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Biotech / Medical : Stressgen (VSE: SSB)

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To: William Marsh who wrote (90)	9/13/1999 6:00:00 PM
From: Heat Shock	Read Replies (1) of 236

To all: I emailed the following summary of the press release about GZMO/StressGen joint venture to Michelle of Stressgen IR, who is just back from vacation: "equivocal scientific results" have made StressGen and GZMO decide to downgrade the importance of the stress protein gene therapy effort by spending less time and money on it so that each company can concentrate more on its lead products instead. In the financing agreements for the joint venture, CMDF put in protection for itself for such an eventuality, and now StressGen and GZMO must each pay CMDF 5.8 million Can. dollars each. her response: Thanks for your email message. Your summary of the release is accurate. I asked if the StressGen payment to CMDF would result in dilution. Yes, StressGen will pay CMDF in shares. The closing is expected before mid-November. The number of shares CMDF receives will be determined using the 20-day average price prior to closing. Unfortunately, it will likely mean dilution for other shareholders. It's too bad the effort didn't pan out gangbusters, but I think it's better for both partners to concentrate on their lead products. StressGen can't be spreading it's money out too thinly and GZMO has 3 melanoma vaccines to worry about, at least one of which had mediocre results so far. I always felt the stress gene therapy idea ought to have been left until StressGen has been profitable for some time. It's so dependent on the effectiveness of the gene delivery vector. It's nice that the HspE7 product is going to a second P1 clinical trial for anal dysplasia. If the HspE7 / cervical dysplasia trial were a complete bust, this would not be happening. Also, the secondary endpoint of the new trial, "the ability of HspE7 to engender a cellular immune response" will help validate the platform. Heat

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