CPEX Cpex Pharmaceuticals, Inc. (MM)

CPEX Pharmaceuticals, Inc. (NASDAQ: CPEX) today received a letter from Athyrium Capital Management, LLC in response to recent incomplete and inaccurate statements by Mangrove Partners. The text of the letter follows.

  Jeffrey Ferrell Athyrium Capital Management, LLC 126 East 56th Street New York, NY 10022   March 4, 2011   The Board of Directors CPEX Pharmaceuticals, Inc. 2 Holland Way Exeter, NH 03833   Dears Sirs:   The March 2, 2011 letter by Nathaniel August to the Board of Directors for CPEX Pharmaceuticals, Inc. (the "Company"), which was included in the Schedule 13D filed by The Mangrove Partners Fund, L.P., Mangrove Partners, Mangrove Capital and Nathaniel August (the "Letter"), is an incomplete and inaccurate description of the conversation between Jeffrey Ferrell of Athyrium Capital Management and Mr. August. The Letter does not reflect the views of Athyrium Capital Management. Athyrium has no interest in funding a recapitalization for CPEX and is fully committed to its lending agreement with FCB I LLC. In light of the foregoing, Athyrium intends to have no further contact with Mangrove or any other shareholder regarding the proposed merger transaction or any alternative financing transaction for the Company in lieu of the proposed merger transaction.   Sincerely,

 

Jeffrey Ferrell  

About CPEX Pharmaceuticals, Inc.

CPEX Pharmaceuticals, Inc. is an emerging specialty pharmaceutical company focused on the development, licensing and commercialization of pharmaceutical products utilizing CPEX’s validated drug delivery platform technology. CPEX has U.S. and international patents and other proprietary rights to technology that facilitates the absorption of drugs. CPEX has licensed applications of its proprietary CPE-215® drug delivery technology to Auxilium Pharmaceuticals, Inc. which launched Testim, a topical testosterone gel, in 2003. CPEX maintains its headquarters in Exeter, NH. For more information about CPEX, please visit www.cpexpharm.com.

ADDITIONAL INFORMATION AND WHERE TO FIND IT

CPEX has filed with the Securities and Exchange Commission (the “SEC”) and furnished to its stockholders a definitive proxy statement in connection with the proposed transaction with FCB (the “Definitive Proxy Statement”). This communication may be deemed to be solicitation material in respect of the merger with FCB. Investors and security holders of CPEX are urged to read the Definitive Proxy Statement and the other relevant materials (when they become available) because such materials will contain important information about CPEX and the proposed transaction with FCB. The Definitive Proxy Statement and other relevant materials (when they become available), and any and all other documents filed by CPEX with the SEC, may be obtained free of charge at the SEC’s website at www.sec.gov. In addition, investors and security holders may obtain free copies of the documents CPEX files with the SEC by directing a written request to CPEX Pharmaceuticals, Inc., 2 Holland Way, Exeter, NH 03833, Attention: Chief Financial Officer. Copies of CPEX’s filings with the SEC may also be obtained at the “Investors” section of CPEX’s website at www.cpexpharm.com/investor.htm.

INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT AND THE OTHER RELEVANT MATERIALS (WHEN THEY BECOME AVAILABLE) BEFORE MAKING ANY VOTING OR INVESTMENT DECISION WITH RESPECT TO THE PROPOSED TRANSACTION WITH FCB.

CPEX and its directors and executive officers may be deemed to be participants in the solicitation of proxies from the security holders of CPEX in connection with the proposed transaction with FCB. Information about those directors and executive officers of CPEX, including their ownership of CPEX securities, is set forth in the Definitive Proxy Statement (filed with the SEC on February 4, 2011) and in the proxy statement for CPEX’s 2010 Annual Meeting of Stockholders (filed with the SEC on April 9, 2010), as supplemented by other CPEX filings with the SEC. Investors and security holders may obtain additional information regarding the direct and indirect interests of CPEX and its directors and executive officers in the proposed transaction with FCB by reading the proxy statements and other public filings referred to above.

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS

Certain items in this document may constitute forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those indicated in such forward-looking statements, including, but not limited to: the proposed transaction with FCB; the actions, interests, analyses and propositions of Mangrove and Nathaniel August; the risks associated with and sales of Testim; the performance of CPEX; the benefits of the proposed transaction with FCB and such other risks and uncertainties as are detailed in CPEX’s Annual Report on Form 10-K filed with the SEC on March 29, 2010, and in the other reports that CPEX periodically files with the SEC. Copies of CPEX’s filings with the SEC may be obtained by the methods described above. CPEX cautions investors not to place undue reliance on the forward-looking statements contained in this document or other filings with the SEC.

The statements in this document reflect the expectations and beliefs of CPEX’s management only as of the date of this document and subsequent events and developments may cause these expectations and beliefs to change. CPEX undertakes no obligation to update or revise these statements, except as may be required by law. These forward-looking statements do not reflect the potential impact of any future dispositions or strategic transactions, including the proposed transaction with FCB, that may be undertaken. These forward-looking statements should not be relied upon as representing CPEX’s views as of any date after the date of this document.