LAIYANG, China, June 3, 2008 /Xinhua-PRNewswire-FirstCall via COMTEX/ —-Genesis Pharmaceuticals Enterprises, Inc. (OTC Bulletin Board: GTEC) (”Genesis” or the ”Company”), a leading pharmaceutical company in the People’s Republic of China, today announced that on May 30, 2008, it successfully completed a private placement (private placement memornadu, PPM) of an aggregate principal amount of $30,000,000 of its three year convertible notes (the ”Notes”).
The Notes carry an annual interest rate of 6.0% and are convertible into shares of the Company’s Common Stock at a conversion price of $0.20 per share. In connection with the private placement of the Notes, the Company issued to purchasers of the Notes an aggregate of 75,000,000 five-year warrants to purchase shares of its Common Stock at an exercise price of $0.25 per share. The lead investor in the private placement (via the private placement memorandum) was Pope Investments, LLC.
Genesis intends to use a significant portion of the net proceeds from this private placement to pay for the rights to manufacture and distribute a new Chinese Class I drug, Ligustrazine Ferulic Acid Acetate (”LFAA”), and for the marketing expenses associated with the launch of LFAA. LFAA is a cardiac cerebral vascular medicine that helps to reduce blood clotting and prevent blood platelets from clumping together. The Company expects to receive approval of LFAA from China’s State Food and Drug Administration in the first half of calendar year 2009 and to start generating revenue from sales of this drug in the latter half of calendar year 2009. The Company projects that revenue from LFAA sales in Genesis’ fiscal year 2010 (July 2009 through June 2010) will be over $23 million, and that revenues from LFAA sales will be over $35 million in fiscal year 2011, and to continue to grow thereafter. The Company estimates that the profit margin on LFAA sales will be above 80%.
The Company also intends to use a significant portion of the net proceeds from the private placement to purchase manufacturing equipment and upgrade the Company’s facilities.