Med BioGene Inc.
TSX VENTURE : MBI

Med BioGene Inc.

March 28, 2011 08:30 ET

Med BioGene Accepts Improved Offer from Precision Therapeutics to Commercialize LungExpress Dx; Rejects Offer from Signal Genetics

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 28, 2011) - Med BioGene Inc. (TSX VENTURE:MBI) today announced that it and Precision Therapeutics, Inc. have amended their previously announced commercialization, license and research reimbursement agreement (the "Commercialization Agreement") in response to an improved offer from Precision. The Commercialization Agreement provides to Precision, subject to the approval by MBI's shareholders and closing, exclusive global rights to develop and commercialize MBI's lead test, LungExpress Dx™.

The amendments to the Commercialization Agreement are as follows:

  • Precision has agreed to pay to MBI within 120 days of closing, license fees and research reimbursements of US$2.3 million, increased from US$1.6 million, half of which is credited against future royalties that may be owed to MBI by Precision;
  • Precision has agreed to pay to MBI royalty payments based on a percentage in the high single digits, increased by one-half of one percent, of Precision's future net revenues associated with the commercialization of LungExpress Dx or any other products incorporating the MBI's technology; and
  • MBI has agreed to pay to Precision a cash termination payment, otherwise known as a break fee, in an amount equal to US$375,000, increased from $250,000, plus any amounts paid to MBI by Precision under a separate support agreement relating to, among other things, reimbursement of legal fees associated with defending the lawsuit initiated by Signal Genetics, LLC and its subsidiary Respira Health LLC, if the Commercialization Agreement is terminated under certain circumstances, including by MBI upon it concurrently entering into a definitive written agreement with a third party that constitutes a superior proposal compared to the amended offer made by Precision.

Offer from Signal Genetics

MBI announced on March 23, 2011 that it had received from Signal an offer to enter into a commercialization, license and research reimbursement agreement that would provide to its subsidiary, Respira, exclusive global rights to develop and commercialize LungExpress Dx.

Signal's press release can be found here: http://www.businesswire.com/news/home/20110322007172/en/Signal-Genetics-Subsidiary-Respira-Health-LLC-Superior.

Acceptance of Improved Offer from Precision Therapeutics

Upon receipt by MBI of the offer from Signal, MBI provided notice thereof to Precision as required under the Commercialization Agreement. Following the giving of this notice and discussions between MBI and Precision, Precision provided to MBI, as described above, an offer to improve certain of the terms provided for in the Commercialization Agreement. 

The board of directors of MBI carefully considered, in light of its obligations under the Commercialization Agreement, the improved offer from Precision and the offer from Signal and, among other things, the opportunity presented by each of Precision and Signal to generate royalty revenues for MBI from the commercialization of LungExpress Dx.

After such consideration, the board of directors determined that the offer by Signal was not superior to the improved offer by Precision. As a result, the board rejected the offer by Signal and accepted the improved offer by Precision and entered into the amended Commercialization Agreement.

April 12, 2011 Annual and Special Meeting of Shareholders

Closing of the amended Commercialization Agreement with Precision is subject to, among other things, the approval of MBI's shareholders. An annual and special meeting of MBI's shareholders will be held on Tuesday, April 12, 2011 at 10:00 a.m. (Pacific Time) at the Terminal City Club, 837 West Hastings Street, Vancouver, British Columbia where the shareholders will be asked, among other things, to approve the amended Commercialization Agreement. 

A copy of the notice of meeting, information circular and form of proxy in respect of the annual and special meeting has been mailed to shareholders and is available on-line at www.sedar.com. A material change report in respect of the entering into by MBI and Precision of the amended Commercialization Agreement is incorporated by reference in, and forms part of, the above noted information circular and is also available on-line at www.sedar.com.

The board of directors unanimously recommends that MBI shareholders vote at the annual and special meeting for the special resolution approving the amended Commercialization Agreement with Precision.

About Med BioGene

MBI is a life science company focused on the development and commercialization of genomic-based personalized clinical laboratory diagnostic tests. MBI is committed to advancing personalized medicine by commercializing tests that provide clinically relevant information to improve patient treatment and reduce health care costs. For more information, please visit www.medbiogene.com.

Certain statements in this press release contain forward-looking statements and information ("forward-looking statements") under applicable United States and Canadian securities legislation. Words such as "anticipates," "believes," "estimates," "expects," "intends," "may," "plans," "projects," "will," "would" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward looking statements include, but are not limited to, that with respect to the timing, completion and/or results of clinical trials or studies, 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. These forward-looking statements are only a prediction based upon the party's current expectations, and actual events or results may differ materially. A party may not actually achieve the plans, intentions or expectations disclosed in its forward-looking statements. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on uncertain assumptions that could cause a party'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 these forward-looking statements, which speak only as of the date of this press release. A party's forward-looking statements do not reflect the potential impact of any future partnerships, collaborations, acquisitions, mergers, dispositions, joint ventures or investments that that party may make. All forward-looking statements are qualified in their entirety by this cautionary statement and a party undertakes no obligation to revise or update any forward-looking statements as a result of new information, future events or otherwise after the date of this press release, other than as required by applicable law.

The closing of the amended Commercialization Agreement is subject to certain conditions and includes approval of the transaction by the MBI shareholders at the annual and special meeting of MBI shareholders, receipt of certain assurances from the University Health Network and MBI settling its outstanding debt with creditors. Such conditions may not be satisfied and the agreement may not close.

LungExpress Dx is MBI's trademark. Each trademark, trade name or service mark of any other entity appearing in this news release belongs to its holder.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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