Med BioGene Inc.
TSX VENTURE : MBI

Med BioGene Inc.

February 03, 2015 18:56 ET

MBI Provides Shareholder Update

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Feb. 4, 2015) - Med BioGene Inc. ("MBI" or the "Company") (TSX VENTURE:MBI) is pleased to provide the following report of the Company's activities over the last four months for the benefit of shareholders and the investment community. Since our last letter to Shareholders on October 1st, 2014, there have been a number of developments of which shareholders should be made aware.

Summary:

  1. Helomics®, formerly Precision Therapeutics Inc., have initiated aggressive marketing in the US and other countries to accelerate commercialization of all its genomic products.
  1. Initial commercialization of GeneFX Lung is anticipated in the US before the end of Q4 2015.
  1. Commercialization of GeneFX Lung is anticipated in Canada and, possibly UK, in Q4 2015.
  1. Commercialization will trigger milestone payments from Helomics® to MBI.
  1. MBI has reduced its annual burn rate to $60 - 70K compared to approximately $400K in 2013, a reduction of approximately 80%.
  1. MBI has funds on hand to cover anticipated operating costs until mid to late 2016.
  1. MBI and Helomics® would like to develop other products and services to generate additional revenue streams.
  1. MBI is working with Helomics® and other stakeholders to explore the potential for licensing of new intellectual property.
  1. MBI has cancelled approximately 10 million options granted to the previous Management and Directors. No options have been reissued and the Company currently does not have any options outstanding.
  1. MBI is considering expanding the Board to include an additional director.

After the September 17th, 2014 conference call with Precision Therapeutics Inc. ("PTI") to discuss its updated presentation summarizing its development plans for 2015, MBI was contacted by PTI's management and informed that significant organizational changes were planned. These included the intention to rename PTI as Helomics®, the appointment of Dr. Neil Campbell as the new CEO, and the adoption of a very focused strategy designed to accelerate the commercialization of their range of prognostic genome-based products.

In early November, the renaming as Helomics® was formally announced, and Dr. Campbell became CEO. Soon after this, one of our Directors travelled to Pittsburgh and met with the Helomics® team. In the subsequent three months the Company's Directors have met with Helomics® on a number of occasions, both in Pittsburgh and in San Francisco, and have also had a number of conversations to discuss matters of mutual interest. At the end of January, Helomics® and MBI had further discussions covering the following topics:

Commercialization of GeneFX Lung

  • Helomics® is moving towards obtaining regulatory approval from Medicare for the prognostic test. As was mentioned in earlier news releases, Helomics® is of the opinion that the documentation and review requirement of the US regulators are such that it is unlikely that approval will be obtained before the end of 2015. For this reason, sales through the Medicare plan will not occur until Q4 2015 at the earliest. Shareholders should remember that net royalty payments to MBI will only commence when the repayable portion of the funds advanced by PTI in 2011 have been repaid.
  • In order to provide parallel paths to commercialization, Helomics® is aggressively pursuing other governmental and private health care providers in the US, as well as a number of private insurers. Not only does this strategy offer the potential for an accelerated acceptance of the test, and thus a revenue stream, but it will also provide access to a statistical data base of clinical results from these other providers, this will support the Medicare application. It is anticipated that approval for the commercial applications of the test from at least one of these organizations may be obtained before the end of Q2 2015. On this basis, we hope to see an initial, and limited, commercialization in the US by mid-2015.

    Helomics® strategy is to establish a progressive release to various providers and agencies. This will provide funds and statistical data to facilitate the expansion of product marketing.
  • In parallel with the approval and marketing work in the US, Helomics® is preparing to commercialize the test in the UK and Canada. Both countries, as well as Australia, have adopted more holistic regulatory approval models, and thus offer a more rapid path to commercialization. It is emphasized that there is no intention, in any way, of reducing the efforts being made to complete the regulatory process approval in the US. However, it may well be the case that general commercialization in Canada or the UK occurs before the US. Helomics® is of the opinion that commercialization of the test in Canada could begin to develop in Q4 2015.
  • In order to facilitate and expedite the accelerated approval and commercialization effort in Canada, MBI will provide whatever support it can to assist Helomics® meet these objectives. We anticipate that MBI will adopt a more active role in the commercialization of GeneFX Lung than was the case in the past.
  • Helomics® is of the opinion that the article in GenomeWeb released on January 26th contained some inaccuracies. It was an amalgamation of information and inferences from a number of sources and did not emphasize that the Company's priority is to commercialize all the prognostic products, including GeneFX Lung, within their portfolio. Helomics® are working towards commercialization on a number of fronts and, as noted above, anticipate initial commercialization of the GeneFX Lung test in mid-2015. On this basis, Dr. Campbell anticipates that the milestone payments due to MBI under the terms of the 2011 agreement could be triggered in mid-2015 depending on certain regulatory and market conditions being met.
  • The GeneFX Lung tests incorporate the intellectual property protected by two patents acquired by MBI from the University Health Network in Toronto. There were two other supplementary patent applications made at a later date. Helomics® has advised MBI that these latter patents have been abandoned. Reviewing them suggests that they have little potential value in terms of advancing the science of genetic diagnostics. These applications were peripheral to the principal patents upon which GeneFX Lung are based and it appears that the applications were made either to provide supplementary coverage and protection, i.e. ring fencing the core patents, or that the applications were a strategic maneuver. In either case they now have no practical value and accordingly have been abandoned.

Other matters which may be of interest to MBI shareholders include the following:

  1. The Company's burn rate in Q4 2014 was reduced to about $6,000 per month or approximately $60 - 70 thousand dollars on an annualized basis. Thus, a reduction of more than 80% from the expenditure in the preceding 12 month period. This has been achieved by implementing strict cost controls, and by more efficient procurement procedures. Directors' fees have been suspended and are not being accrued, and all management expenses and benefits have also been curtailed. Until positive cash flow has been achieved these will not be reinstated.
  1. At the currently predicted burn rate MBI has enough cash on hand to continue operations until the latter part of 2016. This is in accordance with the commitment made to the shareholders by the current management group in the summer of 2014. The anticipated expenditures are primarily related to the routine operation of the Company, i.e. TSXV matters and administrative requirements, regulatory filings, together with legal and accounting expenses.
  1. All outstanding options issued to the previous Management and Directors were cancelled in early December 2014 and the approximately 10 million options returned the Company's treasury. No new options have been issued to the current Management and Directors.
  1. At the first Board meeting of 2015, it was decided to increase the size of the Board from four Directors to five. In accordance with the statement made in a News Release issued last summer, an invitation has been prepared for the new Director outlining the duties and responsibilities. Once the appointment has been finalized it will be announced as a News Release.
  1. A good working relationship has been established with Helomics®, and this will be strengthened by the development of related support and value added services utilizing MBI's Canadian base. This relationship, together with ongoing open communications with Helomics® and other stakeholders, will benefit all parties, and in particular the shareholders of MBI.

Conclusions

  • The prospects of MBI look more positive now than they have for the last 3 years. Initial commercialization of GeneFX Lung may possibly occur by mid-2015 if certain regulatory and market conditions exist and Helomics® will aggressively pursue these commercialization plans to ensure launch by end of 2015 if certain regulatory and market don't allow for earlier commercialization; all of which would provide for the resultant payment of the agreed milestones.
  • The Company's burn rate and cash reserves are such that normal operations can continue until mid to late 2016.
  • The working relationship that has been established with Helomics®, will be strengthened by the development of related support and value added services which rely upon MBI's Canadian relationships and the specific experience and expertise of MBI's Directors. Every effort is being made by both Helomics® and MBI to develop the commercialization of GeneFX Lung in a manner which maximizes the benefits to all parties.

The TSX Venture Exchange has neither approved nor disapproved of the contents of this press release. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.

Certain information in this press release contains forward-looking information and statements ("forward-looking information") of MBI under applicable Canadian and United States legislation. Words such as "anticipates," "believes," "estimates," "expects," "intends," "may," "plans," "projects," "will," "would" and similar expressions are intended to identify forward-looking information, although not all forward-looking information contains these identifying words. Forward looking information includes, but is not limited to, that with respect to the timing, completion and/or results of clinical trials or studies, the timing for commercialization of any products, future profits, future product revenues, future shareholder value, future operations and plans, the completion and use of proceeds from transactions or financings and the prospects for negotiating partnerships or collaborations and their timing. This forward-looking information is only a prediction based upon MBI's current expectations, and actual events or results may differ materially. MBI may not actually achieve the plans, intentions or expectations disclosed in its forward-looking information. Forward-looking information is subject to known and unknown risks and uncertainties and is based upon uncertain assumptions that could cause MBI's actual results and the timing of events to differ materially from those anticipated in such forward-looking information. You are cautioned not to place undue reliance on this forward-looking information, which speak only as of the date of this press release. MBI's forward-looking information does not reflect the potential impact of any future partnerships, collaborations, acquisitions, mergers, dispositions, joint ventures or investments that MBI may make. All forward-looking information herein is qualified in its entirety by this cautionary statement and MBI undertakes no obligation to revise or update any such forward-looking information as a result of new information, future events or otherwise after the date of this press release, other than as required by applicable law. Certain information included in this press release in respect of Helomics® and its scientific, clinical and/ or commercialization efforts and expectations have been provided to MBI by Helomics®. MBI may not have been able to confirm the accuracy of such information and you should not place undue reliance on any such information, including any information regarding Helomics® that may constitute forward-looking information. A redacted copy of the commercialization agreement between MBI and Helomics® may be found at www.sedar.com. Each trademark, trade name or service mark of any entity appearing in this press release belongs to its holder.

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