APHT Aphton (MM)

Aphton Corporation (NASDAQ:APHT) announced today that the Company entered into a binding letter agreement with the holders of the Company's $20 million Senior Convertible Notes, which were issued to the holders in March and June of 2003. Under the terms of the letter agreement, the holders agree to surrender the Senior Convertible Notes for cancellation by the Company and exchange the entire principal balance of $20 million due under the notes for $3 million in cash, shares of the Company's newly issued 0% Non-participating Series A Convertible Preferred Stock with an original Stated Value of $10 million and 6,500,000 shares of the Company's common stock, of which 1,500,000 shares will be placed in escrow at closing to be released upon the occurrence of certain events. The parties anticipate closing the transaction on or prior to November 18, 2005. "We are quite pleased with the outcome of our negotiations with the noteholders," commented Patrick Mooney, M.D., Chairman and Chief Executive Officer of Aphton Corporation. "We believe that the terms of the note exchange denote confidence from the noteholders, simplify the Company's balance sheet and remove a significant overhang on the Company. We further believe that the retirement of this debt puts the Company in a stronger position going forward to return shareholder value." Complete details of the debt cancellation will be contained in the Company's Form 8-K filed with the Securities and Exchange Commission. The Company will be holding a conference call on Thursday, November 10, 2005 at 9:00 a.m. ET to discuss the terms of the exchange of the notes, as well as other items related to the Company. -0- *T A live audio webcast of the conference call can be accessed either by telephone at: Toll Free in the US/Canada at 1-800-322-0079; Code Aphton Corporation Outside the U.S. at 1-973-409-9258; Code Aphton Corporation Or via the internet at http://viavid.net/dce.aspx?sid=00002AC7. *T A replay of the presentation will be available via the website and will begin approximately 2 hours after the conference call has concluded and will be available for 14 days. About Aphton Aphton Corporation, headquartered in Philadelphia, Pennsylvania, is a clinical stage biopharmaceutical company focused on developing targeted immunotherapies for cancer. Aphton's products seek to empower the body's own immune system to fight disease. Through the acquisition of Igeneon AG in March 2005, Aphton acquired late-stage products, IGN101, a cancer vaccine designed to induce an immune response against EpCAM-positive tumor cells, as well as IGN311. Aphton has strategic alliances with Daiichi Pure Chemicals for the development, manufacturing and commercialization of gastrin-related diagnostic kits; and with Xoma for treating gastrointestinal and other gastrin-sensitive cancers using anti-gastrin monoclonal and other antibodies. Aphton's most advanced product, Insegia(TM), targets the hormone, gastrin 17, in an attempt to treat gastrointestinal cancers. For more information about Aphton or its programs please visit Aphton's website at: www.aphton.com. Safe Harbor This press release includes forward-looking statements, including statements about: (1) the Company's belief that the terms of the note exchange denote confidence from the noteholders, simplify the Company's balance sheet and remove a significant overhang on the Company; (2) the Company's belief that the retirement of the debt puts the Company in a stronger position going forward to return shareholder value; and (3) the Company's expectation that it will close the debt exchange on or prior to November 18, 2005, or at all. These forward-looking statements may be affected by the risks and uncertainties inherent in the drug development process and in Aphton's business. This information is qualified in its entirety by cautionary statements and risk factor disclosure contained in Aphton's Securities and Exchange Commission filings, including Aphton's report on Form 10-K filed with the Commission on March 16, 2005. Aphton wishes to caution readers that certain important factors may have affected and could in the future affect Aphton's beliefs and expectations and could cause the actual results to differ materially from those expressed in any forward-looking statement made by or on behalf of Aphton. These risk factors include, but are not limited to: (1) Aphton's ability to successfully close the debt exchange on or prior to November 18, 2005, or at all; (2) Aphton's ability to return shareholder value if the debt exchange is consummated; (3) Aphton's ability to fund the further development of its research and development programs; (4) Aphton's ability to successfully identify and consummate opportunities to broaden and progress its research and development pipeline; (5) scientific developments regarding immunotherapy; (6) Aphton's ability to successfully integrate Igeneon's operations and product portfolio with Aphton's operations and product portfolio; and (7) the actual design, results and timing of preclinical and clinical studies for both companies' products and product candidates.