Bioniche Life Sciences Inc. Signs Definitive Purchase Agreement For Sale Of Pharma Group To RoundTable Healthcare Partners

Published: Jan 13, 2006

BELLEVILLE, Ontario, Jan. 13 /PRNewswire-FirstCall/ -- Bioniche Life Sciences Inc. , a research-based, technology-driven Canadian biopharmaceutical company, today announced that it has entered into a definitive purchase and sale agreement for the sale of Bioniche Pharma Group Limited ("the Pharma Group"), its sterile injectibles manufacturing subsidiary based in County Galway, Ireland, to RoundTable Health Partners, a U.S. healthcare focused private equity group based in Lake Forest, Illinois.

This transaction was first announced on October 5, 2005 and is expected to close later this month. With a combination of cash, debt assumption, equity in the business going forward and deferred sale proceeds, this transaction has a potential value to Bioniche of approximately $33 million U.S. ($38.4 million Cdn.).

The sale achieves several corporate objectives for Bioniche: eliminating a significant portion of its consolidated debt; providing future liquidity that will be directed to core operations; and helping to maximize the success of the Pharma Group while allowing Bioniche an ongoing minority ownership position.

Upon closing of this transaction, Bioniche will have sufficient cash to repay the $7.5 million U.S. ($8.7 million Cdn.) bridge loan obtained from Laurus Funds, which was part of an $18.5 million U.S. ($21.5 million Cdn.) financing that was closed on December 8, 2005.

The balance of the proceeds will be applied to working capital and the Company's ongoing requirements in its areas of strategic focus. "Our proprietary cancer treatment -- Mycobacterial Cell Wall-DNA Complex (MCC) -- is entering a planned multi-centre Phase III/pivotal clinical trial in superficial bladder cancer," said Graeme McRae, President & CEO of Bioniche Life Sciences Inc. "At the same time, our E. coli O157:H7 cattle vaccine is nearing licensing, with final regulatory submission to the USDA expected early this year. These two key projects require significant attention and investment at this late stage of their development."

Mr. McRae added, "The Pharma Group business unit was established by Bioniche in 1992 as a means of generating revenue to support the Company's strategic research and development projects. At this point in the Pharma Group's development, it requires continued investment to reach its full potential. RoundTable's extensive experience in building companies in the sterile injectibles field gives us great confidence in the Pharma Group's future."

The Bioniche unaudited pro forma balance sheet is expected to significantly improve following this transaction by the:

* Removal of all Pharma Group liabilities, both current and long-term ($32 million Cdn. at September 30, 2005). * Repayment of the bridge loan from Laurus Funds ($7.5 million U.S./$8.7 million Cdn.).

The Bioniche senior debt obligations post-transaction include a new U.S. financing of $10.5 million U.S. ($12.2 million Cdn.) that was closed on December 8, 2005. Under the terms of this financing, certain conversion privileges may apply.

As a result, the total liability to equity ratio of Bioniche Life Sciences Inc. should improve significantly from 3.5:1.0 at September 30, 2005 to approximately 1.0:1.0 post-transaction.

Under the terms of the transaction, Bioniche will receive: * Approximately $13.25 million U.S. ($15.4 million Cdn.) in cash, prior to transaction-related expenses. * euro 1.0 million ($1.4 million Cdn.) for each of the calendar years ending December 31, 2006 through December 31, 2010 inclusive (for a total of euro 5.0 million, or $7.0 million Cdn.), provided that annual non-U.S. net sales of Suplasyn(R) (a Bioniche-developed proprietary product for the treatment of osteoarthritis (OA) of the knee) exceed euro 6.5 million ($9.1 million Cdn.), and reducing in proportion if sales are less than euro 6.5 million ($9.1 million Cdn.) in any such calendar year. * Up to $11.5 million U.S. ($13.4 million Cdn.) in aggregate performance payments, calculated as 50% of the amount by which the EBITDA (adjusted to primarily exclude the impact of acquisitions) of the Pharma Group for each of the fiscal years ending June 30, 2007 through June 30, 2010 exceed the following thresholds: $10 million U.S. ($11.6 million Cdn.) (2007); $12.5 million U.S. ($14.5 million Cdn.) (2008); $15.6 million U.S. ($18.1 million Cdn.) (2009); and $15.6 million U.S. ($18.1 million Cdn.) (2010). * A 10% equity position in the new Pharma Group. Blackmont Capital Inc. advised Bioniche on this transaction.

NOTE: The conversion rates used here were obtained from and represent the rates as at 3:00 p.m. EST on January 12, 2006.

About Bioniche Pharma Group Limited

Bioniche Pharma Group is a specialty pharmaceutical company involved primarily in the development, manufacturing, and marketing of sterile injectable products. The Pharma Group sells a number of non-branded products in the U.S. market for which it has received approved Abbreviated New Drug Applications. It also sells its branded product, Suplasyn, in 30 countries globally. Pharma Group products are sold to both the primary care and hospital markets in the U.S., Canada, and Europe.

About Bioniche Life Sciences Inc.

Bioniche Life Sciences Inc. is a research-based, technology-driven Canadian biopharmaceutical company focused on the discovery, development, manufacturing, and marketing of proprietary products for human and animal health markets worldwide. After this transaction, the fully-integrated company will employ more than 175 skilled personnel and have three principal operating divisions: Human Health, Animal Health, and Food Safety. The Company's primary goal is to develop proprietary cancer therapies supported by revenues from marketed products in human and animal health. For more information, please visit

About RoundTable Healthcare Partners

RoundTable Healthcare Partners is an operating-oriented private equity firm focused exclusively on the healthcare industry. The partners of RoundTable have significant experience in managing, operating, acquiring and financing multibillion-dollar diversified healthcare companies. RoundTable partners with companies that can benefit from its extensive industry relationships and proven operating and transaction expertise. RoundTable currently manages two equity funds totaling $900 million in capital. More information about RoundTable Healthcare Partners can be found at

Except for historical information, this news release may contain forward- looking statements that reflect the Company's current expectation regarding future events. These forward-looking statements involve risk and uncertainties, which may cause but are not limited to, changing market conditions, the successful and timely completion of clinical studies, the establishment of corporate alliances, the impact of competitive products and pricing, new product development, uncertainties related to the regulatory approval process, and other risks detailed from time to time in the Company's ongoing quarterly and annual reporting. In addition, due to the fact that the financial results contained herein are unaudited, some of the figures may be adjusted by the Company's auditors. Any material differences will be reported in the quarterly financial statements.

For further information, please contact: Jennifer Shea Corporate Communications Manager Bioniche Life Sciences Inc. Tel: 613-966-8058 ext. 1250 Rachel Levine Investor Relations The Global Consulting Group Tel: 646-284-9439

Bioniche Life Sciences Inc.

CONTACT: Jennifer Shea, Corporate Communications Manager, Bioniche LifeSciences Inc., +1-613-966-8058 ext. 1250,; orRachel Levine, Investor Relations, The Global Consulting Group,+1-646-284-9439,, for Bioniche Life Sciences Inc.

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