EPIX Pharmaceuticals Announces First Quarter 2009 Financial Results

Business Wire, May 11, 2009

Company Successfully Consummates Exchange Offer of $96.8 Million of Debt for Cash and Equity

Company Engages Investment Banks to Assist in Exploring Strategic Alternatives

Company Provides Update on NASDAQ Listing Status

LEXINGTON, Mass. -- EPIX Pharmaceuticals, Inc. (NASDAQ:EPIX) a biopharmaceutical company focused on discovering and developing novel therapeutics through the use of its proprietary and highly efficient in silico drug discovery platform today reported financial results for the first quarter ended March 31, 2009.

In April 2009, the company successfully monetized the U.S., Canadian and Australian rights for MS-325 (formerly marketed as Vasovist®, gadofosveset trisodium by Bayer Schering Pharma). The net proceeds from the sale were used to fund the company’s exchange offer for its $100 million aggregate principal amount of 3.00% Convertible Senior Notes due 2024, which was consummated on May 7, 2009. Pursuant to the exchange offer, EPIX retired an aggregate of $96,839,000, or approximately 97%, of its Convertible Senior Notes in exchange for approximately $17.4 million, approximately 32.8 million shares of common stock, and approximately 97,000 contingent value rights representing potential future payments upon certain events. The remaining $3,161,000 of Notes that were not tendered in the exchange offer will remain outstanding pursuant to the terms of the Indenture governing the Notes as amended.

“We remain highly focused on improving the financial health of EPIX and believe that the successful completion of our exchange offer where nearly 97% of our $100 million aggregate principal amount of Convertible Senior Notes was tendered has meaningfully strengthened our long-term financial position,” said Kim Drapkin, chief financial officer. “In addition to this effort, together with our financial consultants, we are exploring a variety of strategic alternatives to allow EPIX to continue its operations beyond August 2009.”

Company Announces Plan to Pursue Strategic Alternatives

The company also announced that it has engaged J.P. Morgan to assist the Board of Directors in its evaluation of strategic alternatives for the company’s business and Canaccord Adams to assist the Board of Directors in exploring financing and capital structure alternatives.

The Board intends to consider a full range of strategic alternatives, including a recapitalization, a sale or disposition of one or more corporate assets, a potential merger, and/or a strategic business combination. The company does not anticipate making another announcement regarding this matter unless its Board has approved a definitive transaction. While the Board has retained J.P. Morgan and Canaccord Adams to assist EPIX in this process, there is no assurance that this process will result in any specific transactions or outcomes.

Update on NASDAQ Listing Status

On May 7, 2009, the company transferred the listing of its common stock from the NASDAQ Global Market to the NASDAQ Capital Market on a conditional basis, pending the company evidencing by May 11, 2009 either a market value of its common stock of more than $35 million for a period of 10 consecutive trading days or compliance with one of the alternative listing criteria, including a shareholders’ equity of at least $2.5 million. The company was not able to meet any of these criteria by May 11, 2009, and, therefore the company expects its common stock will be delisted on or about May 13, 2009. Once the company’s common stock is delisted, the company intends for its common stock to be eligible for trading on the Over-the-Counter Bulletin Board, an electronic quotation service maintained by the Financial Industry Regulatory Authority. Once the company’s common stock is delisted from NASDAQ, the holders of the remaining $3.2 million aggregate principal amount of the Notes that did not tender their Notes in the Exchange Offer could request redemption of their Notes at face value, plus accrued and unpaid interest.

Financial Results

As of March 31, 2009, EPIX had cash and cash equivalents of $14.7 million compared with $24.6 million on December 31, 2008. Based on its current operating plan, EPIX continues to believe that its cash and cash equivalents will be sufficient to fund the company’s operations through August 2009 provided that the remaining $3.2 million of Notes are not redeemed. To sustain operations beyond August 2009, the company will need to raise substantial capital and is considering a number of strategies to improve its financial position and extend its cash resources.

Net loss for the first quarter ended March 31, 2009 was $9.7 million, or $0.23 per share, compared with $13.7 million, or $0.33 per share, for the first quarter ended March 31, 2008.