Please excuse any typing errors.Metabolic Pharmaceuticals...

Please excuse any typing errors.

Metabolic Pharmaceuticals (MBP)
Aegis has been commissioned my Metabolic Pharmaceuticals to be included in the June 2007 Health and Life Review and has received a fee for its inclusion.

Company Overview

Metabolic Pharmaceuticals Limited is a Melbourne based, ASX listed biotechnology company with around 20 employees. Metabolic's main focus is to take innovative drugs, with large market potential, through formal preclinical and clinical development. The company's current pipeline includes ACV1, a neuropathic pain drug currently in Phase 2A human clinical trials as well as drugs targeting osteoporosis, nerve protection/regeneration and type 2 diabetes. Metabolic's durgs address multi billion dollar markets, which are poorly served by existing treatments, and the company has a strong intellectual property portfolio with several patent families. A platform is also being developed for the oral delivery of existing peptide drugs, a technology that has already shown proof -of-concept. This platform has high potential for use by the other companies developing peptide drugs and could foster multiple out-licensing opportunities.

Strategy:
1. Continue efficient development of Metabolic's lead clinical project ACV1 for pain and seek potential partners.

2. Evaluate development plan for AOD9604 for osteoporosis and, if feasible, progress directly into phase 2.

3. Futher develop Metabolic's oral Peptide Delivery Platform and seek multiple out-licensing opportunities.

4. Continue to progress nerve repair and diabetes drugs towards the clinic.

5. In-license additional high-quality durgs, which are at large preclinical stage or early clinical stage

Aegis Comments:
Market Position. MBP's lead drug ACV1 is in phase 2 clinical trails for nerve pain. MBP is also focusing on animal studies into AOD9604, which may have promise in the treatment and prevention of osteoporosis. A third key initiative relates to extending the application of MBP's Oral Peptide Delivery Platform to high-value drug candidates other than oral ACV1, which showed promising preclinical results in animals in Nov-06. MBP is also running discovery programs for diabetes and with Neuren, for nerve regeneration.

Milestones: in Feb 07, MBP announced the disappointing news that the phase 2B results for AOD9604 did not support commercial viability of the obesity project and so the clinical program for this indication had been terminated. A second phase 2 trail of ACV1 has commenced, targeting diabetic neuropathic pain and the nerve pain of shingles. Results from the first phase 2 ACV1 trial are expected mid 2007. In the Neurent collaboration for peripheral neuropathy, a lead compound should be selected during CY07.

Risk Profile. MBP's risk profile was dented after the termination of the AOD9604 obesity trials. However, mangement is strong. MBP's CEO has big pharma and small biotech experience. A new Chairman, Mr. Rob Stewart, was appointed in April 07, together with several other board changes. The board has international pharmaceutical, medical, financial markets, patent and licensing skills. At the start of April 07 MBP had very strong cash reserves of $23M, so in-lincencing deals to expand the pipeline are likely.

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