ZILA Selling Nutraceutical Division to NBTY

PHOENIX—Zila Inc. (NASDAQ:ZILA) announced an agreement to sell all the shares of its Zila Nutraceuticals subsidiary, which manufactures the Ester-C® brand (www.esterc.com), to NBTY (NYSE:NTY) for $40.5 million, including up to a $3 million contingent payment based upon certain performance markers. The closing of the sale is contingent upon Zila shareholder approval and other normal and customary pre-closing conditions, but the companies expect to complete the transaction by October 2006.

“The acquisition of Ester-C expands our broad array of superior quality products with a well-recognized brand having strong consumer appeal,” said Scott Rudolph, chairman and chief executive officer (CEO) of NBTY (www.nbty.com). “Ester-C is known throughout multiple markets, including health food stores and mass market retailers, and its acquisition represents an opportunity for NBTY to enhance its presence in key markets.”

“We are pleased to announce that we have reached an agreement for the divestiture of Zila Nutraceuticals at a price that is consistent with the valuations of transactions in the nutraceutical sector,” said Douglas Burkett, Ph.D., chairman, president and CEO of Zila (www.zila.com). “This divestiture will enable the transformation of Zila into a high growth cancer diagnostic company.” Consistent with its July 2006 sale of its Swab Technologies business, Zila wants to focus its revenue and infrastructure with its oral cancer detection business in order to further accelerate the growth of ViziLite® Plus, as the company works towards the launch of OraTest®. In reporting third quarter results last month, Burkett said the company was looking into the sale of the nutraceutical business, which it originally used to generate funds for its pharmaceutical products. That strategy to fund those projects worked, leaving the nutraceuticals business ripe for divestiture. “We thank the valued employees of Zila Nutraceuticals for their many years of contribution to the collective efforts of Zila Inc. and we wish them the best as they become an important part of the operations of NBTY,” he added.