Med Biogene Inc. reports financial results for second quarter 2006

11 September 2006

Med BioGene Inc. (TSX Venture: MBI) today reported its financial results for the second quarter ending June 30, 2006.

Recent Scientific and Business Highlights

- August 3, 2006, MBI announced promising results of its pre-clinical

studies involving its Lymphoma Profiling System. The studies of fifty

RNA samples derived from human lymphoma tissues provide evidence that

MBI's Lymphoma Profiling System can be used as an effective tool for

accurate and rapid disease diagnosis and to unlock innovation in

therapeutic development and treatment. Furthermore, MBI narrowed its

lymphoma biomarkers to approximately 100 genes, thus increasing the

effectiveness of the product as a manageable diagnostic tool.

- August 1, 2006, MBI received renewed ethics board approval from the

Vancouver Coastal Health Authority. MBI received initial ethics board

approval in June 2005. As contemplated in the study protocol, Lion's

Gate Hospital will provide to MBI blood and tumour tissue samples of

confirmed lymphoma patients, and blood samples of confirmed leukemia

patients.

- June 30, 2006, MBI received ethics board approval from the Ontario

Cancer Research Ethics Board. Also, MBI and the Ontario Institute for

Cancer Research ("OICR") signed a material transfer agreement

pursuant to which the Ontario Tumour Bank, an initiative of the OICR,

will provide to MBI tumour tissue samples of confirmed lymphoma

patients.

- June 5, 2006, MBI appointed Bruce G. Cousins, Chief Financial Officer

of Aspreva Pharmaceuticals Corporation (NASDAQ: ASPV; TSX: ASV), as a

director.

- May 19, 2006, MBI appointed Erinn B. Broshko, a corporate and

securities lawyer with Farris, Vaughan, Wills & Murphy LLP, as Chief

Executive Officer and a director.

- April 28, 2006, MBI completed its public listing on the TSX Venture

Exchange along with a brokered private placement for gross proceeds

of $2 million.

Erinn B. Broshko, Chief Executive Officer of MBI, stated "Med BioGene has made tremendous progress over the last quarter. In respect of clinical affairs, the most important development was our announcement of promising pre-clinical results in respect of our Lymphoma Profiling System. We are very pleased with these results and are enthusiastic about the prospects of our Lymphoma Profiling System. We are also aggressively developing our Leukemia Profiling System and anticipate entering shortly into the development and validation phase for our Cardiovascular Disease Profiling System. In respect of corporate affairs, MBI completed its public listing and a $2 million private placement and continued to enhance the depth of its management and board of directors."

Second Quarter 2006 Financial Results

For the three months ending June 30, 2006 MBI reported a net loss of $2,342,651 ($0.13 per share) compared to a net loss of $109,140 ($0.01 per share) for the three months ended June 30, 2005. The increase was primarily due to $2,093,288 of transaction costs associated with the acquisition of Dragon-Tex (Group) Limited that closed on April 28, 2006. These transaction costs consisted of: (a) $2,000,000 representing the fair value of the shares issued, and (b) $93,288 of assumed liabilities of Dragon-Tex, in both cases in conjunction with the acquisition of Dragon-Tex.

Research and Development

Research and development expenditures were $107,058 for the three months ended June 30, 2006 compared to $58,751 for the three months ended June 30, 2005 which was net of government assistance received and investment tax credits. The increase was due primarily to stock-based compensation of $28,967 and an increase in personnel costs partially offset by a decrease in laboratory supplies. In addition, there were $40,646 of government grants and refundable tax credits recorded in the three months ended June 30, 2005, which offset the related research and development costs incurred in that quarter.

General and Administrative

General and administrative expenses were $155,102 for the three months ended June 30, 2006 compared to $38,651 for the three months ended June 30, 2005. The increase was due primarily to stock-based compensation expense of $43,452 and public company costs of $41,184, including $30,000 for TSX Venture Exchange filing fees.

Liquidity and Capital Resources

Effective April 28, 2006, in conjunction with the listing of MBI's common shares on the TSX Venture Exchange, MBI completed a private placement financing for gross proceeds of $2 million. MBI has sufficient capital to satisfy the operating expenses and capital requirements required to meet its business objectives for at least twelve months. However, MBI will require additional capital to complete the development of its product candidates, begin development of additional products or undertake a strategic acquisition. In such cases, MBI would review the different alternatives for obtaining additional funding from one or several sources such as granting licenses or disposing of certain non-core assets, cooperative research and development agreements, government grants, tax credits, the issuance of treasury shares if markets are favourable and other financial arrangements. MBI's inability to obtain the necessary capital would adversely affect its ability to complete such projects or strategic acquisitions.

About Med BioGene

MBI is a biotechnology company with advanced research and development in gene expression technology. MBI intends to utilize its expertise in gene expression to identifying those genes, known as "biomarkers," which mark the presence of various diseases. These biomarkers will be used as an effective tool for accurate and rapid disease diagnosis and to unlock innovation in therapeutic development and treatment. With a robust set of qualified biomarkers, disease diagnosis will be quicker, less invasive and more accurate and the safety of new therapeutics will be increased, drug products will get to patients in less time and treatment decisions will be more informed.

MBI is currently focused on developing and validating biomarkers in respect of lymphoma and leukemia through its Hematological Cancer Profiling System and anticipates beginning shortly the development of biomarkers in respect of cardiovascular disease through its CVD Profiling System.

The TSX Venture Exchange does not accept responsibility for the adequacy

or accuracy of this release.

Certain statements in this press release contain forward-looking information under applicable Canadian securities legislation. Words such as "anticipates," "believes," "estimates," "expects," "intends," "may," "plans," "projects," "will," "would" and similar expressions are intended to identify forward-looking information, although not all forward-looking information contains these identifying words. Forward looking information includes, but are not limited to, those with respect to future profits, future product revenues, future operations and plans, the use of proceeds from financings, the timing of clinical trials and the completion date for clinical trials and the prospects for negotiating partnerships or collaborations and their timing. These forward-looking statements or information are only predictions based upon MBI's current expectations, and actual events or results may differ materially. MBI may not actually achieve the plans, intentions or expectations disclosed in its forward-looking information. Forward-looking information is subject to known and unknown risks and uncertainties and are based on uncertain assumptions that could cause MBI's actual results and the timing of events to differ materially from those anticipated in such forward-looking information. You are cautioned not to place undue reliance on this forward-looking information, which speaks only as of the date of this press release. Our forward-looking information does not reflect the potential impact of any future partnerships, collaborations, acquisitions, mergers, dispositions, joint ventures or investments MBI may make. All forward-looking information is qualified in its entirety by this cautionary statement and MBI undertakes no obligation to revise or update any forward-looking information as a result of new information, future events or otherwise after the date of this press release, other than as required by applicable law.

For further information: Erinn B. Broshko, Chief Executive Officer, (604) 306-4969, ebroshko@medbiogene.com

Source: newswire

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