MEDISCIENCE TECHNOLOGY CORPORATION
To the Shareholders of Mediscience Technology Corporation:
We are pleased to report that 1999 marked a year of progress, as we worked to
position our Company to bridge the laboratory to the marketplace transition. We
successfully recruited a new President and CEO with over 15 years of senior
management experience in the medical device and pharmaceutical industries. We
developed a comprehensive business plan which targets a potential market in
excess of $2 billion, and successfully explored several new business
opportunities beyond cancer detection. We identified Sarnoff Corporation as a
strategic partner with key enabling technology to support accelerated product
development and to further enhance and globalize our intellectual property
position. Finally, with the assistance of the City University and Sarnoff, we
initiated a focused effort to secure the financing required for successful
implementation of our strategy.
In parallel to these accomplishments, the Company continues to address several
critical unresolved issues, the most important of which is the lack of adequate
funding to maintain business momentum and properly leverage our intellectual
property assets; the resolution of this issue continues to be a principle focus
and the highest priority of management. In the absence of the availability of
such financing on a timely basis, the company may be forced to materially
curtail or cease its operations.
Two important and immediate derivative issues relate to our research and
licensing agreements with the City University of New York. As previously
reported, the Company has an outstanding financial obligation to the University
for work conducted during the period August, 1997 through July, 1998. In 1999,
an agreement was reached to extend the time for payment until June 30, 2000.
While we are actively working to meet this deadline, there is no assurance that
we will be successful, and if not, that we will successfully negotiate an
additional time extension. In addition, according to the terms of our research
and licensing agreement with the University, the Company must negotiate a
minimum royalty agreement within 5 years of the date of filing for all licensed
patents for which product commercialization has not yet occurred. If we are
unsuccessful in our negotiations, the Company may lose rights to several of its
key patents. The Company and the City University have a long and productive
history of cooperation and are committed to continuing the relationship that has
been so beneficial to both parties. We have every confidence that the current
issues will be resolved without impacting either the structure of that
relationship or our development critical path.
On a positive note, we believe that the Company is eligible to receive benefits
under the State of New Jersey Technology Business Tax Certificate Program (which
allows emerging technology and biotechnology businesses to sell their unused Net
Operating Loss (NOL) carryover to any corporate taxpayer in the state for at
least 75% of the tax benefits) through the sale of its New Jersey Net Operating
Loss carryover. It is our
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intention to apply for benefits under this program, and to use any proceeds
derived to fully fund the payment of our obligation to the City University. The
Company has already entered into an agreement on very favorable terms with a New
Jersey corporate taxpayer to purchase the NOL subsequent to State approval.
We are confident that the year 2000 will mark a turning point for the Company as
we focus on achieving the following key objectives: 1) complete financing
activities and fully initiate business plan implementation; 2) complete
development and testing of a second generation imaging system with fiberoptic
capability to support clinical trials for product registration; 3) conclude
licensing and contract negotiations with the City University to ensure the
continuity of intellectual property ownership and basic research programs; 4)
develop and launch a Mediscience web site (the Company has registered the domain
name medisciencetech.com); and 5) continue to evaluate and prioritize new areas
of opportunity for our technology.
We and our development partners firmly believe that the platform technology
developed by Mediscience and the City University over the past ten years is
paradigm shift, and has the potential to significantly impact both the quality
and the cost of healthcare. The Company and the City University have developed
and refined working prototypes that have been validated in both preclinical and
clinical trials at leading medical institutions (e.g. Sloan Kettering Cancer
Center, Cornell University New York Medical Center, etc.); we are now ready to
begin the process of product commercialization. With your support, we will make
every effort to ensure that the full potential of our technology is realized,
and that our company plays a leadership role in its introduction to the
healthcare market.
Frank S. Castellana, M.D., Eng.Sc.D.
President and CEO
Peter Katevatis, Esq.
Chairman
