Tuesday, 14 July 2009

We Bid Farewell to Med BioGene

Basic shares: 41 million
Fully diluted: 63 million


On February 21, 2007, we announced Med BioGene as our latest client. At that time the company had a new CEO in Erinn Broshko and a focus on developing gene based diagnostics tools for colon cancer, lymphoma, leukemia and cardiovascular disease. In the middle of that year we helped the company raise over $3 million with the expectation to have a commercial partner by the end of that year or the first quarter of 2008.

However in the second half of 2008, management shifted the focus of its science and market strategy to a prognostic test for lung cancer in the belief that the product to market was faster and greater for this science versus the company’s original lymphoma diagnostic test.

As such, the new direction required and will require more money compared to the original plan but in management’s view the potential upside is much greater. At this time MBI is planning on going it alone to commercialize the science. It remains to be seen whether or not it will ultimately partner with an entity that has considerable resources and experience in this area.

This is a risk / reward scenario as during the 2007 and early 2008 period the stock traded in the range of $0.40 to $0.70 on the expectation that a partnering deal would be closed. However, with the critical change in business direction, a market that was growing less and less patient with emerging companies and compounded by gathering economic storm clouds the stock drifted to below a dime.

Much of the risk was assumed by the early investors and they deserve to be well rewarded, which will hopefully come with the commercial launch of MBI’s LungExpressDx™ product later this year. Between last summer and as of this writing the company had raised over $3.5 million in a very difficult market, not to mention during a time when it was virtually impossible for a junior non-cash flowing Canadian biotech company to bring in any capital at all.

We are counting a great deal on Erinn Broshko’s drive and the capabilities of his team to expedite the launch of LungExpressDX™ and to catch the attention of large biopharma companies and laboratories. As The Howard Group, members of the HG team, associated Insight Limited Partnerships and the directors as well as a host of other relationships hold a collective position well into the seven figures, we clearly have a vested interest in wishing MBI every success.