Canadian Medical Discoveries Fund Inc.

Canadian Medical Discoveries Fund Inc.

June 26, 2008 08:52 ET

CMDF Suspends Redemptions and Subscriptions to Preserve Asset Values for Shareholders

TORONTO, ONTARIO--(Marketwire - June 26, 2008) - The Canadian Medical Discoveries Fund Inc. (CMDF or the Fund) announced today that it has halted redemptions and subscriptions of the Fund while its board of directors explores strategic options to maximize returns for all CMDF shareholders.

In accordance with the Fund's prospectus and with the necessary regulatory approvals, CMDF is suspending both sales and redemptions effective immediately. This follows careful consideration by the board regarding the best interests of all shareholders, CMDF's mid-term liquidity situation and the status of its venture portfolio in the current biotechnology industry environment. The fair value of the Fund's portfolio will continue to be determined every day and there are no anticipated changes to the value of its private investments.

"This suspension will enable the Fund to support its existing venture investments at a challenging time for the biotech industry, and to complete the work required to pursue liquidity and improved valuations. While it's not a step we take lightly, we see it as the best route to the best returns for all CMDF shareholders," said Steve Hawkins, Chief Executive Officer of CMDF.

"Many of CMDF's investee companies are conducting clinical trials which, upon completion, should result in higher values for these companies and the Fund. We believe that the refocused CMDF venture portfolio is strong and undervalued due to current market conditions," Hawkins said. "The suspension of trades benefits shareholders by allowing for a reasonable period in which we can endeavour to increase returns."

Launched in 1994, CMDF is Canada's most mature health sciences Labour Sponsored Investment Fund (LSIF). The Fund's current investment advisor, JovInvestment Management Inc., was appointed in October 2006. Since then, the investment advisor has worked with the Fund to actively restructure the CMDF portfolio to focus on fewer and later-stage investments while advancing time horizons to liquidity.

Biotechnology companies require large investments to fund the late-stage clinical trials required for FDA approval and commercialization. To access the large pools of capital needed, these companies generally use the Initial Public Offering (IPO) process. As this is not a feasible option under present market conditions, the Fund's investee companies have turned to the Fund and their other investors for additional capital.

Following the Ontario government's 2005 announcement that it would wind down the province's LSIF program, CMDF has experienced limited sales, forcing liquidity to be derived substantially from the Fund's public portfolio investments. Recent reports on the biotechnology industry have documented ongoing market volatility and reduced availability of venture capital; this has made the liquidation of the Fund's venture portfolio more difficult.

The board and the investment advisor will continue to explore strategic options for the Fund to optimize returns to shareholders in an orderly manner. The board expects to call an annual and special meeting of shareholders later in 2008. During the suspension, the Fund will continue to price its Net Asset Value Per Share daily and will provide its shareholders with regular updates.

About Canadian Medical Discoveries Fund Inc.

CMDF is one of Canada's largest health sciences retail venture capital funds, with approximately $130 million in managed assets. Established in 1994, CMDF has venture capital investments in approximately 35 companies involved in health sciences, biotechnology, diagnostics, medical devices, drug discovery and development, health care delivery services and e-health.

Certain statements contained in this news release may include forward-looking information with respect to the Fund's operations and future financial results. Such statements are based on current expectations, are subject to a number of uncertainties and risks, and actual results may differ materially from those contained in such statements. Further information can be found in the disclosure documents filed by the Fund with the securities regulatory authorities, available at

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