Cellegy Pharmaceuticals Announces Signing of Definitive Merger Agreement

QUAKERTOWN, Pa., Feb. 12 /PRNewswire-FirstCall/ -- Cellegy
Pharmaceuticals, Inc. (OTC Bulletin Board: CLGY) today announced that it has
entered into a definitive merger agreement providing for the acquisition of
Cellegy by Adamis Pharmaceuticals Corporation. Adamis is a privately held
specialty pharmaceuticals company that is engaged in the research, development
and commercialization of products for the prevention of viral infections,
including influenza. Adamis currently markets and sells a line of
prescription products for a variety of allergy, respiratory disease and
pediatric conditions, and also owns a GMP certified independent contract
packager of pharmaceutical and nutraceutical products. Adamis' chief
executive officer, Dr. Dennis Carlo, is expected to become the chief executive
officer of the combined company. Dr. Carlo is a veteran of the pharmaceutical
and biotechnology industry, having previously served as CEO of publicly traded
Immune Response Corporation, president of Telos Pharmaceuticals, and Vice
President of Research and Development and Therapeutic manufacturing of
Hybritech Inc. prior to its acquisition by Eli Lilly & Co.
The transaction was unanimously approved by the boards of directors of
both companies and is anticipated to close during the second or third quarter
of 2008, subject to the filing of a registration statement and proxy statement
with the Securities and Exchange Commission, the approval of Adamis' and
Cellegy's respective stockholders at stockholder meetings following
distribution of a definitive proxy statement, and other customary closing
conditions. Holders of approximately 40% of Cellegy's outstanding common
stock have entered into voting agreements pursuant to which they agreed to
vote their shares in favor of the transaction. The combined company expects
to continue to be publicly traded after completion of the merger, although
under a different corporate name.
"The merger of Cellegy and Adamis will create a new specialty
pharmaceutical company focused on the development and commercialization of
therapeutic products for a variety of viral diseases, including influenza,"
said Mr. Williams, Cellegy's CEO. "We like the fact that in addition to
technologies in development that we believe are promising, Adamis has allergy
and respiratory products already being sold in the U.S. marketplace, and a
contract packaging company that provides a source of current revenue and the
potential for future revenue and income growth," said Mr. Williams.
"This merger allows us to fulfill our strategic objective of building a
publicly traded company that combines biopharmaceutical research and
development with the financial stability of a company producing immediate
revenues from the sale of specialty pharmaceutical products and from the
packaging of drugs for major pharmaceutical distributors. We believe the
concept makes sense both financially and operationally," said Dr. Carlo.
Cellegy estimates that its stockholders will hold between approximately 4%
to 6% of the total number of outstanding shares immediately after the merger,
and Adamis' stockholders are expected to hold in excess of 94% of the total
number of outstanding shares of the combined companies. If the transaction is
approved by the stockholders, before the closing of the merger Cellegy will
implement a reverse stock split of its common stock so that the outstanding
Cellegy shares will be converted into a number of shares equal to the sum of
3,000,000 plus the amount of Cellegy's net working capital at the time of the
closing of the merger divided by $0.50. It is estimated based on assumptions
that the reverse split will be between 8.5 to 1 and 9.945 to 1. The actual
amounts and percentages will depend on many factors, and actual amounts and
percentages could be higher or lower. There are currently approximately
29.8 million outstanding Cellegy shares.
At the effective time of the merger, each outstanding share of Adamis
common stock will be converted into the right to receive one (post-reverse
stock split) share of Cellegy common stock (excluding in all cases dissenting
shares), subject to cash payment in lieu of the issuance of fractional shares.
Adamis currently has approximately 50 million outstanding shares of common
stock, excluding options, warrants and convertible securities.
In connection with the signing of the merger agreement, Cellegy also
provided a loan to Adamis in the amount of $500,000 to provide additional
funds to Adamis during the pendency of the merger transaction.
The companies anticipate that in connection with the closing of the
transaction, directors selected by Adamis would assume a majority of the
positions on the combined company's board of directors. Richard C. Williams,
Cellegy's Chairman and Interim Chief Executive Officer, and current Cellegy
directors John Q. Adams and Robert B. Rothermel are expected to continue as
directors of the combined company.
The merger is intended to qualify for federal income tax purposes as a
tax-free reorganization under the provisions of Section 368(a) of the U.S.
Internal Revenue Code of 1986, as amended.
About Cellegy
Cellegy Pharmaceuticals is a specialty biopharmaceutical company that
specializes in women's health. Savvy(R) (C31G vaginal gel), a microbicide gel
product for contraception, is currently undergoing Phase 3 clinical studies in
the United States for contraception.
About Adamis
Adamis is a specialty pharmaceutical company engaged in the research,
development and commercialization of prescription medicines for the treatment
of viral infections, including influenza. Adamis also markets several
prescription allergy and respiratory products in the United States and is
developing additional product candidates in the allergy and respiratory field.
Adamis also owns a specialty packaging company that provides packaging for
pharmaceutical and nutraceutical products.
Forward Looking Statements
This press release contains forward-looking statements within the meaning
of the U.S. Private Securities Litigation Reform Act of 1995. These
statements may be identified by the use of forward-looking terminology such as
"anticipate," "believe," "continue," "could," "estimate," "expect," "intend,"
"may," "might," "plan," "potential," "predict," "should," or "will," or the
negative thereof or other variations thereon or comparable terminology. Any
statements in this press release regarding the acquisition, Cellegy's business
and technology, and Adamis' business and technology that are not historical
facts may be considered "forward-looking statements," including statements
regarding the acquisition, its expected benefits, and the acquisition's
anticipated timing. Cellegy has based these forward-looking statements on
management's current preliminary expectations, assumptions, estimates and
projections. While Cellegy believes its expectations, assumptions, estimates
and projections are reasonable, such forward-looking statements are only
predictions and involve known and unknown risks and uncertainties, many of
which are beyond its control. Such risks and uncertainties relate to, among
other factors: the risk that the transaction may not be completed or that the
closing of the transaction may be delayed; the risk of a material adverse
event affecting Cellegy; and risks relating to our continued operations. You
should also review our discussion of risk factors and other disclosures in
Cellegy's Annual Report on Form 10-K for the year ended December 31, 2006 and
other filings with the Securities and Exchange Commission. Undue reliance
should not be placed on forward-looking statements, which speak only as of the
date they are made. Cellegy undertakes no obligation to update any
forward-looking statements to reflect new information, events or circumstances
after the date they were made, or to reflect the occurrence of unanticipated
events.
Where to find additional information about the Transaction
Cellegy intends to file a registration statement and proxy statement in
connection with the proposed transaction. Investors and stockholders are
urged to read the registration statement and proxy statement when it becomes
available because it will contain important information about the transaction.
Additional information is also available in a Report on Form 8-K filed by
Cellegy relating to the transactions described in this press release. BEFORE
MAKING ANY VOTING OR INVESTMENT DECISION, CELLEGY'S STOCKHOLDERS ARE URGED TO
READ THE PROXY STATEMENT REGARDING THE PROPOSED TRANSACTION CAREFULLY AND IN
ITS ENTIRETY WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and stockholders may
obtain free copies of the registration statement and proxy statement and other
relevant documents (when they become available) and other documents filed with
the Securities and Exchange Commission at the Securities and Exchange
Commission's web site at: www.sec.gov. In addition, investors and
stockholders may obtain free copies of the documents filed with the Securities
and Exchange Commission by Cellegy by contacting the persons identified below.
Cellegy's directors and executive officers may be deemed to be participants in
the solicitation of proxies from its stockholders in connection with the
proposed transaction. Information regarding the interests of directors and
executive officers in the transaction will be included in the proxy statement
of the company. Additional information regarding directors and executive
officers of Cellegy is also included in the company's annual report on Form
10-K for the year ended December 31, 2006 and, when it becomes available, its
annual report on form 10-K for the year ended December 31, 2007, filed with
the Securities and Exchange Commission, which is available as described above.
SOURCE Cellegy Pharmaceuticals, Inc.

Richard C. Williams, Chairman and Interim CEO, or Robert J. Caso, Vice
President, Finance & CFO, rcaso@biosyn-inc.com, both of Cellegy
Pharmaceuticals, Inc., +1-215-914-0900, ext. 603