VANCOUVER, June 20 /PRNewswire-FirstCall/ - Inex Pharmaceuticals Corporation announced today that it has signed a definitive note purchase and settlement agreement with all of the holders (the “Noteholders”) of certain convertible promissory notes (the “Notes) issued by a wholly-owned subsidiary of INEX and guaranteed by INEX. The Notes were owned by institutional investors, including Stark Trading and Shepherd Investments Ltd. (collectively “Stark”), which owned the majority of the Notes.
Under the agreement, INEX has purchased all of the Notes from the Noteholders for upfront and potential future consideration totalling US$36.5 million, which was the principal and interest outstanding at March 31, 2006. The upfront payment consists of a US$2.5 million cash payment and 1,118,568 shares of Hana Biosciences, Inc. (“Hana”). INEX received US$1.5 million and the Hana shares on completion of a license agreement with Hana for INEX’s Targeted Chemotherapy products. The Hana shares closed yesterday at US$8.60. Therefore, the total value of the upfront payment of cash and Hana shares is approximately US$12.1 million. The amount of the upfront payment will be adjusted based on the share price of the Hana shares over the next 12 months.
The remaining US$24.4 million payment is contingent on INEX receiving future milestone or royalty payments from Hana and other consideration received by INEX should it complete a corporate reorganization. The form of corporate reorganization contemplated in the Note purchase agreement would transfer all of INEX’s pharmaceutical assets to its subsidiary, Tekmira Pharmaceuticals Corporation (“Tekmira”). All of the shares in Tekmira would be distributed pro rata to INEX shareholders allowing INEX to raise additional capital in connection with the acquisition of a new business and this capital would be transferred to the Noteholders. If INEX does not receive any future proceeds from Hana or from the contemplated corporate reorganization then it will not owe the Noteholders any additional consideration or payments. No interest will accrue on the amount owed to the Noteholders.
Timothy M. Ruane, President and Chief Executive Officer of INEX, said the settlement with the Noteholders is a significant achievement for INEX and allows the company to move forward and focus on advancing its products and supporting its corporate partners. “Today’s debt settlement announcement is a key turning point for INEX and its shareholders. We are well positioned to advance our pipeline of anticancer products both internally and in collaboration with our corporate partners.”
As announced on May 8, 2006, under the agreement with Hana, INEX will receive an additional US$30.5 million from Hana if development and regulatory milestones are achieved and will also receive royalties on product sales. INEX will pay to the Noteholders any payments INEX receives from Hana until it has paid a total of US$36.5 million to the Noteholders including the upfront payment. After full payment to the Noteholders, INEX will be entitled to keep all additional milestone and royalty payments from Hana. Payments received from any other pharmaceutical partnership agreement are not part of this settlement agreement and will not be paid to the Noteholders.
INEX has two pipelines of novel products, Targeted Chemotherapy and Targeted Immunotherapy. The three products in the Targeted Chemotherapy pipeline, Marqibo, INX-0125 (sphingosomal vinorelbine) and INX-0076 (sphingosomal topotecan) have been licensed to Hana and Hana is responsible for all future development and future expenses. Hana anticipates initiating pivotal trials for Marqibo in the second half of 2006 and initiating phase 1 clinical trials for INX-0125 in 2006 and for INX-0076 in 2007. INEX is supporting Hana to ensure the products can be advanced as quickly as possible and is being reimbursed for this support.
INEX is also using its liposomal delivery technology in collaboration with Alnylam Pharmaceuticals, Inc. to evaluate the systemic delivery of Alnylam’s RNAi therapeutics. This collaboration is evaluating multiple targets including apolipoprotein B (apoB), a protein involved in cholesterol metabolism. The INEX and Alnylam agreement will build on preliminary data published by Alnylam and its collaborators in Nature, the leading international journal of science, showing that the systemic delivery of an apoB RNAi therapeutic significantly reduced blood cholesterol levels.
Under the terms of the agreement, Alnylam has the option to execute a global exclusive license for specific RNAi therapeutic targets. The license agreement would include upfront license fees, future milestone payments and royalties as the products are commercialized. Alnylam also has the right to expand the option to negotiate license terms for additional targets.
INEX’s lead internal product candidate is INX-0167 under the Targeted Immunotherapy platform. INX-0167 is based on the encapsulation of immunostimulatory oligonucleotides (short sequences of nucleic acids) in liposomes and combines the immunostimulatory properties of certain oligonucleotides into a single synthetic particle. Preclinical studies have demonstrated that INX-0167 enhances the number and potency of certain immune cells, including natural killer (NK) cells. The resultant increase in NK cell activity is important for the enhancement of the potency of monoclonal antibodies through a mechanism known as antibody-dependent cell mediated cytotoxicity (ADCC). INEX recently published promising preclinical data on INX-0167 at the Annual Meeting of the American Association of Immunologists held May 12-16, 2006 showing INX-0167 can generate a potent immune response in non-human primates. INEX anticipates initiating formal toxicology studies in the fourth quarter of 2006 to initiate a phase 1 clinical trial in the second half of 2007.
INEX had cash at March 31, 2006 of $8.9 million. INEX anticipates ending the second quarter of 2006 with cash of approximately $6.2 million after taking into consideration the cash payment received from Hana, the cash payment made to the Noteholders and the cash burn associated with operations for the second quarter. At the current burn rate, INEX anticipates this cash will last until the end of the first quarter of 2007.
About INEX
INEX is a Canadian biopharmaceutical company developing and commercializing proprietary drugs and drug delivery systems to improve the treatment of cancer. Further information about INEX and this news release can be found at www.inexpharm.com.
Forward Looking Statements
There are forward-looking statements contained herein that are not based on historical fact, including without limitation statements containing the words “believes,” “may,” “plans,” “will,” “estimate,” “continue,” “anticipates,” “intends,” “expects,” and similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking statements. Such factors include, among others, Inex’s stage of development, lack of product revenues, additional capital requirements, risks associated with the completion of clinical trials and obtaining regulatory approval to market Inex’s products, the ability to protect its intellectual property and dependence on collaborative partners. These factors should be considered carefully and readers are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future results, events or developments.
Contacts for Inex Pharmaceuticals Corporation Investors Ian Mortimer Vice President, Finance and Chief Financial Officer Phone: 604-419-3200 Media Karen Cook Boas James Hoggan & Associates Inc. Phone: 604-739-7500 Email: kcook@hoggan.com
INEX’s common shares are traded on the Toronto Stock Exchange under the trading symbol “IEX”.
Inex Pharmaceuticals Corporation
CONTACT: Investors, Ian Mortimer, Vice President, Finance and ChiefFinancial Officer, Phone: (604) 419-3200; Media, Karen Cook Boas, JamesHoggan & Associates Inc., Phone: (604) 739-7500, Email: kcook@hoggan.com