WEX Pharmaceuticals Inc.
TSX : WXI

WEX Pharmaceuticals Inc.

July 16, 2007 08:53 ET

WEX Announces $20 Million Financing

VANCOUVER, BRITISH COLUMBIA--(Marketwire - July 16, 2007) - WEX Pharmaceuticals Inc. ("WEX" or the "Company") (TSX:WXI) announces today that it has entered into a subscription agreement (the "Agreement") with CK Life Sciences Int'l., Inc. ("CKLS") of Hong Kong with respect to a private placement of equity and debt (the "Private Placement").

Under the terms of the Agreement, CKLS or its designee would subscribe for:



- 16,327,272 common shares (the "Common Shares") of WEX, representing
approximately 27% of the issued and outstanding Common Shares (including
the issuance of such shares), at a price of $0.275 per share for a total
consideration of approximately $4,490,000; and

- a convertible debenture (the "Debenture") in the principal sum of
$15,600,000.


The proceeds raised under the Private Placement are to be applied to fund the cost of WEX's planned phase III clinical trials of Tectin™ and for working capital purposes as permitted under the Agreement.

The Debenture will mature two years from date of issue. If at maturity WEX is unable to make payment the maturity date may be extended for two years at WEX's option.

After the initial advance of $2,000,000 on the issue date of the Debenture, subject to certain conditions precedent, the remaining funds under the Debenture will be advanced to WEX in installments on the seventh day following the end of each financial quarter commencing December 31, 2007, pursuant to a quarterly installment schedule. The Debenture will impose significant restrictions on the activities of WEX throughout its term.

The Debenture is to bear interest at the rate of LIBOR plus 4% per annum, calculated semi-annually not in advance and payable semi-annually in Common Shares. The Common Shares to be issued in payment of the interest will be issued at an issue price equal to the volume weighted average market price ("VWAP") of such shares on the Toronto Stock Exchange ("TSX") for each trading day over the 6 month period prior to the date that interest payment is due, less a discount of 30% (the "Discounted Market Price").

The principal amount of the Debenture is convertible into Common Shares at the holder's option on and after maturity of the two-year term, upon default and in the event that an offer for effective control of WEX is received. The Common Shares to be issued upon conversion on the maturity date are to be issued at an issue price equal to the Discounted Market Price of such shares on the date of conversion and in all other cases at an issue price equal to VWAP of such shares on the TSX over the last five trading days prior to the conversion date.

The issue price of the Common Shares to be issued pursuant to the interest payment provisions or the conversion provisions in the Debenture may not be higher than $1.75 per Common Share or less than $0.05 per Common Share.

Pursuant to the terms of the Debenture, the maximum number of Common Shares that may be issued to the holder would be between approximately 12 million, if the maximum issue price of $1.75 were used, to approximately 412 million Common Shares, if the minimum issue price of $0.05 were used, that would represent approximately 17% and 87%, respectively, of the issued and outstanding Common Shares (including the issuance of such shares and the issuance of the 16,327,272 Common Shares above) (assuming an interest rate of 8% (using a LIBOR rate of 4%), a four-year term with the full amount advanced at the date of issue of the Debenture (rather than in installments as provided in the Debenture) and no adjustments). If $0.35, the TSX closing price last Friday, were used as the issue price, the maximum number of Common Shares that may be issued to the holder is approximately 59 million Common Shares, that would represent approximately 50% of the issued and outstanding Common Shares (including the issuance of such shares and the issuance of the 16,327,272 Common Shares above) (assuming an interest rate of 8% (using a LIBOR rate of 4%), a four-year term with the full amount advanced at the date of issue of the Debenture (rather than in installments as provided in the Debenture) and no adjustments) and collectively with the 16,327,272 Common Shares above, represents approximately 63% of the issued and outstanding Common Shares (assuming the full issuance of all shares under the Private Placement).

The Agreement requires the number of directors on the Board of Directors is to be increased from seven to nine directors, with two individuals as designated by CKLS to be appointed to the Board upon the signing of the Subscription Agreement. The Board has appointed Alan Yu and Victor Tong, CKLS's designees, to the Board of WEX.

Alan Yu is the Vice President and Chief Operating Officer of the CKLS Group responsible for the commercial activities of the Group, including manufacturing and marketing of all product applications. Mr. Yu has held a number of positions in multinational corporations, including Standard Chartered Bank, Dairy Farm and American Express, in Hong Kong and overseas. Prior to joining the Group in January 2000, he was a Worldwide Vice President with Johnson & Johnson. Mr. Yu holds a Bachelor of Arts degree and a Master's degree in Business Administration.

Victor Tong is the Chief Financial Officer of CK Life Sciences (North America) Inc. Mr. Tong oversees the accounting, financial reporting and financial management functions of all the North American subsidiaries and investee companies of the CKLS Group. Prior to joining the Group, he spent over 18 years in investment banking in Canada, primarily with global firms such as BMO Nesbitt Burns, HSBC and Deloitte. Mr. Tong holds a Bachelor of Business Administration degree and a Master of Business Administration degree. He is also qualified as a professional accountant in the Province of Ontario.

The Agreement also provides CKLS or its designee with the right to:



- appoint one or more members of the Board, in the same proportion, as
nearly as may be, as its shareholdings are to the total outstanding
shares of WEX to a maximum of one half of the Board;

- have one of CKLS' designees to the Board fill the position of Chairman of
the Board;

- approve any change in the Chairman of the Board, Vice-Chairman if
applicable, and Chairman of the Audit Committee;

- designate the Chief Executive Officer, Chief Financial Officer and the
Chief Scientific Officer; and

- designate the Chairman of WEX's 97% subsidiary Nanning Maple Leaf
Pharmaceutical Company ("NMLP");


so long as CKLS holds at least 10% of WEX's outstanding Common Shares or any portion of the Debenture is outstanding.

WEX has also agreed that it will not conduct a rights offering until after the closing of the Private Placement and thereafter only with the consent of CKLS.

The Agreement provides for a number of conditions precedent to closing of the private placement, including among others:



- The approval of the Private Placement by the shareholders of WEX;

- The approval of the TSX and any other governmental or regulatory
approvals that may be necessary;

- Amendments of the articles and by-laws of WEX as necessary in order to
permit the appointment of directors, and the designation of officers by
CKLS or its designee;

- The delivery of certain information to CKLS and execution of certain
agreements related to certain intellectual property and the status of the
finder's fee for the transaction, certain litigation, and WEX's ownership
of NMLP, all being satisfactory to CKLS; and

- The completion of a "due diligence" review of the assets and operations
of WEX and its subsidiaries as CKLS may require, with the results of such
review being satisfactory to CKLS in its absolute discretion.


The Board of Directors has waived the application of the shareholder rights plan to the Private Placement and other Flip-in Events (as defined in the plan) in existence, if any, and has, to the extent applicable, postponed the Separation Time (as defined in the plan) until 2 weeks after the next annual meeting for which such shareholder approval as may be required will be obtained.

An affiliate of CKLS has also agreed to provide a short term bridge loan to WEX of $350,000 which will bear interest at LIBOR plus 4% and be secured by certain Quebec tax credits, provided certain conditions precedents are met. The short term bridge loan will impose certain restrictions on the activities of WEX throughout its term.

WEX has also reached agreement with the holders of its existing convertible debentures, under which approximately $3.7 million is outstanding, to pay out the debentures for a discounted lump sum amount of approximately $2.1 million, conditional on the completion of the CKLS transaction by September 30, 2007.

About CKLS

CKLS is a wholly owned subsidiary of CK Life Sciences Int'l., (Holdings) Inc.. CK Life Sciences Int'l., (Holdings) Inc. has been listed on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited (stock code:8222) since July 2002. The Group is engaged in the business of research and development, manufacturing, commercialization, marketing and sale of biotechnology products.

About WEX Pharmaceuticals Inc.

WEX Pharmaceuticals Inc. is dedicated to the discovery, development, manufacture and commercialization of innovative drug products to treat pain. The Company's principal business strategy is to derive drugs from naturally occurring toxins and develop proprietary products for the global market. The Company's Chinese subsidiary sells generic products manufactured at its facility in China.

Forward Looking Statements and Information

Certain statements herein may contain forward-looking statements and forward-looking information within the meaning of applicable securities laws. Such forward-looking statements and information include but are not limited to statements or information about the Private Placement . Forward-looking statements or information appear in a number of places and can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate" or "believes" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. With respect to forward-looking statements and information contained herein, we have made certain assumptions. Forward-looking statements and information are by their nature based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or information. These risks and uncertainties include the satisfaction of the conditions precedent of the Private Placement, including those outlined above. See our annual information form and our quarterly and annual management's discussion and analysis for additional information on risks and uncertainties relating to the forward-looking statement and information. There can be no assurance that forward-looking statements or information referenced herein will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements or information. Also, many of the factors are beyond the control of the Company. Accordingly, readers should not place undue reliance on forward-looking statements or information. The Company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future results, events or developments. All forward-looking statements and information made herein are qualified by this cautionary statement.

For additional information on our products, visit us at www.wexpharma.com.

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