ACRUX LIMITED — Management Reports 2009

Apr 21, 2009

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----- Start of picture text ----- Issue no 3: April 2009----- End of picture text -----

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----- Start of picture text ----- A strong start toa critical yearWelcome to the first newsletter of2009. The really good news is thatwe have generated significantmomentum so far this year, and aremaking good progress towardsmeeting the critical milestones thatwe set ourselves. Most importantly,as you will learn in this newsletter,our Phase 3 trial for TestosteroneMD-Lotion [®] , which is now re-namedunder the AXIRON™ brand, isproceeding on time and on budget.We have all the funds required tocomplete the trial and remain ontarget to submit AXIRON™ formarketing approval to the US Foodand Drug Administration (FDA)before the end of the year. This is akey part of our plan to achieveAcrux’s longer-term commercialgoals.----- End of picture text -----

arbitration process in California in order to clarify and enforce the obligations of our licensing partner Vivus Inc in the US was a very necessary step. The interim arbitration ruling, received earlier this month, provided a clear and unambiguous framework for both Acrux and Vivus to work together to make the Luramist™ phase 3 clinical trial a reality. A final and binding ruling is expected from the arbitration panel next month.

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----- Start of picture text ----- Dr Richard Treagus CEO----- End of picture text -----

The other important deliverables, that we said we would achieve, are materialising. The results of our latest contraceptive trial were very positive providing a credible basis for further partnering discussions. Evamist™ sales in the USA, although somewhat below our initial expectations, are consistently and steadily increasing week-on-week and we have advanced commercial interest from potential marketers of ELLAVIE™ outside the USA. I should also add that we are delighted with how our animal health partnership with Eli Lilly and our exclusive commercial manufacturing alliance with Orion Corporation are evolving.

Australia Bioscience Fund as a knowledgeable, long-term shareholder, further balancing and strengthening the share register.

Delivering on promises is what matters to our shareholders and it’s very gratifying to see the recent upward trend in our share price and the addition of an important new shareholder, the IB Australia Bioscience Fund. Last year, due to factors beyond the control of Acrux, there was a perceived overhang on our share register. This has now been rectified and we welcome the IB

There is a great deal to look forward to in 2009 as some of our most important products reach companycritical milestones. As a management team and a board, we are excited about the near term prospects for your company and we thank you for sharing our belief, as well as for your ongoing support.

We remain committed to seeking the best commercial outcomes in the shortest possible time for our shareholders. In this regard, the decision to proceed with an

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are very encouraged by the patient and prescriber responses to AXIRON™. We’re on track to complete the Phase 3 trial on time, which will enable Acrux to submit a marketing application to the FDA by the end of December,’’ he said. “We already know that the ease and convenience of using AXIRON™ sets it apart from current treatments. Patients tell us that they prefer the discreet application of a fast drying and pleasant smelling lotion to the armpit, compared with the messy gels currently on the market. What’s even more exciting is the size of the market treating testosterone deficiency in men is growing strongly and has now topped $1 billion,’’ Dr Treagus said.

Introducing AXIRON™

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Acrux has received a strong response to the announcement that its Testosterone MD-Lotion[®] used to treat male testosterone deficiency, has a new brand name, AXIRON™. The name AXIRON™ was derived from the clinical name for armpit, AXILLA, and it has already caught on as Acrux now begins the process of finding a commercial partner to market and distribute the product. Samples of the product with its eye-catching branding and logo have been sent to key stakeholders, and received a unanimously positive response.

truly compelling product, we are only six months away from completing the Phase 3 trial and moving to the all important approval and commercialisation phase. The Acrux team is working very hard and enthusiastically to make sure that all the finer project details are taken care of and that we reach the finish line in the very best shape possible, on budget and on time.’’

The reason for the optimism about AXIRON™ stems from the fact that its Phase 3 trial has progressed well, with 72 patients having already completed treatment. Last month Acrux completed enrolment of the 150 hypogonadal men necessary to conduct the trial and the feedback from trial subjects and physicians regarding AXIRON™ has been very positive.

ELLAVIE™ heading for Europe

“To make certain we are ready for a commercial roll-out of AXIRON™, Acrux has already transferred the manufacturing process for the product to Orion Corporation in Finland and we have begun talking to a number of potential partners about marketing AXIRON™ in the US and other markets post FDA approval,’’ he said.

In the US, the female hormone replacement product created by Acrux is called Evamist™, but for the rest of the world, including the important European market, it will be called ELLAVIE™. In December 2008 Acrux submitted a marketing authorisation application to the Medical Products Agency in Sweden in order to allow for European distribution. Following approval of the product in Sweden, Acrux intends to obtain marketing approval of ELLAVIE™ in the other major European markets.

Acrux CEO Richard Treagus commented that the combination of the new brand name and the successful progress of the Phase 3 trial is reason for optimism. “We

“The really significant thing about this whole process is that after years of hard work to develop a

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“Acrux is currently in advanced discussions with a number of potential distributors for ELLAVIE™ in Europe, as well as for certain other territories outside of the US” said Acrux’s CEO and Managing Director Richard Treagus. “We look forward to announcing distribution agreements for ELLAVIE™ in conjunction with progress on the European regulatory approval processes in the months ahead’’ he added.

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Eli Lilly partnership

The FDA is currently reviewing the marketing application for the first veterinary product from Acrux’s partnership with Eli Lilly. FDA approval will trigger a milestone payment and we expect to earn royalties from product sales following the launch in 2010. Further products are already in clinical development and these will likewise attract product approval payments and royalties.

Contraceptive sprays

The media was very interested when news broke that Acrux had achieved positive results from its latest trials of combination contraceptive skin sprays. The Age newspaper in late February ran the story prominently in its news section, which prompted radio and television to follow-up the breaking news. It’s not surprising that it should have caught the imagination of the public. The contraception market is very large – worth $US7.2 billion in 2007 – and women are always looking for easier ways to manage their fertility.

The latest trials with 40 women over 14 days showed that a simple daily spray to the forearm

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delivered into the blood stream the amounts of both the new generation progestin Nestorone[®] and an estrogen that are required to provide effective contraception.

Based on the strength of these results, Acrux is currently seeking development partners for Phase 2 and Phase 3 trials. The media – and millions of women - will no doubt be watching the progress with great interest.

Evamist prescriptions continue to grow

The graph below, which reflects the total number of weekly

prescriptions, gives reason for optimism about the impact that Evamist™ is having in the allimportant US market. Evamist™ is an estrogen replacement therapy available in a convenient spray that is being marketed and distributed under license by a subsidiary of the US company KV Pharmaceutical. KV has undergone a significant restructuring of its business following a number of product recalls and the temporary suspension of its manufacturing operations by the FDA.

However, the supply of Evamist™, which is manufactured by a third party, has not been adversely affected by these events. KV has provided reassurances that despite the broader organisational challenges it remains fully committed to focusing its sales force on the promotion of Evamist™. In fact, KV has stated that the marketing and promotional support for Evamist™ remains unchanged by the restructuring elsewhere in the company and it expects weekly growth in prescription sales of Evamist™ to continue.

Acrux will monitor the situation closely and provide any further updates to shareholders as they become available.

Evamist™ total prescriptions per week since launch

Source: IMS

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