ACRUX LIMITED — Capital/Financing Update 2007

Jul 15, 2007

ACRUX (ASX: ACR) - ASX ANNOUNCEMENT

16 JULY 2007

ACRUX REPORTS POSITIVE RESULTS IN PHASE 2 TRIAL OF TESTOSTERONE MD-LOTION[®] FOR MEN

Acrux (ASX: ACR) today announced positive results from the Phase 2 clinical study of its Testosterone MD-Lotion[®] , a patient-friendly treatment for testosterone deficiency in men.

Summary

• ⇒ MD-Lotion[®] successful in elevating testosterone levels into the normal healthy range and strongly indicative of success in Phase 3

• ⇒ Maximum testosterone levels well within safety limits and no serious adverse events

• ⇒ Acrux to capture uplift in value for its shareholders by deferring licensing until after Phase 3 trial

• ⇒ New capital to be raised specifically to fund remaining development cost of $20m

• ⇒ Phase 3 trial to start Q2 2008, with marketing applications targeted for H2 2009

Design of the Phase 2 study

The study was conducted in 9 centres in the USA, which recruited 41 men aged between 18 and 70, who had testosterone levels below the normal healthy range of between 300 ng/dL and 1,000 ng/dL, and who were eligible to receive androgen replacement therapy. The Principal Investigator was Christina Wang, MD, at the Los Angeles Biomedical Research Institute. The study tested once-daily application to the armpits of two different doses of the lotion, containing 30 mg and 60 mg of testosterone. The men applied one dose level for 7 days and then crossed over to apply the other dose level for a further 7 days.

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The primary endpoint of the study was to determine and compare the steady state pharmacokinetics of each dose level. The secondary endpoints required an assessment of the safety and tolerability of the lotion after multiple dosing. Blood samples were taken at regular intervals on days 7 and 14. Levels of testosterone, dihydrotestosterone (DHT) and Sex Hormone Binding Globulin (SHBG) were also measured. All subjects completed treatment. 8 subjects were required to be excluded from the results analysis due to protocol violations or partial data.

Study results

Primary endpoint

The 60 mg dose elevated the average level of testosterone to within the normal range in 29 (88%) of the 33 subjects, with an average level across all patients of 510 ng/dL. The 30 mg dose elevated the average level of testosterone to within the normal range in 25 (76%) of the 33 subjects, with an average level across all patients of 419 ng/dL. Of the 8 subjects that were below the normal range following the 30 mg dose, 6 of these were within the normal range after the 60mg dose. Based on the expected Phase 3 treatment protocol, which specifically requires that patients be titrated on to an optimum dose, these results are strongly indicative of the product’s ability to meet the primary endpoints required by regulatory authorities in a pivotal Phase 3 clinical trial.

Secondary endpoints

All safety measurements were well within the expected requirements in a Phase 3 trial. Only one subject had a maximum testosterone level above 1500 ng/dL and no subjects had maximum levels above 2500 ng/dL. There were no serious adverse events recorded and only three reports of mild, temporary skin irritation. Levels of DHT and SHBG were normal.

Value uplift by proceeding with Phase 3 development

Based on previous guidance received from the FDA, these study results are strongly indicative of success in a Phase 3 trial. Acrux has formed the view that value for its shareholders will be more than doubled by licensing Testosterone MD-Lotion[®] to a commercial partner for marketing and distribution after completing the remaining development, compared with licensing the product at this stage.

As with Phase 2, the Phase 3 trial will require measurement of levels of testosterone in the blood, rather than clinical symptoms. The remaining development is within Acrux’s capability and the estimated cost is relatively low, at $20 million. Acrux will raise new capital specifically to fund this cost.

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Activity and timelines

Acrux expects to conduct the Phase 3 trial at centres in the USA, Europe and Australia, commencing in the second quarter of 2008. Key activities prior to the start include:

• ⇒ completion of the current supplementary clinical trial with parts assessing the use of the lotion with an antiperspirant or a deodorant, the effect of washing the application site and the potential for patient-to-person transfer

• ⇒ an “end of Phase 2” meeting with the US Food and Drug Administration and finalisation of the Phase 3 study design

• ⇒ validation of the dose applicator and identification of a commercial contract manufacturer

• ⇒ strengthening of skills in the manufacturing area

Acrux is targeting submission of a New Drug Application to regulatory authorities in the USA, Europe and Australia in the second half of 2009.

About Acrux’s Testosterone MD-Lotion[®]

Market research in the USA amongst both patients and prescribers that use current testosterone replacement products, including gels and injections, showed a strong preference by the patients for daily application of Acrux’s lotion over the existing products. The Acrux product will apply a precise dose of quick-drying lotion to the armpit once daily, via a convenient and ergonomic “no-touch” applicator.

The leading gel is currently applied each day as a 5 gram dose by hand to the shoulders, upper arms and/or abdomen. It takes longer to dry and patients are advised to wear protective clothing after application to reduce the risk of transferring testosterone to others. In contrast, the market research highlighted that the men considered Acrux’s lotion would form part of a normal grooming routine and it could be discreetly applied, much like a deodorant.

Acrux has an international patent pending, which covers the application to the armpit of a number of drugs, including testosterone, combined with a skin penetration enhancer and a volatile liquid. Once granted, the patent will provide protection against competing products until at least 2026 in all major markets. Testosterone MD-Lotion[®] is already covered until 2017 by Acrux’s granted patents.

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About testosterone deficiency

Testosterone deficiency in men (hypogonadism) is associated with a number of symptoms including lethargy, depression, reduced libido and decrease in muscle mass and bone density. It is estimated that over 20% of the US male population over 50 suffer from testosterone deficiency, with the incidence increasing with age. Approximately 10% of hypogonadal men currently receive testosterone replacement therapy. This is expected to grow with increasing patient and physician awareness. Exmanufacturer sales of testosterone replacement therapies for men in 2006 in the USA alone were more than US$500 million, growing at 14% per annum, to which the leading gel contributed US$377 million. Sales in the key European markets of Germany, UK, France, Italy, Spain and Sweden are currently growing at 20% per annum.

Contact

Richard Treagus, Acrux CEO +61 417 520 509 richard.treagus@acrux.com.au

About Acrux - www.acrux.com.au

• Acrux is an Australian drug delivery company, developing and commercialising a range of patient-preferred, patented pharmaceutical products for global markets, using its innovative technology to administer drugs through the skin.

• Fast-drying, invisible sprays or liquids provide a delivery platform with low or no skin irritation, superior cosmetic acceptability and simple, accurate and flexible dosing. The technology platform is covered by broad and well-differentiated, issued patents.

• Acrux’s products in clinical development include:

  • Estradiol MDTS[®] (EvaMist™ in the USA) to treat menopause symptoms

  • Testosterone MDTS[®] to treat decreased libido in women

  • Testosterone MD-Lotion[®] to treat testosterone deficiency in men

  • Nestorone[®] MDTS[®] contraceptive sprays for women

  • Fentanyl MDTS[®] to treat chronic pain

• Acrux has licensed worldwide rights to its technology for selected contraceptives and for an undisclosed proprietary drug to ORGANON, USA rights for Estradiol MDTS[®] to KV Pharmaceutical and for Testosterone MDTS[®] to VIVUS, and AUS/NZ distribution rights for Estradiol MDTS[®] to Aspen Pharmacare and for Testosterone MDTS[®] and Fentanyl MDTS[®] to CSL Limited. Acrux has also licensed its technology to Eli Lilly and Company for veterinary healthcare products.

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