October 24, 2008: AlphaRx Inc. and Gaia BioPharma Ltd, a privately held early stage biopharmaceutical company focused on hospital-based injectable therapeutics, announced the signing of a Feasibility and Option Agreement.

Under the terms of the Agreement, AlphaRx will use its proprietary nano drug delivery platforms to formulate two injectable products targeting underserved medical conditions. These represent market opportunities potentially exceeding $200M in annual revenue for Gaia. Gaia will have 12 months to evaluate the formulated products and exercise its option right for a pre-negotiated License Agreement.

AlphaRx is responsible for completing the product development work and will be eligible to receive an upfront non-refundable option fee and reimbursements in exchange for completing certain pre-defined development milestones. AlphaRx will also receive royalty and milestone payments from future product sales that utilize AlphaRx’s delivery technology. Gaia BioPharma will be responsible for performing all aspects of clinical development, regulatory submission, manufacture and commercial operations.

The licensing agreements include up to $5.35M to AlphaRx in potential development milestone payments; potential sales milestones in excess of $27M in addition to royalties on the net sales of the two products by Gaia. The first product is expected to reach commercial stage by 2011.