VANCOUVER, BRITISH COLUMBIA--(Marketwired - Nov. 29, 2013) - Med BioGene Inc. (TSX VENTURE:MBI) today reported its financial results for the nine months ended September 30, 2013 (all amounts are in United States dollars).
Erinn B. Broshko, MBI's Executive Chairman, commented: "The first three quarters of 2013 has seen Med BioGene hit some very important milestones. In respect of GeneFx® Lung, our partner, Precision Therapeutics, successfully completed their final clinical studies early in the year and anticipates submitting certain required data to CLIA in December for regulatory approval. As Precision's clinical laboratory is already CLIA-certified, approval for GeneFx Lung is expected reasonably soon after submission of the data demonstrating the analytical validity of the test. In respect of our litigation with Signal Genetics LLC and Respira Health LLC, MBI and Precision executed a settlement agreement with Signal and Respira for the dismissal of all remaining claims, with Precision being solely responsible for all financial obligations under the settlement. Lastly, the petition filed by certain shareholders of MBI against the company in the British Columbia Supreme Court making claims relating to, among other things, MBI's adoption of an Advance Notice Policy, was discontinued by the petitioners. We are very pleased with our progress and are looking forward to the commercial launch of GeneFx Lung."
Regulatory and Commercialization Update
On November 5, 2013, MBI provided a regulatory and commercialization update regarding GeneFx Lung. MBI's commercial partner, Precision Therapeutics, Inc., plans to offer GeneFx Lung testing under CLIA (Clinical Laboratory Improvement Amendments of 1988), the United States federal regulations applicable to clinical laboratory testing. In order to receive CLIA approval for GeneFx Lung, Precision is completing the required "wet laboratory work" and associated data analysis demonstrating the analytical validity of the assay in Precision's laboratory. The analytical work completed to date has been successful and has shown the expected results. Primarily as a result of feedback from New York State, Precision is planning to undertake certain other laboratory work that is expected to add approximately three weeks to the completion date of the overall analytical laboratory work. As such, Precision anticipates submitting the required data to CLIA in December. As Precision's clinical laboratory is already CLIA-certified, approval for GeneFx Lung is expected reasonably soon thereafter. This timeline relating to the CLIA submission and receipt of approval is Precision's current best estimates; however, given the short timeframe, unforeseeable events, even if minor, may result in delays.
The long-term commercial success of GeneFx Lung will depend largely upon the extent to which government payors, such as Medicare and Medicaid, and other third-party payors reimburse the test. In the United States, insurers generally require evidence of both analytical and clinical validity (i.e. reliability of test results associated with the target disease) as well as clinical utility (i.e. whether the test results affect actual clinical decision-making and, possibly, improve patient outcomes) before reimbursing for a molecular diagnostic test.
Precision believes that it has sufficient evidence of the clinical validity of GeneFx Lung from existing and in-process peer-reviewed publications which demonstrate the prognostic power of the test.
The evidentiary requirements of payors in the United States relating to the clinical utility of high-value molecular diagnostic tests, which includes GeneFx Lung, has varied over the last couple of years as among the numerous Medicare contract administrators who make coverage determinations within their jurisdictions, and as among other third-party payors. Published recommendations earlier in the year from The Center for Medical Technology Policy, an independent, non-profit think tank, relating to the evidentiary requirements to demonstrate clinical utility, combined with recent decisions of specific payors to not cover certain molecular diagnostic tests due to their submissions lacking evidence of clinical utility, seems in aggregate to indicate an increase in evidentiary requirements. In advance of the commercial launch of GeneFx Lung, Precision plans to engage in further dialogue with payors to better understand the current landscape and the specific needs of relevant payors as it applies to GeneFx Lung and will incorporate this into their launch strategy in order to ensure that efforts are aimed to provide clinical utility data that satisfies payors' requirements.
Dismissal of Petition by Dissident Shareholders
On August 30, 2013, MBI announced that the petition (the "Petition") filed by certain shareholders of MBI against the company in the British Columbia Supreme Court, which was scheduled be heard by the court today, is being discontinued by the petitioners.
The Petition was filed by Iain Weir-Jones, Elizabeth Anne Weir-Jones, Graeme May and Tracy May and made claims against MBI relating to, among other things: the adoption of the Advance Notice Policy by the board of directors of MBI in advance of the annual and special meeting of MBI shareholders held on May 17, 2013 (the "Meeting"); MBI's subsequent rejection, for failure to comply with the requirements of the Advance Notice Policy, of a notice of intention submitted to MBI by Mr. Weir-Jones to nominate himself and another person at the Meeting for election as directors of MBI; and decisions made at the Meeting by the chairman.
The dissident shareholders were seeking from the Court, among other things, an order convening a new annual general meeting of MBI and allowing the dissident shareholders to nominate persons for election as directors of the company.
Settlement Agreement for Dismissal of Lawsuit by Signal Genetics LLC and Respira Health LLC
On August 22, 2013, MBI announced that it and Precision had entered into a settlement agreement with Signal Genetics LLC and Respira Health LLC for the dismissal all of Signal and Respira's remaining legal claims made against MBI and Precision in the Supreme Court of the State of New York.
Pursuant to the settlement agreement, within three days of the payment by Precision to Signal and Respira of a certain financial obligation to be made on or by January 5, 2014, Signal and Respira will dismiss and withdraw all of their remaining legal claims made against MBI and Precision.
The terms of the settlement are confidential. As part of MBI and Precision's commercialization agreement, Precision is solely responsible for all financial obligations under the settlement agreement.
Presentation of GeneFx Lung Data at ASCO
On June 1, 2013, Precision presented data regarding GeneFx Lung at the American Society of Clinical Oncology (ASCO) Annual Meeting in Chicago, Illinois. The presentation was titled "Performance of a Prognostic Genomic Signature for Early-Stage NSCLC in Matched Fresh Frozen and RNA-Stabilized Tissue" and detailed the successful completion of the previously announced clinical studies to validate the use of GeneFx Lung with tissue preserved by RNAlater®, a molecular fixative.
RNAlater eliminates the need to flash-freeze specimens and to keep specimens frozen throughout storage and transport, a process that is cumbersome and costly and limits test adoption as many laboratories are not equipped to work with frozen specimens. It also eliminates the need for preserving tissue in formalin, which is known to cross-link and degrade the nucleic acids rendering them less suitable for specific downstream molecular applications.
The clinical study was undertaken by Precision Therapeutics of Pittsburgh, Pennsylvania, Almac Diagnostics Ltd. of Craigavon, Northern Ireland and the University Health Network and Princess Margaret Hospital of Toronto, Ontario.
Exercise of Warrants
In May 2013, 2,318,000 warrants and agents' warrants to purchase an equal number of common shares of MBI at a price of $0.10 per share were exercised for gross proceeds to MBI of C$231,800.
Third Quarter 2013 Financial Results
Including non-cash, share-based payments relating to the prior issuance of stock options, MBI incurred a loss of $691,968 ($0.01 per share) for the nine months ended September 30, 2013 compared to a loss of $301,667, ($0.00 per share) for the nine months ended September 30, 2012. Comparing to the third quarter of 2013 to the third quarter of 2012, MBI incurred a loss of $474,383 ($0.01 per share) and a loss of $78,239, respectively.
General and Administrative
Exclusive of non-cash, share based payments of $357,705 (2012 - $100,838) relating to the prior issuance of stock options, general and administrative expenses were $334,263, for the nine months ended September 30, 2013 compared to $200,829 for the nine months ended September 30, 2012.
Exclusive of non-cash, share based payments of $357,705 (2012 - $16,441) relating to the prior issuance of stock options, general and administrative expenses were $116,678 for the three months ended September 30, 2013 compared to $61,798 for the three months ended September 30, 2012.
The increase in general and administrative expenses during the nine months ended September 30, 2013 were largely due to MBI incurring $125,826 of legal fees relating to MBI's opposition of the above-mentioned petition filed in the British Columbia Supreme Court on June 4, 2013 by certain shareholders of MBI against the company. On August 30, 2013, the shareholders discontinued the petition.
Liquidity and Capital Resources
At September 30, 2013, MBI had cash and equivalents totalling $299,979 and working capital of $180,057 compared to cash and equivalents of $355,326 and a working capital of $294,655 at December 31, 2012.
Cash used in operating activities was $279,791 for the nine months ended September 30, 2013 compared to $226,923 for the nine months ended September 30, 2012.
Cash provided by financing activities was $225,792 for the nine months ended September 30, 2013 compared to $nil for the nine months ended September 30, 2012. In May 2013, 2,318,000 warrants and agents' warrants to purchase an equal number of common shares of MBI at a price of C$0.10 per share were exercised for gross proceeds to MBI of C$231,800.
In September 2012, MBI and Precision amended their commercialization agreement to restructure the potential milestone payments payable by Precision. By restructuring the milestone payments, management expects to extend MBI's cash runway following the commercialization of GeneFx Lung to allow MBI the opportunity to demonstrate increasing clinical and commercial success of GeneFx Lung. Under the amended commercialization agreement, MBI is eligible to receive from Precision up to $1.0 million in the following milestone payments, all of which are credited against future royalties that may be owed to MBI by Precision: following the commercial launch of GeneFx Lung, amounts totaling $500,000 and, following the achievement of $5 million in net revenues from GeneFx Lung, amounts totaling $500,000.
About Med BioGene Inc.
MBI is a life science company based in Vancouver, British Columbia that is currently focused on managing the license and rights to GeneFx Lung. MBI's common shares are listed for trading on the TSX Venture Exchange. For more information, please visit www.medbiogene.com.
About GeneFx® Lung
GeneFx Lung is a proprietary gene expression-based test to improve upon staging for identifying those patients with early-stage non-small-cell lung cancer (NSCLC) who, following surgical removal of their tumor, are at higher and lower risks of mortality. In an initial study of patient specimens from the National Cancer Institute of Canada Clinical Trials Group JBR.10 trial, published in the Journal of Clinical Oncology, patients classified by GeneFx Lung as higher risk benefited from adjuvant chemotherapy, and those classified as lower risk did not benefit and may have experienced a detrimental effect from adjuvant chemotherapy. GeneFx Lung was subsequently validated in predicting patient mortality in four independent studies involving data from tumor specimens totaling 676 untreated early-stage NSCLC patients. GeneFx Lung is expected to provide better-informed and personalized treatment decisions to assist in the selection of patients for adjuvant chemotherapy.
On April 15, 2011, Precision Therapeutics, Inc. and Med BioGene closed their commercialization agreement. The agreement provides to Precision exclusive global rights to develop and commercialize GeneFx Lung.
About Precision Therapeutics, Inc.
Precision, a leading life science company based in Pittsburgh, Pennsylvania, is dedicated to improving the outcomes of cancer patients by providing personalized medicine solutions that aim to increase quality of life and cancer survival rates. Precision offers a portfolio of products developed to help guide physicians and patients with difficult clinical decisions throughout the cancer care continuum. For more information, please visit www.precisiontherapeutics.com.
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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 Precision and its scientific, clinical and/ or commercialization efforts and expectations have been provided to MBI by Precision. 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 Precision that may constitute forward-looking information. A redacted copy of the commercialization agreement between MBI and Precision 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.