Progen Industries Ltd and Medigen Biotechnology Corporation has announced that they have agreed terms to conclude the agreement of strategic alliance between the two companies.
The strategic alliance, which was signed in May 2000, required Medigen to undertake and complete certain clinical trials of PI-88. On completion of these PI-88 clinical trials, Medigen was entitled to a 15 per cent royalty on PI-88 proceeds of commercialisation received by Progen. Both parties have agreed to end the strategic alliance to allow Progen to develop and commercialise PI-88 as rapidly as possible and with maximum flexibility.
The removal of the 15 per cent royalty obligation to Medigen means Progen now retains a much larger portion of PI-88's proceeds of commercialisation, which significantly increases the value of PI-88 to the company as it completes the final stages of clinical development.
In return, Medigen will benefit through an increased equity position in Progen and the potential to earn future milestone payments, demonstrating the confidence Medigen has in the future of PI-88. Additionally, the cancellation of Progen's shareholding in Medigen and the removal of an associated anti-dilution clause will provide Medigen with future capital raising alternatives including a potential Initial Public Offering.
Justus Homburg, Progen's CEO commented, "We believe this is an excellent opportunity to create a win-win scenario for both companies and create the greatest flexibility for PI-88 to be developed and commercially exploited."
Stephen Chang, Progen's executive chairman added, "The alliance between the two companies has formed an important foundation for the development of PI-88. Medigen has played a central role in our clinical trial programme, particularly in the liver cancer trial, the largest PI-88 phase II trial that has been conducted, which involved 172 patients."
"The Progen Board extends its gratitude to Dr Chang and Cheng for their contribution to the company as directors. There commitment to PI-88's development in liver cancer has been critical to our current ability to proceed as rapidly as possible towards commencing a phase 3 trial of PI-88 in liver cancer", Chang said.
Medigen's CEO, Dr Stanley Chang commented: "The alliance was struck in 2000 and at that time it was never envisaged that Progen would develop PI-88 beyond the completion of phase II. We are delighted to have been involved in the development of PI-88 particularly the HCC phase II study, and agreed to end the Alliance so that PI-88 has the best chance of success. Our continuing confidence in PI-88 is reflected in our strong desire to hold Progen equity and to agree to future milestone payments that are based on PI-88's success," company release stated.