Afexa Life Sciences Inc. Announces Results for Fiscal 2011 First Quarter

EDMONTON, ALBERTA--(Marketwire - August 13, 2010) - Afexa Life Sciences Inc. ("Afexa" or the "Company") (TSX: FXA) today announced that for the three months ended June 30, 2010, revenue fell to $1.8 million from $6.2 million during the same period last year.

"Consistent with our previous guidance, revenues for this quarter were very modest, but we continue to expect that Afexa's results for the 12 months ending September 30, 2010 will compare favourably with those for the immediately preceding 12 months," said Chairman and Chief Executive Officer Jack Moffatt. "Moreover, we anticipate that revenue from the sale of COLD-FX® will increase significantly in the quarter ending September 30, 2010 as customers commence stocking up on cold and flu products prior to the fall and winter cold and flu season. Based on outstanding orders and discussions with our large customers, we currently expect revenue for the upcoming quarter will exceed the revenue reported in the comparative three month period ended September 30, 2009."

Incidence of colds and flu generally decrease between April and August, with the three months ending June 30 typically producing the lowest quarterly revenue of the year. In 2010 this effect was exacerbated by last winter's mild cold and flu season, which meant retailers' inventories were higher than normal during the quarter ended June 30, 2010. By contrast, the quarter ended June 30, 2009 produced unusually strong financial results since global concern regarding a possible flu pandemic sparked exceptionally high demand during the period for Afexa's flagship product, COLD-FX.

For the three months ended June 30, 2010, Afexa's net loss increased to $4.1 million ($0.04 per share) from $1.1 million ($0.01 per share) in the same quarter a year ago. Low revenues in the quarter adversely affected the net loss as many operating costs are fixed in nature. Historically, revenue and margins in the June quarter are insufficient to cover expenses.

The Company's cash position at June 30, 2010 remained strong at $8.6 million, down from $17.7 million at March 31, 2010. Working capital was $13.7 million at June 30, 2010 compared to $17.5 million at March 31, 2010.

On August 12, 2010 Afexa's Chairman and CEO spoke to the shareholders and presented an overview of the Company's exciting and diverse line-up of scientifically derived natural medicines, currently at various stages of development and commercialization-all playing a role in positioning Afexa for positive and sustainable growth and diversification.

"We were very pleased to present this exciting pipeline of product candidates to our investors. We are currently a seasonal business and this is clearly reflected in our first quarter financial results. As we move along with our product development and commercialization goals, we hope to introduce products that are not as seasonal in nature as cold and flu products," said Mr. Moffatt.

Afexa is in the process of finalizing contractual terms to license a natural medicine developed by a third party, which the Company expects to launch into the Canadian market place in its next fiscal year. "Based on clinical studies of the product, we believe this is a unique and highly effective new product," Mr. Moffatt said. "The product is derived from a natural source and over the next few years, we expect this product to make a substantial contribution to Afexa's growth."

On August 5, 2010, the Ontario Superior Court of Justice dismissed the proposed Ontario class action lawsuit in conjunction with its approval of the settlement of all related claims. As part of the settlement and in conjunction with the Ontario Court Order, the Alberta Court of Queen's Bench dismissed the related proposed Alberta class action lawsuit. The settlement agreement provides for the settlement, release and dismissal of all claims asserted against the Company and does not in any way constitute any admission of liability by Afexa or its officers, directors or employees. The Company's portion of the settlement amounts to $6.6 million, which will be funded through its insurance coverage.

Afexa's daily immune booster, IMMUNITY-FX®, was launched in the fall of 2009 and is on the shelves of major grocery stores and leading pharmacies across Canada. The product's performance is on plan and a marketing program this year is intended to increase awareness of the benefits of IMMUNITY-FX.

COLD-FX was Canada's best selling cold and flu remedy for the 52-week period ended July 3, 2010, according to The Nielsen Company. In addition, COLD-FX remains the number one natural cold remedy recommended by pharmacists and doctors in Canada, based on 2009/2010 surveys of over-the-counter counseling and recommendations reported by Drugstore Canada and L'actualite pharmaceutique, as well as The Medical Post.

Afexa's normal course issuer bid ("NCIB") with the Toronto Stock Exchange permits the Company to purchase, over a one-year period, up to 5% (5,245,645) of the common shares issued and outstanding when the NCIB came into effect on October 16, 2009. Afexa has repurchased and cancelled 408,248 common shares pursuant to the current NCIB at a weighted average trading price of $0.68 per share. Afexa's management believes the current market price of the Company's common shares does not reflect their underlying value.

A complete set of Afexa's most recent Financial Statements and Management's Discussion and Analysis will be filed on SEDAR (www.sedar.com) and posted on the Company's web site.

ABOUT AFEXA LIFE SCIENCES INC.

Afexa Life Sciences Inc., founded in 1992, strives to deliver the most trusted health brand on the planet through pioneering evidence-based natural medicines that empower people to achieve their health potential. The Company's patented ChemBioPrint® discovery and standardization technology enables the development of effective and safe medicines from complex natural sources, while ensuring reliable health benefits and batch-to-batch consistency. COLD-FX®, a ChemBioPrint product, is the Company's flagship product and Canada's leading over-the-counter (OTC) cold and flu remedy. It is officially indicated in Canada to help reduce the frequency, severity and duration of cold and flu symptoms by boosting the immune system. COLD-FX products have product licenses (NPN) and are supported by scientific evidence, including randomized, double-blind, placebo-controlled clinical trials.

Advisory Regarding Forward-looking Statements

This news release contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "would", "project", "could", "should", "contemplate", "potential", "depend", "forecast", "believe", "plans", "targets", "intends" and similar expressions are intended to identify such forward-looking statements. These forward-looking statements reflect our beliefs and are based on information currently available to us. These statements require the Company to make assumptions which it believes are reasonable, and which are subject to inherent risks and uncertainties. Actual results and developments may differ materially from the results and developments discussed in the forward-looking statements, as certain of these risks and uncertainties are beyond Afexa's control. The forward-looking information and statements included in this news release are not guarantees of future performance and should not be unduly relied upon.

Examples of such forward-looking statements include, but are not limited to, the expectation that results for the 12 months ending September 30, 2010 will compare favourably with those for the immediately preceding 12 months; the Company's belief that revenue for the quarter ending September 30, 2010 will increase significantly and exceed the level of the same three month period last year; whether the Company will be successful in pursuing greater penetration of existing markets and diversification into new ones; whether product development and commercialization goals will result in the introduction of new products and revenue; whether the Company will successfully finalize a contractual license agreement for a third-party product, whether that product will be successfully launched in the Company's fiscal 2012 year, and whether that product will substantially contribute to Afexa's growth; whether the intended marketing program for IMMUNITY-FX will lead to increased awareness of the benefits of IMMUNITY-FX in the marketplace; and belief that the class action lawsuit settlements will be funded within insurance coverage.

In addition, forward-looking statements are subject to the following risks and uncertainties which include, among other matters, the impact of competition; consumer confidence and spending levels; general economic conditions; interest and currency exchange rates; unseasonable weather patterns; the incidence of illnesses in the general population; the cost and availability of capital; the cost and availability of grants/funding; product development; lawsuit settlement finalized within insurance limits; reliance on third parties; dependence on a small number of major customers; hiring expectations and related anticipated capital expenditures; adequacy of the Company's cash position to mitigate potential tightening of credit terms; success and adequacy of the IFRS conversion plan and the impact of the implementation on future financial statements; the risk that actual results may differ from management's assumptions, estimates and interpretation of policies; and marketing efforts anticipated to parallel increases in cold and flu activity may not necessarily be accounted for in the quarters in which revenue is derived.

The Company believes that the expectations and assumptions reflected in the forward-looking information and statements contained herein are reasonable, but no assurance can be given that these expectations and assumptions are correct and that the results, performance or achievements expressed in, or implied by, forward-looking statements within this disclosure will occur, or, if they do, that any benefits may be derived from them. Afexa assumes no duty to update or revise forward-looking information, except as may be required pursuant to applicable laws. All forward-looking information is expressly qualified in its entirety by this cautionary statement. Further information regarding risks and uncertainties relating to Afexa and its securities can be found in the disclosure documents filed with the securities regulatory authorities, available at www.sedar.com. The Company claims exemptions under U.S. SEC Rule 12g3-2(b).