WEX Pharmaceuticals Inc.

WEX Pharmaceuticals Inc.

November 15, 2007 13:09 ET

WEX Reports Second Quarter Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 15, 2007) - WEX Pharmaceuticals Inc. ("WEX" or the "Company") (TSX:WXI) reported events and financial results for the three-month and six-month periods ended September 30, 2007. All amounts, unless specified otherwise, are in Canadian dollars.

Financial Results - Unaudited

For the six months ended September 30, 2007, the Company recorded a loss of $1.348 million ($0.03 per common share) compared to a loss of $2.236 million ($0.06 per common share) for the six months ended September 30, 2006. The decrease in loss for the six months ended September 30, 2007, when compared to the same period in the preceding year, is attributable to recognizing in full the deferred revenue of $501,000 as income on termination of the Esteve collaboration arrangement, expense reductions relating to discontinuing clinical trials, staff reductions, and the reduction of other overhead expenses. However, in the course of negotiating with CK Life Sciences Int'l. Inc. ("CKLS") in respect of the proposed financing, the Company incurred considerable legal fee costs. With the curtailment of scientific research effort, the government investment subsidy decreased by $119,000 as compared to the same six month period in 2006. During the six months ended September 30, 2007, the Company reports minor product income from its China subsidiary. Management expects increased losses during the coming quarters as it continues to focus its resources on TEC-006 clinical trials and the commercialization of Tectin™.

At the end of September 30, 2007, the Company had largely expended its available cash reserves, including a $350,000 bridge loan received in July 2007. As previously announced, the proposed financing with CKLS closed on October 17, 2007. As a result, the Company received $4,490,000 from the issuance of 16,327,272 restricted voting common shares to CKLS's designee Pharmagesics (Holdings) Inc. In addition, the Company received its first installment of a convertible debenture in the amount of $2,000,000 concurrent with the closing on October 17, 2007. The balance of the convertible debenture will be advanced to the Company on a quarterly basis totalling $13,600,000 provided certain conditions are met.

Second Quarter Events

- In September 2007, the Company was granted Canadian Patent No. 2,485,337 under the title, "Analgesic Composition and Method" and Canadian Patent No. 2,493,885 under the title, "Use of Sodium Channel Blocking Compounds and Aspirin in Manufacturing Drugs for Producing Synergistically Analgesic Effect in Mammals". Foreign counterparts of both patents have been previously issued in China and are pending in other countries.

- 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 bears interest at the LIBOR plus 4% and imposes certain restrictions on the activities of WEX throughout its term. This loan was repaid on October 17, 2007 when the CKLS financing was closed.

Subsequent Events

- As referenced above, the CKLS financing was closed on October 17, 2007. As a condition of the closing of the CKLS Private Placement, the share structure of the company was reorganized, as approved at the annual general meeting, as follows:

-- voting common shares are redesignated as restricted voting shares; and

-- creation of one class A share

Pharmagesic (Holdings) Inc., a designee of CKLS, was issued one class A share. The class A shareholder will have the right to elect a certain number of directors. The holders of the restricted voting shares will have the right to elect the remaining members of the board of directors.

- On October 3 and 4 , 2007 an affiliate of CKLS provided a short term bridge loan to WEX of $80,192 which bears interest at LIBOR plus 4% and is secured by certain Quebec tax credits. The short term bridge loans provided on July 26, 2007 of $350,000 and those advanced above were repaid in full upon the completion of the CKLS financing on October 17, 2007.

- The Company reached an agreement with holders of its convertible debentures under which approximately $3.3 million face value of the loans is outstanding. The debenture holders accepted a discounted settlement sum of approximately $2.1 million upon the completion of the CKLS financing on October 17, 2007.

- Concurrent with the closing of the CKLS financing on October 17, 2007, the following claims were settled.

-- Severance claims by former directors, officers and employees,

-- Claims related to the September 2002 acquisition of the additional 46% interest in the China subsidiary, Nanning Maple Leaf Pharmaceuticals Co. Ltd. ("NMLP"), and

-- Certain indemnity claims by former directors, officers and employees.

- The Company has commenced its purchase of the remaining 3% of Nanning NMLP for a negotiated sum of $250,000. On completion of the purchase, NMLP will be a wholly owned subsidiary of the Company.

For further details, please refer to the unaudited Interim Consolidated Financial Statements and Management's Discussions and Analysis for the three and six month periods ended September 30, 2007 on www.sedar.com.

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.

Contact Information

  • WEX Pharmaceuticals Inc.
    Dr. Edge Wang
    President & CEO
    (604) 683-8880 or Toll Free: 1-800-722-7549
    Website: www.wexpharma.com