WEX Pharmaceuticals Inc.
TSX : WXI

WEX Pharmaceuticals Inc.

September 14, 2007 19:14 ET

WEX Reports First Quarter Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 14, 2007) - WEX Pharmaceuticals Inc. ("WEX" or the "Company") (TSX:WXI) reported events and financial results for the three month period ended June 30, 2007. All amounts, unless specified otherwise, are in Canadian dollars.

Financial Condition

- The Company has largely expended its available cash reserves, including a $350,000 bridge loan received in July 2007. The Company has sufficient cash reserves to continue operations only until mid-September 2007 but management is optimistic that the proposed financing with CK Life Sciences Int'l. Inc. ("CKLS") will close following a shareholders' meeting scheduled for September 17, 2007. The Company has not yet met all material conditions required for closing. There can be no assurances that all conditions will be satisfied and accordingly that the financing will close. If the financing is not completed for any reason, including the Company's inability to satisfy the conditions precedent, there can be no assurance that the Company will be able to find another investor willing to provide the financing necessary to continue its operations in the short term and will be forced to shut down all of its operations.

Third Quarter Events

- In May 2007, the Company filed a Clinical Trial Application with Health Canada for Tectin™ and subsequently received a No Objection Letter allowing the Company to conduct a Phase III clinical trial in cancer pain (TEC-006). This multi-centre, randomized, double-blind, and placebo-controlled trial will include approximately 120 patients with moderate to severe cancer-related pain. The study design is based on the Company's knowledge and experience obtained from the WEX-014 trial which was terminated early when it became apparent that it would not meet its objective when based solely on pain reduction. A primary composite endpoint that evaluates pain reduction with an improvement in quality of life will be used to define true responders to treatment and the Company believes that the TEC-006 trial has a high probability of meeting its composite endpoint based on its re-analysis of the WEX-014 trial.

- In May 2007, WEX and its partner, Laboratorios del Dr. Esteve, S.A. ("Esteve"), entered into a termination agreement (the "Termination Agreement") to amicably end their collaboration for the development of TTX as an analgesic. The partnership, formed in 2002, was aimed at obtaining approval from regulatory authorities for the marketing of TTX in Europe. Under the Termination Agreement, WEX retains exclusive worldwide rights to all its intellectual property predating the collaboration, as well as all intellectual property developed by the parties during their collaboration.

- In May 2007, the Company reconstituted its scientific advisory board, to which it appointed five outstanding physicians and scientists. These new advisory board members will provide WEX senior management with scientific and medical advice on the Company's drug development plans and strategies. The scientific advisory board comprises: Charles Berde, MD, PhD; Howard M. Cohen, MD; Patrick du Souich, MD, PhD; KyungMann Kim, PhD, CCRP; and Edward M. Sellers, MD, PhD.

Subsequent Events

- In July 2007, WEX entered into a subscription agreement with CKLS with respect to a private placement of equity and debt (the "Private Placement Agreement"). Under the terms of the Private Placement Agreement, CKLS or its designee is to subscribe for (i) 16,327,272 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 (ii) a convertible debenture (the "Debenture") in the principal sum of $15,600,000. The proceeds will be applied to fund the cost of WEX's planned Phase III clinical trials of Tectin™ and for working capital purposes.

The Private Placement Agreement also provides CKLS or its designee with the rights to participate on the Company's board of directors, approve the appointment of certain key employees and approve certain financing transactions.

This summary is not complete and the reader is encouraged to review the entire subscription agreement available at www.sedar.com.

- In July 2007, an affiliate of CKLS provided a short-term bridge loan to WEX of $350,000 which is secured by certain Quebec tax credits. The short-term bridge loan matures on the earlier of two months from the advance date or the closing of the private placement. The loan imposes certain restrictions on the activities of WEX throughout its term.

- Also in July 2007, the Company reached an agreement with holders of its convertible debentures under which approximately $3.4 million is outstanding. The debenture holders have agreed to accept a discounted lump sum amount of approximately $2.1 million, conditional upon the completion of the CKLS transaction by September 30, 2007.

- In August 2007, the Company's controller, Mr. Vaughn Balberan, resigned his position due to personal reasons. Since January 31, 2007, Mr. Balberan had acted as chief financial officer pending a search for a replacement of the prior chief financial officer who resigned in December 2006.

Financial Results - Unaudited

For the three months ended June 30, 2007, the Company recorded a loss of $334,000 ($0.01 per common share) compared to a loss of $1.4 million ($0.04 per common share) in the three months ended June 30, 2006. The decrease in loss for the three months ended June 30, 2007, when compared to the same period in the preceding year, is attributable to recognizing in full the deferred revenue as income, expense reductions relating to discontinuing all clinical trials in March 2006, staff reductions, reduced amortization and the reduction of other overhead expenses. With minor product income, management expects losses to continue during the coming quarters as it continues to focus its resources on the commercialization of Tectin™.

The Company had cash, cash equivalents and short-term investments of $572,000 for the three months ended June 30, 2007 as compared to $4,582,000 for the three months ended June 30, 2006.

As at June 30, 2007, the Company had a working capital deficiency of $2,642,913, total shareholders' deficiency of $792,742 and an accumulated deficit of $70,754,486.

The Company's subsidiary in China, NMLP, and Wex Medical Limited in Hong Kong, recorded product revenues of $180,000 for the three months ended June 30, 2007 as compared to $76,000 in the same period in the previous year, or an increase of $104,000. This is primarily the result of increased sales of generic products brought about by revitalizing the marketing team.

The remaining portion of revenue was the recognition of deferred revenue of $501,000 which relates to the Termination Agreement with Esteve. No further revenues will be recognized under this agreement.

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. 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. Forward-looking statements and information are subject to such 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. 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. All forward-looking statements and information made herein, are qualified by this cautionary statement.



WEX PHARMACEUTICALS INC.
Incorporated under the laws of Canada
CONSOLIDATED BALANCE SHEETS
(Unaudited, Prepared by Management)
(Expressed in Canadian Dollars)

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June 30, March 31,
As at 2007 2007
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ASSETS

Current
Cash and cash equivalents $ 359,874 $ 1,265,542
Short-term investments (note 5) 223,286 361,885
Receivables (note 6) 1,456,453 1,420,247
Inventory (note 7) 202,603 107,237
Prepaid expenses and deposits 291,822 255,315
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Total current assets 2,534,038 3,410,226

Deposits 23,231 23,231
Property and equipment (note 8) 1,839,024 1,899,130

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TOTAL ASSETS $ 4,396,293 $ 5,332,587
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LIABILITIES AND SHAREHOLDERS' DEFICIENCY

Current
Accounts payable and accrued liabilities
(note 13) $ 1,631,297 $ 1,606,319
Advances from customers 12,095 27,848
Deferred revenue - 187,778
Deferred lease inducements 8,056 8,056
Convertible debentures (note 10) 3,525,503 3,689,272
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Total current liabilities 5,176,951 5,519,273

Deferred revenue - 312,967
Deferred tenant inducements 12,084 14,098

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Total liabilities 5,189,035 5,846,338

Commitments and contingencies (note 14) -

Shareholders' deficiency -
Share capital (note 11) 64,230,769 64,230,769
Equity component of convertible
debentures (note 10) 725,018 725,018
Contributed surplus (note 12(a)) 5,008,757 4,951,016
Deficit (note 1) (70,754,486) (70,420,554)
Accumulated other comprehensive loss (2,800) -
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Total shareholders' deficiency (792,742) (513,751)

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TOTAL LIABILITIES AND SHAREHOLDERS'
DEFICIENCY $ 4,396,293 $ 5,332,587
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Nature and continuance of operations and basis of presentation (note 1)
See accompanying notes to the consolidated financial statements on
www.sedar.com.

Approved on behalf of the Board of Directors:

"Dr. Edge Wang" "Simon Anderson"
--------------- ----------------
Director Director


WEX PHARMACEUTICALS INC.
Incorporated under the laws of Canada
CONSOLIDATED STATEMENTS OF CHANGE IN DEFICIT AND ACCUMULATED OTHER
COMPREHENSIVE LOSS
(Unaudited, Prepared by Management)
(Expressed in Canadian Dollars)

CONSOLIDATED STATEMENTS OF CHANGES IN DEFICIT

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June 30, June 30,
As at 2007 2006
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Balance, beginning of period $ (70,420,554) $ (65,660,434)
Opening adjustment on adoption of new
accounting policy - -
Loss for the period (333,932) (1,422,044)
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Balance, end of period $ (70,754,486) $ (67,082,478)
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CONSOLIDATED STATEMENT OF CHANGES IN ACCUMULATED OTHER COMREHENSIVE
LOSS

--------------------------------------------------------
June 30,
As at 2007
--------------------------------------------------------
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Balance, beginning of period $ -
Opening adjustment on adoption of new
accounting policy -
Net unrealized loss on available-for-sale
investments arising during the period (2,800)

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Balance, end of period $ (2,800)
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WEX PHARMACEUTICALS INC.
Incorporated under the laws of Canada
CONSOLIDATED STATEMENTS OF OPERATIONS, AND COMPREHENSIVE LOSS
(Unaudited, Prepared by Management)
(Expressed in Canadian Dollars)

CONSOLIDATED STATEMENTS OF OPERATIONS

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Three Months Ended June 30
2007 2006
(Restated note 2)
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Revenue
Product sales $ 180,304 $ 75,599
License fees 500,745 46,944
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Total revenue 681,049 122,543

Cost of goods sold - product sales 121,502 56,446
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Gross profit 559,547 66,097
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Expenses
Amortization 46,396 63,492
General and administrative 704,611 492,568
Research and development 273,975 762,853
Sales and marketing 8,659 9,356
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Total operating expenses 1,033,641 1,328,269
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Operating loss (474,094) (1,262,172)
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Other income (expenses)
Interest and sundry income 9,581 66,613
Interest expense on convertible
debentures (note 10) (171,199) (201,972)
Foreign exchange gain (loss) 306,567 (24,513)
Gain on settlement of accounts payable 14,913 -
Realized loss on sale of available-
for-sale investments (19,700) -
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Total other income (expense) 140,162 (159,872)
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Loss for the period (333,932) $ (1,422,044)
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Basic and diluted loss per common share $ (0.01) $ (0.04)
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Weighted average number of common
shares outstanding $ 43,809,451 $ 35,059,451
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CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS

Net loss for the period $ (333,932)

Net unrealized loss on available-for-
sale investments during the period (2,800)

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Comprehensive loss end of period $ (336,732)
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See accompanying notes to the consolidated financial statements on
www.sedar.com.


WEX PHARMACEUTICALS INC.
Incorporated under the laws of Canada
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, Prepared by Management)
(Expressed in Canadian Dollars)

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Three Months Ended June 30
2007 2006
(Restated note 2)
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OPERATING ACTIVITIES
Loss for the period $ (333,932) $ (1,422,044)
Adjustment for items not involving cash
Amortization of deferred revenue (500,745) (46,944)
Amortization of property and equipment 60,556 72,322
Amortization of deferred financing costs 1,511 3,180
Amortization of deferred tenant inducement
allowance (2,014) (2,014)
Foreign exchange gain on convertible
debentures (286,185) (181,801)
Loss on disposal of property and equipment - 2,960
Stock-based compensation 57,741 40,201
Imputed interest expense on convertible
debentures 169,688 198,792
Realized loss on sale of available-for-sale
investments 19,700 -
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(813,680) (1,335,348)
Changes in non-cash working capital items:
Accounts and other receivables (36,206) 193,128
Inventory (95,366) 805
Prepaid expenses, deposits and other (98,018) 50,367
Accounts payable and accrued liabilities (22,294) (1,870,530)
Advances from customers (15,753) -

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Cash used in operating activities (1,081,317) (2,961,578)
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INVESTING ACTIVITIES
Proceeds from short term investments 285,975 100,000
Purchase of short term investments (169,876) -
Rental deposit 60,000 65,000
Purchases of property and equipment (450) (407)
Proceeds from disposal of property and
equipment - 8,341

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Cash provided by investing activities 175,649 172,934
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FINANCING ACTIVITIES
Repayment of convertible debentures and
interest - (426,947)

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Cash used in financing activities - (426,947)
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Decrease in cash and cash equivalents (905,668) (3,215,591)

Cash and cash equivalents, beginning of
period 1,265,542 7,797,673

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Cash and cash equivalents, end of period $ 359,874 $ 4,582,082
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Supplemental cash flow information
Interest paid - -
Income taxes paid $ - $ -
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See accompanying notes to the consolidated financial statements on
www.sedar.com.


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