of mild to moderate severity* (including cases caused by multi-drug resistant Streptococcus pneumoniae) and acute bacterial exacerbations of chronic bronchitis**. A regulatory filing for a third indication of FACTIVE(R) for acute bacterial sinusitis is planned. In addition, an intravenous form of the antibiotic is currently under development. Supplementing the FACTIVE(R) development pipeline are two novel anti-infectives: Ramoplanin, currently in Phase III and Phase II trials for the prevention and treatment of serious hospital-based infections, and a series of oral PDF (peptide deformylase) inhibitors, expected to enter Phase I testing in the future for treating respiratory tract infections. Genome Therapeutics also brings seven partnered programs to the merger through strategic alliances with pharmaceutical companies including Wyeth, Schering-Plough, Amgen and AstraZeneca.

"We are committed to building a premiere anti-infectives company, which will introduce products that satisfy the medical community's intensifying need for new therapeutic options," stated David B. Singer, Founder, Chairman and CEO of Genesoft Pharmaceuticals, who will assume the role of Chairman of the new company. "This merger supports our efforts to successfully launch FACTIVE(R), as the management team at Genome Therapeutics possesses proven expertise in marketing antibiotics into the community and hospital settings. Our shareholders will also participate in the success of the integrated company's extensive portfolio of anti-infective opportunities."