HONG KONG, Aug. 25 /CNW/ - PACRIM INTERNATIONAL CAPITAL INC. (PCN: TSX) ("Pacrim") is pleased to announce that it has entered into a Cooperation Agreement with Cellular Therapy Centers, LLC and Bionica, Inc. ("Bionica"), both of Sacramento, California (collectively, "CTC") intended to allow Pacrim to establish clinics in the People's Republic of China featuring a treatment for diabetes using a patented pump (the "Microdose Ambulatory Infusion Pump") manufactured by Bionica and which has been approved by the Food and Drug Administration in the United States for use in the United States and for export.
The Bionica pump is used for a "Cellular Activation Therapy" ("CAT") treatment for type 1 and type 2 diabetes. The CAT therapy is an infusion treatment using an intravenous line and the Bionica pump. The pump causes precise pulses of insulin to be delivered to the patient's blood stream mimicking the way a non-diabetic's pancreas produces these pulses in order to cause the whole body to metabolize carbohydrates and reduce elevated lipid metabolism. The patient consumes a measured amount of glucose in solution, while being infused, thus giving the liver the two signals it needs to change the resting metabolism of the patient. The patient's metabolism is monitored to adjust the treatment amounts of insulin and glucose, which results in the establishment of more proper carbohydrate and lipid metabolism, as well as a host of other enzymes and processes which are dormant or blunted in diabetic people. Treatment is a six hour procedure administered once a week at a clinic licensed to use the pump.
According to a 2010 report in The New England Journal of Medicine of a national study, China faces a diabetes epidemic with rising obesity levels and an aging population helping to trigger a major public health problem. It is estimated that more than 92 million people are living with diabetes in China, almost one in ten adults. The report indicated another 148.2 million people in China are considered to be prediabetic and suggested that public health measures should be undertaken in China to mitigate the consequences of new cases of diabetes.
The Cooperation Agreement and a related Development and License Agreement grant Pacrim the exclusive right to use the Bionica pump and related proprietary technology for twenty years in China (including for this purpose Hong Kong and Macau), subject to certain conditions. Pacrim agrees to use all reasonable efforts to expeditiously secure the approval of the State Food and Drug Administration ("SFDA") in China and patents in China for such technology for the benefit of CTC. The Cooperation Agreement requires Pacrim to pay CTC an upfront payment of U.S.$125,000 and a one-time fee of U.S.$1,000,000 within fifty days after approval is granted by SFDA for the twenty years exclusive right in China. There can be no assurance that SFDA approval will be obtained.
The licensing fee per treatment chair in China is originally U.S.$20,000 with a royalty of 20% of gross revenue reducing to U.S.$12,500 per chair and a royalty of 12.5% of gross revenue based upon the number of chairs in operation. If Pacrim fails to install a specified minimum number of chairs within two years of SFDA approval, it will lose its right to purchase additional chairs and any further licensed chairs would be at the discretion of CTC.
The Cooperation Agreement gives Pacrim the right of first refusal for the Bahamas pending ongoing negotiations with the government of the Bahamas for up to twelve months.
Pacrim is also pleased to announce it has entered into a Memorandum of Understanding with Country Place Living, LLC ("Country Place") of Irving, Texas, a developer of assisted living residences for seniors in rural and suburban areas of the United States. Pursuant to the Memorandum of Understanding, it is intended that Country Place develop and then manage assisted living residences in the United States in conjunction with Pacrim. Each residence is to be developed pursuant to a project management agreement between a Pacrim controlled entity and a related entity of Country Place and then managed pursuant to a management agreement between the ownership entity for a residence and Country Place or a related entity. Pursuant to the Memorandum of Understanding Pacrim on a best efforts basis is to acquire adequate equity and debt capital to fund the development of such residences. It is Pacrim's intention that the first residence be initiated by December 2010.
The Centers for Medicare and Medicaid Services in the United States have estimated that the population of seniors in the United States age 65 and up will increase by 15,900,000 between 2008 and 2020 (from a base of close to 40,000,000) with the included population age 85 and up expected to increase by 1,300,000 in the same period.
Country Place has been in operation since 2003 offering uniquely designed assisted livingresidences in the United States for seniors with two concepts, 18 to 22-apartment residences and eight-bedroom group home residences. Jack West, the Chief Executive Officer of Country Place, established his first senior living complex in 1982.
Pacrim intends to develop the assisted living residences under the EB-5 business immigration program in the United States, replying on Pacrim's previous experience with business immigration programs in Canada. Through its relationships in the People's Republic of China, Pacrim intends to assist residents of China to participate in the EB-5 program through investment in residence projects.
Pursuant to the project management agreement for each residence location, a fee of U.S.$250,000 would be payable to the project manager for developing the residence. Once a residence is in operation, Country Place as manager would be paid various fees under a management agreement, including a management fee equal to the greater of 6% of gross revenue and U.S.$3,250 per month.
Pursuant to the Cooperation Agreement with CTC, Pacrim will be entitled to offer diabetes clinics in the assisted living residences using the CAT treatment. Pacrim will pay a per chair fee of U.S.$20,000 to U.S.$15,000 and a royalty of 20% of gross revenue reducing to 15% after a specified number of chairs in clinics are in operation in the assisted living residences. In order to maintain the right to operate the clinics in the United States, Pacrim is required to establish a specified number of clinics.
"Pacrim is looking forward to using its experience operating in both China and North America to successfully develop diabetes clinics in China and the United States with CTC and assisted living residences in the United States with Country Place," commented Guy Lam, Chief Executive Officer of Pacrim.
About Pacrim International Capital Inc.
Pacrim International Capital Inc. ("Pacrim") is an investment holding company with its investments focused to date mostly in southern China. Pacrim's business strategy includes participation in the corrugated paper products and packaging industry in the Pearl River Delta area of southern China, the heart of the "World's Factory". Pacrim intends to enter the diabetes treatment field in China and also the assisted living residence business (including diabetes clinics) in the United States. The company's head office is in Hong Kong with offices in Shenzhen, Guangzhou and Beijing.
Caution concerning forward-looking statements
Statements made in this news release, other than those concerning historical financial information, should be considered forward-looking and subject to various risks and uncertainties. Some forward-looking statements may be identified by words like "may", "will", "anticipate", "estimate", "expect", "intend" or "continue" or the negative thereof or similar variations. Readers are cautioned not to place undue reliance on such statements, as actual results may differ materially from those expressed or implied in such statements. Factors that could cause results to vary include, but are not limited to: risks associated with China including state ownership, government sector intervention, foreign investment, repatriation of profit and currency conversion, tax, the developing legal system, protection of intellectual property rights, shareholder rights and enforcement of judgments, permits and business licenses, appropriation, political stability considerations, the central planned economy, fluctuations in foreign exchange rates and Chinese accounting and auditing standards; risks in business and operations including risks associated with expansion, future capital requirements, dependence on key personnel, environmental regulation, competition, risk in purchasing abroad, risk of change in the price of raw materials, product price volatility, insurance and operating plant risk; customer risk including risk of a single market and risk depending on major customers; technical risk including risk in the advance of technology and risk of relying on technology abroad; financial risk including foreign exchange risk, credit risk, liquidity risk, cash flow and fair value interest rate risk; investment strategy risk; and short term management transition risk.
We caution that the foregoing list of factors is not exhaustive and that when reviewing our forward-looking statements, investors and others should refer to the "Risk Factors" section of Pacrim's Annual Information Form, the "Risks and Uncertainties" and other sections of our Management's Discussion and Analysis and our other periodic filings with Canadian securities regulatory authorities. All forward-looking statements presented herein should be considered in conjunction with such filings. Except as required by Canadian securities law, we do not undertake to update any forward-looking statements, whether written or oral, that may be made from time-to-time by us or on our behalf; such statements speak only as of the date made.
SOURCE PACRIM INTERNATIONAL CAPITAL INC.
For further information: For further information: Guy Lam, Chief Executive Officer, Pacrim International Capital Inc., Tel. 852.2526.1554