TORONTO, Dec. 31 - GeneNews Limited (TSX: GEN), a company focused on developing blood-based biomarker tests for the early detection of diseases and personalized health management, today announced that it has issued five-year 15% redeemable convertible secured debentures (each, a “Debenture”) in the aggregate principal amount of $1,058,350 million. The issuance of these Debentures represents the initial closing of a private placement offering of the Debentures whereby the Company’s Board of Directors has authorized the sale of up an aggregate principal amount of $3,450,000 of Debentures. Each Debenture will be issued at par with no discount or premium to the principal amount of the Debenture. The 15% per annum simple interest that is payable on the Debentures is to be accrued and paid only upon the earlier of maturity, conversion or redemption of the Debentures. No commission or finder’s fee is payable in regard to the issuance of the Debentures.
“We have made tremendous progress this year bringing our lead product ColonSentry(TM), the world’s first blood-based test to determine a person’s current risk for colorectal cancer, to market in Canada,” said Dr. Heiner Dreismann, Lead Director and Interim CEO of GeneNews. “The issuance of these Debentures will support our efforts to build on this momentum and prepare for the US commercialization of ColonSentry(TM), planned for the second half of 2009.”
In consideration for purchasing a Debenture, each initial purchaser of a Debenture shall also receive one warrant (“Warrant”) for every $0.25 of principal amount of their Debenture. Each Warrant is exercisable into common shares of the Company (“Common Shares”) for a period of 36 months following the date of issuance at a price of $0.25 per Common Share. The Company has the right to accelerate the expiry date of the Warrants if the Common Shares trade with a closing price on the TSX of greater than $2.00 per Common Share for 20 consecutive trading days. Under such circumstances, the Company will have the right to accelerate the expiry date of the Warrants to the date that is 30 days after the Company provides notice that it has elected to exercise its acceleration right.
The net proceeds from the sale of the Debentures will be used for general working capital purposes, the continued marketing of the ColonSentry(TM) test in Canada and pre-launch preparation for the commercial launch of the ColonSentry(TM) test into the United States and Asia.
The principal amount of a Debenture and any accrued and unpaid interest thereon is convertible at the option of the Debenture holder into any equity securities of the Company that may be offered by the Company by way of any prospectus or private placement offering made during the term of the Debenture.
Each Debenture is also redeemable at the option of the Company. In order to redeem a Debenture, the Company must provide the holder with written notice at least 30 calendar days prior to the day when the Debenture is to be redeemed (the “Redemption Date”). On the Redemption Date, the Company shall pay the holder the principal amount of the Debenture together with any accrued and unpaid interest, unless the holder of the Debenture provides prior notice that it has elected to convert the principal amount of the Debenture along with any accrued and unpaid interest into Common Shares.
As at December 30, 2008, the number of Common Shares outstanding was 55,883,437.
About GeneNews
GeneNews is focused on the application of functional genomics to enable early diagnosis and personalized therapeutic intervention based on disease-specific biomarkers. The Company has developed a novel approach, the Sentinel Principle(TM), to detect and stage virtually any disease or medical condition from a simple blood sample. GeneNews is currently applying the Sentinel Principle(TM) in major areas with unmet clinical needs such as cancer, arthritis, cardiovascular disease and neurological disorders. For more information on GeneNews, visit www.genenews.com.
This press release contains forward-looking statements, which reflect the Company’s current expectations regarding future events. The forward-looking statements involve risks and uncertainties. Actual events could differ materially from those projected herein. Investors should consult the Company’s ongoing quarterly filings and annual reports for additional information on risks and uncertainties relating to these forward-looking statements. The reader is cautioned not to rely on these forward-looking statements. The Company disclaims any obligation to update these forward-looking statements.