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AmpliPhi to Combine with Special Phage Services to Create World's Leading Anti-Infective Company Focused on Bacteriophage-Based Therapies.

Key points

* Ampliphi to acquire Special Phages Services in a share exchange transaction, subject to closing conditions

* Combination would create an international bacteriophage company with a pipeline of innovative development stage anti-bacterial therapies focused on antibiotic-resistant infections

* Would bring together complementary technologies and expertise in bacteriophage-based therapies

* Strong management team led by Ampliphi's Phil Young as CEO and Jeremy Curnock-Cook as Chairman, with operations in the US, UK and Australia

RICHMOND, Va. & LONDON & SYDNEY -- AmpliPhi Biosciences Corporation [APHB.PK] ("Ampliphi"), today announced that it has offered to acquire Brookvale, Sydney-based Special Phage Services ("SPS"). The combination of the two companies would result in the creation of a leading anti-infective company focused on developing phage-based therapies to combat the growing threat of antibiotic-resistant infection.

In a share exchange transaction, AmpliPhi Australia Pty Limited, a wholly owned subsidiary of US-based AmpliPhi, has offered to acquire Sydney-based Special Phage Holdings Pty Ltd ("SPH"), the holding company of SPS. Under the terms of the acquisition AmpliPhi has offered up to 40 million shares of its common stock in exchange for 100% of the fully diluted share capital of SPH (approximately 22.7 million shares outstanding as of September 7, 2012). 20 million AmpliPhi shares would be held in escrow, 8 million to satisfy potential warranty claims by Ampliphi under the transaction documents and the remaining 12 million shares to be held pending completion of certain milestones. Upon completion of the transaction, if all shares held in escrow are released the former shareholders of SPH (on a fully diluted basis) would hold up to approximately 47% of outstanding Ampliphi shares (based on Ampliphi's approximately 44.9 million shares outstanding on August 27, 2012). Completion of the share exchange acquisition of SPH by Ampliphi is subject to standard conditions, including, without limitation, acceptance of Ampliphi's offer by a sufficient number of SPH shareholders, completion of regulatory approvals and execution of certain ancillary agreements.

The combination would bring together complementary technologies and expertise in bacteriophage-based therapies to create a company with an exciting development stage pipeline of innovative anti-bacterials addressing the antibiotic resistant infections market.

The combined company would be led by a very strong management team combining extensive drug development, financial and regulatory expertise. AmpliPhi's President and CEO, Phil Young would continue to lead the enlarged company alongside current Chairman Dr Jeremy Curnock-Cook and other Ampliphi board directors Caroline Williams (as deputy chairman), Dr. Mike Perry, and Louis Drapeau. The Founder and Managing Director of SPH, Dr. Anthony Smithyman, and SPH's financial adviser, Tony Gellert would also join the Ampliphi board on completion of the transaction.

Phil Young, AmpliPhi President and CEO said, "The combination of AmpliPhi with SPH would result in the creation of the first global phage therapy company covering the United States, Europe, and the Asia-Pacific regions. Ampliphi and SPH each have complementary technologies and pipelines backed by a truly stellar team of internationally-recognized phage scientists. The combined companies would possess an unmatched pipeline of innovative developmental phage therapies. , Our initial post-acquisition focus is expected to be the treatment of bacterial infections that are resistant to conventional antibiotics. Initial targets include: global pandemic strains of Pseudomonas aeruginosa, MRSA (Methicillin Resistant Staphylococcus Aureus), E. coli, Klebsiella and other hospital-related 'super bugs'."

AmpliPhi was the first company to present evidence of the clinical efficacy of phage therapy in a well -controlled and regulated human clinical trial. Its leading therapeutic programs target areas of significant unmet clinical need. Its proprietary technology also has potential application in the treatment of orphan indications. Historically, Ampliphi's development programs targeted gram-negative bacterial infections that are often resistant to existing antibiotic treatments. These include BioPhage-PA, for the treatment of chronic and acute lung infections in cystic fibrosis and VAP(Ventilator Associated Pneumonia) patients. In addition to its pipeline of phage products against the major hospital- related infections ( the so-called ESKAPE organisms) the acquisition of SPS brings added expertise in veterinary medicine. The team at SPS has provided evidence of the value of phage-based treatments in treating infertility in thoroughbred horses affected by resistant bacterial infection. If the acquisition is completed, the new combined company is expected to seek to develop and partner many applications in treating and curing infections in animals.

Dr. Anthony Smithyman, Chairman and Managing Director of SPS said "This combination makes perfect sense; we expect it to give us access to the larger technology capital markets of the United States and Europe at a critical time in our development and commercialization cycle and provide us with enhanced visibility and access to potential partners in the pharmaceutical industry."

Post -combination, Ampliphi plans to raise further capital to finance its drug development programs. It also plans to continue to seek to develop alliances with pharmaceutical companies and other partners to maximise the value of its technology platform.

Ampliphi Chairman Jeremy Curnock Cook added, "As a US-listed company, we believe that the combined business would be more appealing to a larger audience of specialist healthcare investors and pharma partners, both within the United States and internationally."

Ampliphi is scheduled to present at the 2012 Rodman & Renshaw Annual Global Investment Conference in New York, NY on Monday, September 10, 2012 at 4:05PM US Eastern Time.

Notes to editors

AmpliPhi Biosciences

AmpliPhi BioSciences Corporation, created in 2011 through the merger of Biocontrol Limited with Targeted Genetics Inc., is a biotechnology company dedicated to the development of innovative antibacterial solutions to improve human health through the application of its proprietary bacteriophage platform. The Company's lead product development programs are targeting gram-negative infections that are often resistant to existing antibiotic treatments. For more information, please visit www.ampliphibio.com

Special Phage Services

Special Phage Services Pty Ltd was formed in 2004 to address the rapidly escalating problem of antibiotic resistance. The company has focused on the ESKAPE (E. coli, Staph, Klebsiella, Acinetobacter, Pseudomonas, and Enterobacter) range of hospital- related "superbugs" but has also developed phage-based treatments in the veterinary health area. Three of the company's lead products are entering the clinical trial stage. For more information, please visit www.specialphageservices.com.au

Forward-looking Statements

This press release contains certain forward-looking statements that involve known and unknown risks, delays, uncertainties, and other factors not under the control of the AmpliPhi. AmpliPhi's actual results, performance, or achievements may differ materially from those conveyed in such forward-looking statements, and Ampliphi disclaims any intent or obligation to update these forward-looking statements. Examples of such forward looking statements include, but are not limited to, statements about: the potential completion of an acquisition of SPH by Ampliphi, the potential research, development and commercialization benefits of the potential combination of Ampliphi and SPH; potential therapies and target indications in both humans and animals that the combined company may research and develop; the benefits of the acquisition of SPH for obtaining additional financing or partnering opportunities; and the number of shares of Ampliphi that may be issued to the shareholders of SPH in connection with its acquisition by Ampliphi and the ownership percentage such shares may represent of Ampliphi's outstanding shares. The factors that could cause actual results, performance or achievements to differ from the forward-looking statements include the possibility that an insufficient number of SPH shareholders will accept the offer from Ampliphi to acquire SPH or that the proposed acquisition of SPH by Ampliphi could otherwise be delayed or prevented; the expected benefits from the Ampliphi's acquisition of SPH will not be realized; the risk that the combined businesses will not be integrated successfully; the risk that Ampliphi's current financial resources and future financial resources will be insufficient to enable Ampliphi to fund continuing operations; difficulties or delays in obtaining financing or in entering partnering transactions; and the risk that Ampliphi's product research, development and commercialization efforts will be unsuccessful. Ampliphi is not subject to the reporting obligations of the Securities and Exchange Act of 1934 and, accordingly, is not required to file current or periodic reports with the Securities and Exchange Commission.

Securities Law Matters

The shares of Ampliphi to be issued in connection with the combination of Ampliphi and SPH as described in this press release have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act"), and may not be offered or sold in the United States or to, or for the benefit of, U.S. persons (as defined in Regulation S under the U.S. Securities Act), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act. Purchasers of or subscribers for the shares may not offer to sell, pledge or otherwise transfer the shares in the United States or to U.S. persons (other than distributors) unless such offer, sale, pledge or transfer is registered under the U.S. Securities Act or an exemption from registration is available. Hedging transactions involving the shares may not be conducted, directly or indirectly, unless in compliance with the U.S. Securities Act.

For U.S. Persons, the shares of Ampliphi to be issued in connection with the combination of Ampliphi and SPH as described in this press release have been offered only to accredited investors in reliance upon exemptions provided by Section 4(2) of the U.S. Securities Act, Regulation D under the Securities Act and applicable state securities laws.

This press release does not constitute an offer to sell, or the solicitation of an offer to buy, the shares of Ampliphi to be issued in connection with the combination of Ampliphi and SPH to any person.
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Publication:Business Wire
Date:Sep 10, 2012
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