The Canadian company Med BioGene (MBI) made the decision to partner with Precision Therapeutics to commercialize its drug, LungExpress Dx now called GeneFX Lung. It received the cash it needed from Precision and to pay off its debt and Precision will commercialize the drug this summer. Once the drug is commercialized, MBI will receive another cash payment from Precision and may never need to finance if sales perform well.
When the product starts selling, MBI will receive royalty payments as much as 7 to 9 percent and Precision pays 100 percent of the costs to commercialize. MBI will not have many expenses when it starts receiving royalty and will be able to grow its base revenue. The company only owes royalty payments to the University Health Network. When GeneFX Lung reaches $10 million in sales per year, MBI will have a positive cash flow.