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Medwell Capital Reports Second Quarter 2011 Results

^{Published on 2011-08-29 15:36:33 - Market Wire}
 

EDMONTON, Aug. 29, 2011 /CNW/ - Medwell Capital Corp. (TSXV: MWC) today announced financial and operational results for the three and six months ended June 30, 2011.

• Entered into an arrangement agreement to invest an additional $10 million in Spectral Diagnostics Inc. ("Spectral") and distribute approximately 54.3 million common shares of Spectral to Medwell shareholders (see description below)
• Mimetogen Pharmaceuticals Inc. ("Mimetogen"), a Medwell investment, announced positive top line efficacy and safety data from its Phase II clinical trial of MIM-D3 for dry eye disease

"The past quarter has seen the announcement of several important developments for Medwell, including a reorganization of the Company to reduce net cash burn, positive top line results from Mimetogen and the plan of arrangement with Spectral," said Mr. Kevin Giese, Chairman of the Board, President and CEO of Medwell Capital. "The net effect of all this, is that Medwell and its shareholders are being positioned to potentially realize significant value from these investments, should they continue to develop as expected. The plan of arrangement is also important in that it funds Spectral's clinical program, and allows Medwell shareholders to directly own shares in this exciting company with a fully-funded Phase 3 asset targeting an unmet medical need in a large market."

Arrangement Agreement:
Pursuant to the Arrangement, among other things Medwell will acquire a further 33,333,333 common shares ("Spectral Shares") of Spectral Diagnostics Inc. at a subscription price of $0.30 per share for aggregate proceeds of $10 million and will distribute approximately 54,282,834 Spectral Shares to Shareholders, or, based on the number of issued Medwell Shares as of the date hereof, approximately 0.6 of a Spectral Share for each Medwell Share owned (the "Arrangement"). Each Shareholder will also be deemed to be the holder of one New Medwell Common Share for each Share held on the effective date of the Arrangement. After the completion of this transaction, Medwell will retain 15,200,000 common shares of Spectral, or approximately 13 percent of the common shares outstanding (26 percent on a fully-diluted basis). Further information concerning the Arrangement can be found in Medwell's press releases of June 28, 2011, July 15, 2011 and August 26, 2011.

With all required shareholder, court and other regulatory approvals now having been obtained, the Arrangement is now scheduled to close on September 9, 2011, which is also the record date for the Distribution. Medwell's voting Class "A" shares will commence trading on the TSX Venture Exchange on an ex-dividend basis at the opening of trading on September 7, 2011.  The completion of the Arrangement is subject to other customary closing conditions.

Financial Results:
The consolidated net loss from continuing operations of the Corporation for the three months ended June 30, 2011 was $6.7 million or $0.07 per share compared with a consolidated net loss from continuing operations of $9.0 million or $0.11 per share for the same period in the previous year.  The results for the three months ended June 30, 2011 included the recognition of an unrealized loss of $3.1 million on the Corporation's investments, $0.4 million in contract services revenue and $2.1 million for severance and termination payments.

The consolidated net loss from continuing operations of the Corporation for the six months ended June 30, 2011 was $9.6 million or $0.11 per share compared with a consolidated net loss from continuing operations of $2.4 million or $0.02 per share for the same period in the previous year.  The results for the three months ended June 30, 2011 included the recognition of an unrealized loss of $4.3 million on the Corporation's investments and $0.9 million in contract services revenue.

The Corporation recorded an unrealized loss of $3.1 million (2010 - $7.0 million) for the three months and an unrealized loss of $4.3 million (2010 unrealized gain - $1.6 million) for the six months ended June 30, 2011.

Revenue earned from services agreements for the three months ended June 30, 2011 was $0.4 million (2010 - $0.3 million; Spectral $0.3 million 2010) and $0.9 million (2010 - $0.5 million) for the six months ended June 30, 2011.  Included in contract services revenue is $0.7 million (2010 - $0.3 million) for the six months ended June 30, 2011 from the agreement with Spectral.

Total consolidated expenses from continuing operations for the three months ended June 30, 2011 were $4.1 million as compared with $1.6 million for the same period last year. Total consolidated expenses from continuing operations for the six months ended June 30, 2011 were $6.3 million as compared with $4.5 million for the same period last year.

At June 30, 2010, cash and cash equivalents and short-term investments totalled $19.4 million compared with $27.5 million as of December 31, 2010. During the three months ended June 30, 2011 recorded net cash outflows for investments of $1.7 million (2010 - $0.5 million); cash outflows  incurred in the operation of the Corporation of $3.1 million (2010 - $1.6 million); and, cash outflows used in discontinued operations of $0.6 million (2010 - $1.0 million).  In the six months ended June 30, 2011 the Corporation had a decrease in cash and cash equivalents of $7.7 million compared to $19.7 million in the prior year.  The decrease in cash and cash equivalents in the six months ended June 30, 2010 is the net result of $2.3 million in investments, net operating activities incurred in the operation of the Corporation $4.7 million and amounts used in discontinued operations $0.7 million.  The Corporation has sufficient working capital to meet its obligations as they come due.

As at June 30, 2011 there were 91,008,923 Class "A" common shares of the Company issued and outstanding.

About Medwell Capital Corp.

Medwell Capital Corp. is a Canadian-based merchant bank that provides of capital and advisory services to the healthcare industry. For further information please visit [ www.medwellcapital.com ].

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.  This press release may contain forward-looking statements, which reflect the Company's current expectation regarding future events.  These forward-looking statements involve risks and uncertainties that may cause 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, but are not limited to, changing market conditions, the successful and timely completion of clinical studies, the establishment of corporate alliances, the impact of competitive products and pricing, new product development, uncertainties related to the regulatory approval process and other risks detailed from time to time in the Corporation's ongoing quarterly and annual reporting.  We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.