VANCOUVER, BRITISH COLUMBIA--(Marketwired - April 9, 2013) - Med BioGene Inc. (TSX VENTURE:MBI) today reported its financial results for 2012 (all amounts are in United States dollars).
Erinn B. Broshko, MBI's Executive Chairman, commented: "2012 and the beginning of 2013 has seen Med BioGene hit some very important milestones. In respect of our commercialization efforts, our commercial partner, Precision Therapeutics, successfully completed their final clinical studies in advance of the expected launch of GeneFX® Lung by mid of 2013. In respect of our litigation with Signal Genetics LLC and Respira Health LLC, we had a recent significant victory in the Supreme Court of the State of New York and are confident that we will be successful in having the remaining claims and causes of action dismissed. Lastly, in respect of our cash position, we restructured our future milestone payments with Precision such that, upon the expected launch of GeneFX Lung, MBI believes that it will have enough cash resources with receipt of the first milestone payment to fund operations until approximately the third quarter of 2015. We are very pleased with our progress and are confident in the commercial prospects of GeneFx Lung."
Recent Business Highlights
Change of Marketing Name of Lung Cancer Test
On March 27, 2013, MBI announced that Precision Therapeutics has decided upon a new marketing name for GeneFx Lung. Instead of LungExpress Dx, Precision plans to market the test under the brand name GeneFx Lung.
Precision expects to commence commercialization of GeneFx Lung through its CLIA-certified laboratory by mid-2013.
Precision currently markets a number of tests through its CLIA-certified laboratory, including ChemoFx®, BioSpeciFx®, miRview®mets2 and GeneFx® Colon. Both GeneFx Colon and GeneFx Lung are gene expression-based tests and, accordingly, share the brand name GeneFx.
Successful Completion of GeneFx Lung Clinical Studies
On January 23, 2013, MBI and Precision announced that Precision had successfully completed their 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 can be cumbersome and costly. 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 studies were conducted using patient specimens prospectively accrued by Precision from a consortium of medical centers in the United States.
In advance of commercialization, Precision has established an advisory board comprised of world leaders in lung cancer research and treatment from the United States, Canada, France and Italy.
"Precision's efforts in commercializing this important test underscores our ongoing commitment to improving the outcomes of cancer patients by providing personalized medicine solutions that aim to increase quality of life and cancer survival rates," said Sean McDonald, Precision's President and Chief Executive Officer. "The successful completion of our clinical studies provides further evidence of the robustness of our test and we are moving closer to providing patients and doctors with a tool to address a critical unmet need."
Erinn Broshko commented: "We are very pleased with the progress made by Precision and are looking forward to our clinically valuable test being available to lung cancer patients. The commercial success of a molecular diagnostic test depends, in large measure, upon the extent of its integration into current pathological processes. The use of GeneFx Lung with RNAlater will allow pathologists to avoid the logistics involved with using flash-frozen tumor specimens and, instead, to handle and ship specimens at room temperature, thereby simplifying the process significantly. We believe that this will materially enhance the commercial prospects of our test."
Update Regarding Litigation with Signal Genetics LLC and Respira Health LLC
On February 25, 2013, MBI provided an update in regard to its ongoing litigation with Signal Genetics LLC and Respira Health LLC.
In February 2011, Signal and Respira filed a lawsuit against MBI and Precision in the Supreme Court of the State of New York asserting twelve causes of action against MBI. MBI continues to believe that the lawsuit is frivolous, vexatious and entirely without merit and is defending the lawsuit vigorously. MBI has received financial support from Precision to, among other things, conduct such defense and to cover any settlement (in both cases, half of which is credited against future royalties that may be owed to MBI by Precision) or award of damages made against MBI (which would not be credited against such future royalties), subject in all cases to certain threshold limits.
Discovery in the lawsuit has been completed and, on August 24, 2012, MBI filed with the Court a motion for partial summary judgment to dismiss Signal and Respira's claims for lost profits arising from alleged breaches of contract and the duty of good faith and fair dealing, and causes of action for negligent misrepresentation, unfair competition and unjust enrichment.
On February 20, 2013, the Court heard oral argument in connection with MBI's motion. In a Decision and Order of the same date, the Court granted MBI's motion and dismissed Signal and Respira's: (1) claims against MBI for lost profit damages arising from alleged breaches of contract and the duty of good faith and fair dealing; (2) cause of action against MBI for negligent misrepresentation; and (3) cause of action against MBI for unfair competition. No trial date has been set with respect to the remaining claims.
Erinn Broshko commented: "This decision is a significant setback for Signal and Respira. We have always believed that the lawsuit is entirely without merit and are confident that we will be successful in having the remaining claims and causes of action dismissed."
2012 Financial Results
MBI incurred a loss of $368,083 ($0.00 per share) for 2012 compared to having net income of $1,530,192 ($0.02 per share) for 2011. MBI did not generate any revenue during 2012, but generated net licensing revenue of $2,069,773 during 2011.
Research and Development
Research and development expenses were $nil for 2012 compared to $94,519 for 2011. Under the terms of MBI's commercialization agreement with Precision, Precision is responsible for all future costs associated with the development and commercialization of GeneFx Lung.
General and Administrative
General and administrative expenses, including non-cash share-based expenses associated with the prior issuance of stock options and foreign exchange, were $368,083 for 2012 compared to $732,216 for 2011, representing a decrease of 50%.
Consistent with MBI's cost saving initiatives and focused burn rate, general and administrative expenses, exclusive of non-cash share-based expenses associated with the prior issuance of stock options and foreign exchange, were $257,138 for 2012.
Liquidity and Capital Resources
At December 31, 2012, MBI had cash and equivalents totalling $355,326 and working capital of $294,655 compared to cash and equivalents of $685,170 and a working capital of $556,446 at December 31, 2011.
Cash used in operating activities was $329,549 for 2012 compared to cash provided by operating activities of $252,586 for 2011.
Cash provided by investing activities was $nil for 2012 compared to $64,499 for 2011. The cash provided by investing activities consisted of proceeds from the disposition of capital assets.
Cash provided by financing activities was $nil for 2012 compared to $212,930 for 2011. The cash provided by financing activities consisted of proceeds on the issuance of shares.
In September 2012, MBI and Precision amended their commercialization agreement to restructure the potential milestone payments payable by Precision. 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.
By restructuring the milestone payments in the commercialization agreement, 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. As a result of MBI's cost savings initiatives and focused burn rate, management believes that MBI currently has sufficient cash resources to continue with operations until approximately the first quarter of 2014. If Precision commercializes GeneFx Lung by mid-2013 as previously announced, then, with receipt of the $500,000 in milestone payments from Precision relating to commercial launch, management believes that MBI will have sufficient cash resources to fund operations until approximately the third quarter of 2015.
About Gene®Fx 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 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.
About Med BioGene Inc.
Med BioGene is a life science company based in Vancouver, British Columbia that is currently focused on managing the license and rights to GeneFx Lung. Med BioGene's common shares are listed for trading on the TSX Venture Exchange. For more information, please visit www.medbiogene.com.
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 a 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.