Auriga Settles Lawsuit to Reduce Royalties Payable on Levall Product Line by Approximately $10 Million.

NORCROSS, Ga. -- Auriga Laboratories, Inc. (OTCBB:ARGA), a specialty pharmaceutical company with products for the treatment of acute respiratory diseases, dermatological conditions, and Xerostomia (or "dry mouth"), said it reached a settlement agreement with Athlon Pharmaceuticals, Inc. regarding a dispute between the parties related to its license agreement between Auriga and Athlon, which provided Auriga an exclusive license to certain pharmaceutical products developed by Athlon, including the Levall brand of cough and cold medication.

Auriga filed a lawsuit against Athlon on February 5, 2007 regarding certain sales practices allegedly engaged in by Athlon regarding the Levall products. The terms of the settlement agreement, as provided in more detail in a Form 8-K filed with SEC by Auriga, provide for a full and final settlement of all disputes and claims currently between the parties.

In connection with the settlement agreement, Athlon agreed to a reduction in the royalties it would be paid by Auriga on net sales of the Levall products, as well as effecting changes to Auriga's reporting and payment obligations. The license agreement originally provided that Auriga pay Athlon a royalty payment equal to 50% of net sales up to $10 million through the end of the first year following the closing date of the license agreement, and this rate was to decrease to 20% of net sales in excess of $10 million. The royalty payments for the second and third years of the license agreement were equal to 35% of net sales and 25% of net sales, respectively. The royalty payments would be reduced to 8% of net sales in subsequent years. If at any time the total aggregate consideration paid under the agreement exceeded $20 million, royalty payments would be reduced to 1% of net sales and paid in perpetuity.

The new agreement reduces the initial period of time for which Auriga is obligated to make royalty payments at the rate of 50% of net sales, reducing it from the first year following the closing date of the license agreement to the date of December 31, 2006. Further, effective February 1, 2007, the royalty payment rate on all sales by Auriga is reduced to 25% of net sales until the aggregate royalty payments total $10 million. Once the aggregate royalty payments total $10 million, Auriga will not be required to make any further royalty payments to Athlon.

The new agreement also reduces the frequency of Auriga's reporting and payment obligations to only quarterly reports and payments. The license agreement previously required Auriga to make monthly reports and payments until the aggregate royalty payments made by Auriga equaled or exceeded $10 million, with reports and payments to be made on a quarterly basis thereafter.

About Auriga Laboratories[TM]

Auriga Laboratories is a specialty pharmaceutical company capitalizing on high-revenue markets and opportunities in the pharmaceutical industry through proactive sales, integrated marketing, and advanced in-house drug development capabilities. The company's high-growth business model combines acquisition of proven brand names, powerful product development strategies and rapidly-growing national sales teams and marketing operations. Auriga acquires valuable brand portfolios that are no longer a strategic focus for large pharmaceutical companies, then capitalizes on untapped marketplace opportunities through brand extension and directed sales/marketing programs. The company's drug-development pipeline leverages novel material science and advanced drug delivery technologies to produce improved formulations of successful brands to further expand markets, sales and clinical indications for proven, successful products. Auriga's exclusive prescription product portfolio currently includes Aquoral[TM] for the treatment of Xerostomia, Akurza[TM] and Xyralid[TM] dermatology products, and the Zinx[TM], Extendryl[R], and Levall[R] families of products for relief of symptoms associated with a range of acute respiratory diseases. For more information, visit: www.aurigalabs.com.

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