Consistent with MBI's cost saving initiatives and focused burn rate, general and administrative expenses, exclusive of non-cash share-based expenses associated with the prior issuance of stock options and foreign exchange, were $257,138 for 2012.
Liquidity and Capital Resources
At December 31, 2012, MBI had cash and equivalents totalling $355,326 and working capital of $294,655 compared to cash and equivalents of $685,170 and a working capital of $556,446 at December 31, 2011.
Cash used in operating activities was $329,549 for 2012 compared to cash provided by operating activities of $252,586 for 2011.
Cash provided by investing activities was $nil for 2012 compared to $64,499 for 2011. The cash provided by investing activities consisted of proceeds from the disposition of capital assets.
Cash provided by financing activities was $nil for 2012 compared to $212,930 for 2011. The cash provided by financing activities consisted of proceeds on the issuance of shares.
In September 2012, MBI and Precision amended their commercialization agreement to restructure the potential milestone payments payable by Precision. Under the amended commercialization agreement, MBI is eligible to receive from Precision up to $1.0 million in the following milestone payments, all of which are credited against future royalties that may be owed to MBI by Precision: following the commercial launch of GeneFx Lung, amounts totaling $500,000 and, following the achievement of $5 million in net revenues from GeneFx Lung, amounts totaling $500,000.
By restructuring the milestone payments in the commercialization agreement, management expects to extend MBI's cash runway following the commercialization of GeneFx Lung to allow MBI the opportunity to demonstrate increasing clinical and commercial success of GeneFx Lung. As a result of MBI's cost savings initiatives and focused burn rate, management believes that MBI currently has sufficient cash resources to continue with operations until approximately the first quarter of 2014. If Precision commercializes GeneFx Lung by mid-2013 as previously announced, then, with receipt of the $500,000 in milestone payments from Precision relating to commercial launch, management believes that MBI will have sufficient cash resources to fund operations until approximately the third quarter of 2015.
About Gene®Fx Lung
GeneFx Lung is a proprietary gene expression-based test to improve upon staging for identifying those patients with early-stage non-small-cell lung cancer (NSCLC) who, following surgical removal of their tumor, are at higher and lower risks of mortality. In an initial study of patient specimens from the National Cancer Institute of Canada Clinical Trials Group JBR.10 trial, published in the Journal of Clinical Oncology, patients classified by GeneFx Lung as higher risk benefited from adjuvant chemotherapy, and those classified as lower risk did not benefit and may have experienced a detrimental effect from adjuvant chemotherapy. GeneFx Lung was subsequently validated in predicting patient mortality in four independent studies involving data from tumor specimens totaling 676 untreated early-stage NSCLC patients. GeneFx Lung is expected to provide better-informed and personalized treatment decisions to assist in the selection of patients for adjuvant chemotherapy.
On April 15, 2011, Precision and Med BioGene closed their commercialization agreement. The agreement provides to Precision exclusive global rights to develop and commercialize GeneFx Lung.
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