MDS Proteomics Announces New Business Plan and Financial Reorganization TORONTO, June 1 /PRNewswire-FirstCall/ -- MDS Proteomics today announced a change to its business and financial strategy. Over the last year, the company has been evaluating commercialization strategies to leverage its assets, knowledge, experience and technology. As a result, the company is changing its business model to the provision of services to the rapidly growing fields of biomarker identification, lead optimization and protein analysis. The company intends to substantially discontinue its activity in drug discovery and development. Biomarker Discovery and Assay Development ----------------------------------------- MDS Proteomics is collaborating with MDS Pharma Services to provide a unique end-to-end biomarkers offering for biopharmaceutical customers. MDS Proteomics will discover protein biomarkers and provide the technology transfer of these markers to MDS Pharma Services who will develop validated assays for use in their clients' pre-clinical trials. Biomarkers are becoming important elements in drug discovery and pre- clinical and clinical development because of increasing financial pressures to improve the economics and productivity of bringing new drugs to market. Biomarkers can provide objective, measurable and reliable indicators of drug action and disease progression and assist pharmaceutical companies in selecting the best drug candidates. Industry estimates are that the biomarker products and services industry will grow from US$500 million in 2003 to US$2.9 billion in 2008. "We intend to devote substantial resources to biomarker identification and assay development using our expertise, leading-edge technologies and excellent client relationships," said Anil Amlani, Executive Vice President & Chief Financial Officer, MDS Proteomics. "We will provide full protein biomarkers discovery services that our partner MDS Pharma Services will apply in a clinical setting." MDS Proteomics utilizes a gel-free mass spectrometry based differential analysis platform that has been in operation for over a year. This platform combines proprietary sample processing, state of the art mass spectrometry and sophisticated analytical software to discover biomarkers. The company has utilized this technology successfully to discover biomarkers related to the early stages of drug induced kidney damage. Lead Optimization ----------------- MDS Proteomics' OptiMol business unit will continue to offer lead optimization services through its "hybrid" platform that combines advanced computer-aided molecular modeling with its proprietary Leadfinder(TM) small molecule-screening platform. This eliminates the need for assay development and improves the turnaround significantly. OptiMol is dedicated to providing high value early stage drug development capabilities to its pharmaceutical and biotech partners. OptiMol's platform capabilities and multi-disciplined team can quickly add value to our partners' protein targets and small molecule leads, advancing them efficiently up the drug development value chain. Dr. Neil Reid will continue to lead OptiMol, as its Senior Vice President. Proteomics Analytical Services ------------------------------ MDS Proteomics has launched a proteomics analytical services unit to provide proteomics services to biotechnology, pharmaceutical and academic clients. This new unit, Protana Analytical Services, will focus on identifying and profiling proteins in biological samples. Protana's high throughput capability incorporates fully automated gel band cutting, data acquisition and bioinformatics. Protana has considerable experience in sample processing, offering a best-in-class service capability that provides rapid turnaround, mass spectrometry-based protein identification and characterization, with capacity for over 150,000 gel bands per year. Dr. Cemal Kuyas has joined MDS Proteomics as Senior Vice President, Protana. Dr. Kuyas is a protein chemist with over 20 years of experience providing premium quality services to pharmaceutical clients in Europe and North America. Financial Plan -------------- The change in the company's business model has created the need to restructure the obligations and capital structure of the company. The highlights of the proposed plan include: - Effective merger of the company and Optimal, which is 50% owned by the company; - Conversion of all existing funded debt into equity in the reorganized company; - In exchange for CDN $15 million, MDS Inc. will gain access to tax assets and ongoing technology access agreement; - Reorganizing the company to reduce the quarterly net cash burn rate to between CDN$2.5-$3.0 million. Following the transaction, the reorganized company will employ approximately 72 individuals at its offices in Toronto; and - Implementation of the new business model to achieve cash flow breakeven operations by the end of 2005. The company will effect the proposed reorganization through a Plan of Arrangement pursuant to the Companies' Creditors Arrangement Act. On finalization of the proposed Plan, which has the support of the company's major creditors and shareholders, it will be filed with the Ontario Superior Court, and full implementation is expected by mid-July 2004. About MDS Proteomics MDS Proteomics offers an integrated platform of superior and ultra- sensitive mass-spectrometry proteomics technologies - protein identification, protein interaction mapping, differential analysis, phosphoprofiling and chemical proteomics - that can be applied across the entire drug discovery and development process. MDS Proteomics' combination of world-class experts and sophisticated technology will ultimately provide the global medical community - and patients throughout the world - with leading-edge solutions for the diagnosis and treatment of disease. For more information on MDS Proteomics, visit the company's website at http://www.mdsp.com/. About MDS Inc. At MDS Inc., our more than 10,000 highly skilled people provide enabling products and services for the development of drugs and the diagnosis and management of disease. We focus on helping to discover new drugs, assisting doctors to diagnose and treat patients and preventing the spread of disease. Find out more about MDS Inc. at http://www.mdsintl.com/ or by calling 1-888-MDS-7222, 24 hours a day. This document contains forward-looking statements. Some forward looking statements may be identified by words like "expects", "anticipates", "plans", "intends", "indicates" or similar expressions. The statements are not a guarantee of future performance and are inherently subject to risks and uncertainties. The Company's actual results could differ materially from those currently anticipated due to a number of factors, including, but not limited to, successful integration of structural changes, including restructuring plans, acquisitions, technical or manufacturing or distribution issues, the competitive environment for the Company's products, the degree of market penetration of the Company's products, and other factors set forth in reports and other documents filed by the Company with Canadian and US securities regulatory authorities from time to time. DATASOURCE: MDS Proteomics Inc. CONTACT: Anil Amlani, Executive Vice President & Chief Financial Officer, MDS Proteomics Inc., (416) 646-6351 or

Copyright