>>Please feel free to add to the list>>
TORONTO, March 6, 2000 - Spectral Diagnostics Inc. (TSE: SDI), developer of innovative diagnostic technologies, today reported that it has committed to issue 2,500,000 common shares to Dr. Paul Walker and Dr. Alex Romaschin in exchange for their 27% interest, on a fully diluted basis, in Sepsis Inc., Spectral's joint venture partner in the development of diagnostic tests for infections. Drs. Walker and Romaschin will maintain their senior roles in the direction, development and commercialization of these important diagnostic products.
This transaction has been valued at $5.2 million and is conditional upon the attainment of certain milestones by Sepsis Inc. Spectral will issue to Drs. Walker and Romaschin:
- 1,500,000 common shares upon filing by Sepsis Inc. of the pre-market approval ("PMA") submission to the FDA for a test designed to rule out gram negative infections; and
- 1,000,000 common shares upon receipt of confirmation of approval from the FDA for marketing of the test to rule out gram negative infections.
All common shares issued will be subject to a one-year hold period from the date of issue.
Upon conclusion of all elements of the transaction Spectral will own 86% of Sepsis Inc. on a fully diluted basis and Spectral will have a total of 13,350,841 common shares issued and outstanding. Spectral is also in discussions to acquire the remaining shares of Sepsis Inc. which it does not already own.
Dr. Calvin Stiller, Chairman of Spectral said, "We are very excited about our diagnostic tests for infections. The acquisition of an additional 27% of Sepsis Inc. will benefit the shareholders of Spectral in that the Company is broadening its base of diagnostic tests. A broader product base will open up new growth opportunities."
In 1998, Spectral and Sepsis Inc., entered into an alliance with Elan Corporation, plc ("Elan"). Under the terms of this alliance, Elan acquired an interest in Sepsis Inc. and world-wide marketing rights for diagnostic products for infections in exchange for development funding and certain milestone payments. The milestone payments associated with regulatory filings and approvals of the test in the United States, Europe and Japan to rule out gram negative infections could total up to US $12 million. Under the agreements, Sepsis Inc. retains exclusive manufacturing rights for these products and a significant royalty entitlement based on "in market" sales of the tests. Upon acceptance by the FDA of a PMA for the test to rule out gram negative infections, Sepsis Inc. will receive a milestone payment of US $2.5 million. A further milestone payment of US $1.5 million will be earned upon receipt of FDA regulatory approval for this test. In addition to the development of the test to rule out gram negative infections, early stage development of the gram positive diagnostic test is now underway.
Each year there are an estimated 750,000 cases of septic infection reported in the United States alone. With mortality rates of up to 40%, sepsis represents one of the leading causes of patient death and costs to the health care system. Conventional methods for diagnosing infection include the use of cultures that provide diagnostic information in 24 to 72 hours. Sepsis Inc.'s gram negative test, the first in a family of diagnostic tests, is intended to provide additional diagnostic information to physicians in one hour. |
