For immediate release: September 19, 2005
September 19, 2005
VANCOUVER - Inex Pharmaceuticals Corporation ("INEX"; TSX: IEX) announced today that at the close of business on Friday, September 16, 2005, it received a copy of a demand letter for repayment from the majority holder of the convertible debt issued by INEX's subsidiary, Inex International Holdings Ltd (“Inex International”). Other holders of the notes have not served a similar notice.
The note holder, Stark Trading and Shepherd Investments International Ltd. (collectively “Stark”), has alleged the notes are in default and has demanded repayment in the amount of US$24.6 million. Stark has asked to be repaid by September 21, 2005.
INEX and Inex International do not believe the notes are in default and intend to oppose any action taken by Stark.
As of June 30, 2005, Inex International owes approximately US$32.7 million in certain promissory notes originally issued to Elan Corporation plc in April 2001. These notes were purchased by certain institutional investors from Elan in April 2004. The debt is comprised of an exchangeable note and a development note. The notes are repayable in April 2007 at INEX’s option in cash, in shares of INEX or a combination of both cash and shares. There is no cash interest payable during the term of the notes. Between now and maturity, the notes can be converted, at the holder’s option, into INEX shares, at predetermined conversion prices of US$5.71 and US$5.07 for the exchangeable note and development note, respectively.
Since December 2004, INEX has held a number of discussions with Stark, as the majority note holder, to determine if an agreement on a restructuring of the notes could be reached. To date these discussions have been unsuccessful in reaching an agreement to restructure the notes.
In its demand letter, Stark has indicated that it believes the notes are in default on the basis that (a) it has been admitted to Stark in writing that INEX and Inex International are unable to pay or are generally failing to pay their debts as they mature or become due, (b) INEX and Inex International are unable to pay their debts in the normal course of business, and (c) INEX and Inex International are ceasing wholly or substantially to carry on business. At June 30, 2005, INEX had $15.2 million in working capital and is committed to ensuring that this capital will be sufficient to ensure INEX and Inex International can pay all of their debts in the normal course of business well past the maturity date of the notes. INEX is also carrying on business and intends to continue to carry on business of maximizing the value of its assets.
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 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.
Contact Information
Investors
Ian Mortimer
Vice President, Finance and Chief Financial Officer
Phone: 604-419-3200
Email: info@inexpharm.com
Website: www.inexpharm.com
Media
James Hoggan & Associates Inc.
Phone: 604-739-7500
