NEWS RELEASE
VIMRx CLOSES DEAL TO ACQUIRE
CONTROLLING INTEREST IN INNOVIR
Combination Will Aid Development of Complimentary Therapeutic
Technologies That Inhibit Expression of Disease-Linked Genes
Wilmington, DE, and New York, NY -- January 2, 1997 -- VIMRx
Pharmaceuticals, Inc. (NASDAQ: VMRX) and Innovir Laboratories, Inc. (NASDAQ
SmallCap: INVR) today announced the finalization of a transaction which gives
VIMRx a controlling interest in Innovir Laboratories and through which Innovir
acquired VIMRx's subsidiary, VIMRx Holding Ltd (VHL).
Innovir and VHL are developing complementary therapeutic technologies that
seek to inhibit the expression of genetic information encoded in
disease-associates genes, interrupting the process of disease causation. Each
company's technology involves a different class of oligomers (Oligozymes) that
are either catalytically active themselves or have the ability to form
catalytically active complexes with cellular components that can inactivate
specific RNA "messenger" molecules that direct cells to produce illness-causing
protcins. VHL, focuses on RILON(TM) Oligozymes and Innovir on External Guide
Sequence, (EGS) Oligozymes. Both technologies, as well as the associates
scientific staffs, have been combined as part of Innovir.
The final transaction included terms that were modified somewhat from the
original deal. In the final transaction, VIMRx acquired 9.5 million Innovir
shares owned by The Aries Funds for 3 million VIMRx shares and $3 million in
cash. Previously, it was anticipated that consideration for these Innovir shares
would be entirely VIMRx stock, valued at its average trading price between
November 15, 1996 and January 15, 1997, but not to exceed $4.50 per share.
Richard Dunning, President and Chief Executive Officer of VIMRx, said "We
worked with the Aries Funds to modify the terms because, with VIMRx stock
trading downward for most of the past several weeks, we felt the dilutive impact
of the transaction on VIMRx shareholders would be too great so we substituted
cash for part of the VIMRx stock that otherwise would have been issued. With the
completion of this acquisition, we can move forward aggressively to integrate
the two companies and their complementary technologies. We are extremely pleased
with the progress we have made already, and as Dr. Goldberg's recent talk at the
Sixth Anti-Sense Conference in Japan regarding advances in Innovir's potential
effectiveness in fighting hepatitis B demonstrates, we believe there's still
more to come."
Pursuant to an amended acquisition agreement, the following events have
taken place:
* The Aries Funds, which owned 4 million shares of Innovir stock,
exercised warrants and options to purchase an additional 6 million
shares, and thereby provided $3 million in cash to Innovir.
* VIMRx purchased 9.5 million shares of Innovir stock from The Aries
Funds for 3 million VIMRx shares and $3 million in cash; and
* VIMRx exchanged its 100% ownership of its RILON(TM) oligonucleotide
technology subsidiary -- VHL, valued at $13 million (including cash of
$4 million) -- for approximately 8.7 million shares of Innovir stock
valued at $1.50 a share, plus five-year warrants to purchase an
additional two million shares of Innovir stock (one million at an
exercise price of $1.00 per share and one million at $2.00 per share).
As a result of these transactions, VIMRx now owns approximately 68% of
Innovir; the RILON(TM) and EGS technologies are strategically and operationally
combined under the Innovir name; and Innovir has received $7 million in cash,
plus commitments from VIMRx and The Aries Funds to provide an additional $2
million when required through the exercise of warrants.
In addition, VIMRx has nominated a majority of the Innovir board of
directors. Four directors have already been elected: Mr. Dunning, Dr. David A.
Jackson, VIMRx Chief Scientific Officer, Mr. Francis O'Connell, VIMRx's Chief
Financial Officer, and Laurence D. Fink, Chairman and CEO of Black Rock
Financial Management -- who is also a VIMRx director. Dr. Jackson will also join
the Innovir Science Advisory Board.
"We are pleased at this major step forward for Innovir," said Dr. Allan R.
Goldberg, Chairman and Chief Executive Officer of Innovir. "There are true
opportunities for synergy here, and we have already begun to take advantage of
them. This is clearly a case of the whole being more than the sum of the parts."
VIMRx, based in Wilmington, DE, is currently developing two technology
platforms: chemically synthesized hypericin, VIMRxn(R), and, through its
ownership position in Innovir Laboratories, Inc., both EGS and RILON(TM)
Oligozymes, VIMRxyn(R) is currently in clinical development for the treatment of
HIV and brain cancer and is in pre-clinical development for the treatment of
hepatitis C and the sterilization of blood. The Oligozyme technology being
developed by VHL through Innovir has potential uses both in attacking diseases
at the genetic level and as a broadly-applicable tool in pharmaceutical research
to aid in drug target identification and validation. VIMRx also intends to be
active in identifying and acquiring additional technologies and products.
Innovir Laboratories, Inc. is a biotechnology company that has been
developing External Guide Sequences (EGS), which the Company believes will be a
broad enabling technology. EGS technology is based upon the Nobel Prize-winning
research by Sidney Altman, Ph.D., Sterling Professor of Biology at Yale
University. The Company has an
-2-
exclusive license to develop this patented technology for new therapeutic
applications and also has independently developed EGS technology not subject to
the Yale license. In addition to hepatitis B, Innovir's initial disease target
areas include psoriasis, inflammation, and drug-resistant microorganisms. The
Company also is developing therapeutic technology that inhibits expression of
disease-linked genes through VHL and is investigating multiple applications for
this technology, including agricultural uses.
NOTE TO INVESTORS AND EDITORS: VIMRx's press releases are available on the
Internet through Business Wire's web site at
http://www.businesswire.com/cnn/vmrx.htm.
The releases also are available at no charge through Business Wire's
fax-on-demand service at 800-411-8792.
* * *
CONTACTS: WALTER MONTGOMERY OR MARY ANN DUNNELL FRAN DANIELS
(212) 484-6721 (310) 278-4413
This news release contains forward looking statements which involve risks and
uncertainties. Such statements are subject to certain risk factors which may
cause VIMRx's and/or Innovir's plans to differ. Factors that may cause such
differences include, but are not limited to, the progress and success of each
company's research and development programs, each company's ability to: obtain
additional funds; secure regulatory approval to market its products; compete
successfully; successfully enter into collaborations with third parties; enter
into and progress in clinical trials; establish collaborations with third
parties; enter into and progress in clinical trials; establish development and
commercialization relationships, and manufacture product in a cost-effective
manner. Additional risk factors are discussed under the heading "Risk Factors"
included in Innovir's Form S-3 Registration Statement (Reg. No. 333-12865).
-3-