Chromos provides shareholder update

    BURNABY, BC, Aug. 28 /CNW/ - Chromos Molecular Systems Inc. ("Chromos";
TSX: CHR) today provided an update on its on-going restructuring efforts.
    "Since filing for creditor protection in April 2007, Chromos has made
significant progress in its efforts to restructure and re-position the Company
for success going forward," said Alistair Duncan, President and Chief
Executive Officer. "Management and the Board of Directors are committed to
this process and are confident that it will lead to an outcome to the benefit
of all shareholders."

    Some of the key items of note in the on-going restructuring process

    -  On April 11, 2007 Chromos filed a Notice of Intention to Make a
       Proposal (the "Proposal") under the Bankruptcy and Insolvency Act
       (Canada) and named Campbell, Saunders Ltd., as Trustee under the
       intended Proposal and to assist Chromos in developing a Proposal to

    -  On July 19, 2007 Chromos sold its two monoclonal antibody drug
       candidates, CHR-1103 and CHR-1201, to Glenmark Pharmaceuticals, S.A.
       The upfront proceeds from this sale transaction, together with a
       small amount of existing funds on hand, were used to fully repay
       Chromos' secured creditors;

    -  In late July Chromos filed a Proposal to its unsecured creditors to
       settle all of its financial obligations that had arisen prior to
       April 11, 2007. At a meeting of unsecured creditors held on
       August 14, 2007, the unsecured creditors overwhelmingly endorsed the
       Proposal and on August 23, 2007 the Supreme Court of British Columbia
       in Bankruptcy approved the Proposal. Under the terms of the Proposal,
       Chromos must on or before October 23, 2007 pay to the Trustee
       $1.1 million, to then be dealt with in accordance with the Proposal
       terms, to settle Chromos' financial obligations incurred prior to
       April 11, 2007. Under the Proposal, Chromos will also assign to the
       Trustee $1.5 million from a milestone payment payable by Glenmark on
       the commencement of a Phase I clinical trial for CHR-1103, if and when
       such payment is made;

    -  Chromos continues to maintain scaled-back operations, while
       maintaining the integrity of its assets, during the restructuring
       period and has reached an agreement in principle with its landlord to
       significantly reduce the amount of leased premises in its current
       location effective September 1, 2007; and

    Chromos has also continued to negotiate and execute on a number of ACE
System licensing transactions which has provided on-going operating funds and
is in the process of completing the sale of surplus equipment to raise
additional capital.
    Chromos is in discussions and negotiations with respect to several
strategic transactions, including investment proposals and assets
dispositions, which if completed would yield funds sufficient to pay the
$1.1 million to be paid to the Trustee for the Proposal and to provide some
capital to fund future operations. In parallel, there are also preliminary
discussions regarding potential business combinations.
    In late May, 2007 and before significant steps had been made in the
restructuring process, certain shareholders who held secured notes delivered a
requisition to hold a shareholder meeting. Chromos originally resolved to hold
this meeting on September 26, 2007, a date by which Chromos expected the
restructuring process to be substantially complete. At this time, though the
Company has now received creditor and court approval for the Proposal, the
Company continues to work on near term strategic transactions, some of which
may require shareholder approval, to not only satisfy the Company's Proposal
obligations but to also define the future operations of Chromos. Therefore,
Chromos has re-considered the timing of this meeting given that separate
shareholder meetings would be required in the next short while for the
approval of the pending strategic transactions and that additional time is
required to complete the audit of Chromos' December 31, 2006 financial
statements to be presented to shareholders.
    "The Board of Directors believes that if the shareholder meeting took
place on September 26, 2007 the Company would not have sufficient information
to present to shareholders regarding the various transactions for which
shareholder approval may ultimately be required," said Darrell Elliott,
Chairman of the Board. "Therefore, we concluded that it was not in the best
interests of the Company to incur the considerable expense involved to hold
more than one shareholder meeting in view of the Company's current financial
position and in considering that shareholders should have the benefit of
considering all matters at once to make an informed decision." Accordingly,
the Board has decided to cancel the September 26th shareholder meeting and
schedule a new shareholder meeting to be held on December 11, 2007.

    About Chromos

    Chromos is a biopharmaceutical company focused on the development and
commercialization of its proprietary ACE System technology that is used to
engineer production quality cell lines to manufacture biopharmaceutical
products including monoclonal antibodies and the development of human
therapeutic products. For more information visit our website at

    Risks and Uncertainties

    Certain of the statements contained in this press release are
forward-looking statements which involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Chromos, or industry results, to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements.
    To the extent possible, management implements strategies to reduce or
mitigate the risks and uncertainties associated with Chromos' operations.
Operating risks include (i) the continued availability of capital to finance
Chromos' activities; (ii) Chromos' limited cash position, (iii) the ability to
successfully obtain proof of the effectiveness of Chromos' technology (iv) the
ability to complete and maintain corporate alliances relating to the
development and commercialization of Chromos' technology; (v) the ability to
obtain and enforce patent and other intellectual property protection for
Chromos' technology; (vi) market acceptance of Chromos' technology; (vii) the
competitive environment and impact of technological change; (viii) Chromos'
ability to attract and retain employees and consultants to carry out its
business plans; (ix) the timely development and commercialization of any
technology or products that are contingent on the completion and maintenance
of corporate alliances with third parties (*) the demand for repayment of
currently outstanding secured, promissory notes; (xi) re-emergence from its
reorganization proceedings. Further details on Chromos' operating risks can be
found in its most recently filed Annual Information Form and in its Quarterly
and Annual Reports to Shareholders.

For further information:

For further information: Jeff Charpentier, CA, Vice President Finance
and CFO, (604) 415-7132, email:

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