MiddleBrook Pharmaceuticals Announces $100 Million Investment to Support Launch of...

MiddleBrook Pharmaceuticals Announces $100 Million Investment to Support
Launch of MOXATAG(TM)
Strategic Review Results in $100MM Investment by Equity Group Investments;

GERMANTOWN, Md., July 1 /PRNewswire-FirstCall/ -- MiddleBrook
Pharmaceuticals, Inc. (Nasdaq: MBRK), a pharmaceutical company focused on
developing and commercializing novel anti-infective products, today announced
that its Board of Directors has completed its previously announced review of
strategic alternatives and has entered into an agreement with Equity Group
Investments, L.L.C. (EGI) for a $100 million equity investment in the Company.
As part of the agreement, a new, commercially-focused senior management team
will be appointed. Proceeds from the transaction will allow MiddleBrook to
move forward with the commercial launch of its once-daily MOXATAG(TM) product,
and to continue the development of its clinical pipeline.
As part of the agreement with EGI, Edward M. Rudnic, Ph.D. will step down
from his current position as MiddleBrook's President and CEO and will be
replaced by John Thievon, effective upon the closing of the transaction. In
addition, David Becker has been appointed as MiddleBrook Executive Vice
President, Finance and CFO, replacing Robert C. Low as MiddleBrook's principal
financial officer, also effective upon the transaction closing. Dr. Rudnic and
Mr. Low will continue to serve as consultants to the Company following the
closing.
Mr. Thievon brings more than 17 years of pharmaceutical sales and
marketing experience to MiddleBrook, and will be responsible for the
successful launch and commercialization of MOXATAG Tablets and the continued
development of the Company's other PULSYS(R) pipeline products. Most recently,
Mr. Thievon was Executive Vice President, Sales and Corporate Accounts for
Adams Respiratory Therapeutics (Adams). While with Adams, Mr. Thievon launched
the Mucinex(R) brand and built the Mucinex franchise into more than $350
million in annual revenue. Mr. Thievon left Adams in February 2008, following
its acquisition by Reckitt Benckiser.
Mr. Becker was also a former senior executive at Adams, where he was Chief
Financial Officer from 2000-2007. He completed Adams' initial public offering
in 2005, and was appointed Chief Financial and Administrative Officer in 2007.
Mr. Becker has 18 years of public accounting, mergers and acquisitions, and
corporate finance experience, and will be responsible for all of MiddleBrook's
finance and operating activities.
Several changes to the Board of Directors will result from the agreement
with EGI. Dr. Rudnic will depart from the MiddleBrook board, effective upon
the transaction closing. At closing, William C. Pate, Managing Director at
EGI; Mark Sotir, Managing Director at EGI; and John Thievon will join the
current Board, which will be expanded to nine members.
"We are very pleased to have completed this agreement with Equity Group,
and believe it provides MiddleBrook with both the financial resources and the
operational management expertise to make our FDA-approved MOXATAG product a
commercial success," stated R. Gordon Douglas, M.D., MiddleBrook Chairman of
the Board. "With our strategic review now concluded, we look forward to
focusing the Company's initiatives on successfully executing its operating
plan."
"Additionally, with the forthcoming departure of Ed Rudnic, I would like
to join the Company's employees and all its shareholders in expressing my
profound gratitude for his contribution in creating MiddleBrook, its
intellectual property, and in leading the team to the successful approval of
MOXATAG," Dr. Douglas continued. "Ed's leadership, vision, and proven
entrepreneurial achievements will continue to serve MiddleBrook well following
his departure, and we wish him the best in his future endeavors. The current
Board of Directors looks forward to working closely with MiddleBrook's new
executive management team in driving MOXATAG to the market. We are all very
focused and eager to present MOXATAG to the market and to communicate its
unique benefits of improved convenience and likely enhanced patient compliance
to the healthcare community."
Investment Terms
MiddleBrook announced today that it entered into a definitive securities
purchase agreement with EGI for the sale of 30,303,030 shares of its common
stock at $3.30 per share and a five-year warrant to purchase a total of
12,121,212 shares of common stock at an exercise price of $3.90 per share.
EGI's investment totals approximately $100 million.
In connection with the transaction, MiddleBrook has agreed to repurchase
its Keflex assets previously sold to funds affiliated with Deerfield
Management in November of 2007, contemporaneously with the closing of the
transaction. The Company will reacquire the Keflex assets as well as its
ongoing royalty obligations to Deerfield for approximately $11 million.
Additionally, as a result of the EGI transaction, MiddleBrook will redeem the
3.0 million warrants issued to Deerfield in conjunction with the Keflex asset
sale for a total of $8.8 million.
The transaction is subject to approval by MiddleBrook's common
stockholders, and other customary closing conditions, and is expected to close
in 60 to 90 days. Three of MiddleBrook's largest stockholders, HealthCare
Ventures, Rho Ventures and Deerfield, have entered into voting agreements with
EGI and the Company, agreeing to vote their shares of MiddleBrook common stock
in favor of the EGI transaction. These MiddleBrook shareholders collectively
represent approximately 37 percent of the Company's currently outstanding
shares of common stock.
In addition to satisfying the Deerfield obligations described above, the
Company intends to use the proceeds from the financing to support the creation
of a sales and marketing infrastructure supporting the commercial launch of
MOXATAG, for restarting the clinical development of its once-daily PULSYS
version of Keflex(R), as well as the pediatric version of its Amoxicillin
PULSYS product that were previously on-hold, and for working capital and
general corporate purposes.
Morgan Stanley & Co. Incorporated acted as financial advisor to
MiddleBrook in connection with this transaction.
The shares sold in the private placement and the shares issuable upon the
exercise of the related warrants have not been registered under the Securities
Act of 1933, as amended, or state securities laws, and may not be offered or
sold in the United States without being registered with the Securities and
Exchange Commission ("SEC") or through an applicable exemption from SEC
registration requirements. The shares and warrants were offered and sold only
to EGI. MiddleBrook has agreed to file a registration statement with the SEC
covering the resale of the common stock issued in the private placement and
issuable upon the exercise of the warrants.
This news release is not an offer to sell or the solicitation of an offer
to buy the shares of the Company.
ABOUT EGI:
Equity Group Investments, L.L.C. (EGI) is a Chicago-based private
investment firm that has an active portfolio spanning industries and
continents with interests in finance, energy, pharmaceuticals, transportation,
media, telecommunications and real estate. Founded 40 years ago by financier
Sam Zell, the firm has a successful track record of investing in and
partnering with companies to maximize their potential. EGI's origins were in
commercial real estate, and the company served as the catalyst for three of
the largest real estate investment trusts in the industry's history.
About Middlebrook Pharmaceuticals:
MiddleBrook Pharmaceuticals, Inc. (Nasdaq: MBRK) is a pharmaceutical
company focused on the development and commercialization of anti-infective
drug products that fulfill substantial unmet medical needs in the treatment of
infectious disease. The Company is developing anti-infective drugs based on
its novel biological finding that bacteria exposed to antibiotics in front-
loaded staccato bursts, or "pulses," are killed more efficiently and
effectively than those under standard treatment regimens. Based on this
finding, MiddleBrook has developed a proprietary, once-a-day pulsatile
delivery technology called PULSYS(R). The Company currently markets the
Keflex(R) brand of cephalexin and has received regulatory approval for
MOXATAG(TM) - the first and only once-daily amoxicillin product approved for
marketing in the U.S. For more on MiddleBrook, please visit
www.middlebrookpharma.com.
About MOXATAG:
MOXATAG(TM) (amoxicillin extended-release) tablets are a once-a-day
extended-release formulation of amoxicillin for oral administration consisting
of three components: one immediate-release and two delayed-release. The three
components are combined in a specific ratio to prolong the release of
amoxicillin from MOXATAG compared to immediate-release amoxicillin. MOXATAG is
intended to provide a lower treatment dose, once-daily alternative to
currently approved penicillin and amoxicillin regimens for the treatment of
adults and pediatric patients 12 years and older with tonsillitis and/or
pharyngitis.
This announcement contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. These statements are based on
MiddleBrook's current expectations and assumptions. These statements are not
guarantees of future performance and are subject to a number of risks and
uncertainties that would cause actual results to differ materially from those
anticipated. The words, "believe," "expect," "intend," "anticipate," and
variations of such words, and similar expressions identify forward-looking
statements, but their absence does not mean that the statement is not forward-
looking. Statements in this announcement that are forward-looking include, but
are not limited to, statements about the Company's future development plans,
clinical trials, potential commercial success, and any financial forecasts
included in this announcement.
The actual results realized by MiddleBrook could differ materially from
these forward-looking statements, depending in particular upon the risks and
uncertainties described in the Company's filings with the Securities and
Exchange Commission. These include, without limitation, risks and
uncertainties relating to the Company's financial results and the ability of
the Company to (1) raise additional capital and continue as a going concern,
(2) increase Keflex 750 sales, (3) retain marketing approval for its MOXATAG
product, (4) successfully reduce costs, (5) reach profitability, (6) prove
that the preliminary findings for its product candidates are valid, (7)
receive required regulatory approvals, (8) successfully conduct clinical
trials in a timely manner, (9) establish its competitive position for its
products, (10) develop and commercialize products that are superior to
existing or newly developed competitor products, (11) develop products without
any defects, (12) have sufficient capital resources to fund its operations,
(13) protect its intellectual property rights and patents, (14) implement its
sales and marketing strategy, (15) successfully attract and retain
collaborative partners, (16) successfully commercialize and gain market
acceptance for its Keflex products, (17) successfully obtain sufficient
manufactured quantities of its drug products at acceptable rates, and (18)
retain its senior management and other personnel. Existing and prospective
investors are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of today's date. MiddleBrook undertakes no
obligation to update or revise the information in this announcement, whether
as a result of new information, future events or circumstances or otherwise.
SOURCE MiddleBrook Pharmaceuticals, Inc.

Robert Bannon, Vice President, Investor Relations & Corporate Communications,
+1-301-944-6710, rbannon@middlebrookpharma.com