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Isotechnika reports first quarter 2009 financial results

^{Published on 2009-05-14 15:12:56, Last Modified on 2009-05-14 15:16:11 - Market Wire}
 

 EDMONTON, May 14 /CNW/ - Isotechnika Inc. (TSX:ISA) today announced its financial results for the first quarter ended March 31, 2009. Isotechnika Inc. announced on May 7, 2009 a strategic investment and collaboration with Paladin Labs Inc. (TSX: PLB), a leading Canadian specialty pharmaceutical company. Pursuant to this agreement, Isotechnika has entered into a plan of arrangement with Paladin Labs, which will provide Isotechnika with $7.0 million of cash immediately and $4.35 million in supported Research and Development funding over the next 12 months. The successful completion of this arrangement is required to provide the Company with funding to continue operations and carry out its business plans. Under the proposed plan of arrangement, current shareholders of Isotechnika will own 81% of a new company, Isotechnika Pharma Inc., with the remaining 19% owned by Paladin Labs. Isotechnika Pharma will maintain a listing on the Toronto Stock Exchange and senior management of Isotechnika will continue with Isotechnika Pharma. Given these challenging markets, Isotechnika's Board of Directors evaluated a number of options for the company. Based on this assessment, a fairness opinion from Isotechnika's financial advisors for the transaction, and other considerations, the Board of Directors unanimously recommended that Isotechnika security holders approve the transaction. The strategic relationship with Paladin is expected to build on the strengths of each organization. Paladin is recognized for its business development acumen and pharmaceutical commercialization expertise, which perfectly complements Isotechnika's significant expertise in drug discovery and development. Combining the strengths of these two companies, it is expected that additional late-stage clinical assets will be brought into Isotechnika Pharma to strengthen the product pipeline, while Paladin will be granted the rights to these products in its territories of interest. The restructuring will be completed by way of a plan of arrangement to be approved by the Court of Queen's Bench of Alberta, the TSX and Isotechnika security holders (by a majority of at least 66.6% of the security holders voting). Completion of the transaction is expected to occur in June 2009. Other 2009 Scientific and Operating Highlights to the current date: - Partner Atrium completed patient enrollment for their CONFIRM 1, First-in-Man drug coated coronary stent clinical trial evaluating their voclosporin coated coronary stent system. - Announced cost saving measures, including staff reductions. - Partner Lux began treating patients in a First-in-Man (Phase 1) study with LX214, a proprietary topical ophthalmic solution containing voclosporin as the active ingredient. - Repayment of 70 percent of the balance outstanding on March 6, 2009 of the $13 million USD loan issued by Oxford Finance Corporation and Silicon Valley Bank. Repayment results in interest savings to Isotechnika of approximately $920,000 USD over the remaining life of the loan. - Partner Lux announced the successful results of their LUMINATE Phase 2/3 clinical trial program showing that voclosporin had a positive effect on ocular inflammation and a safety profile consistent with its expected use in this indication. - Announced positive 12 month follow up data from the Phase 2b PROMISE trial evaluating its lead drug, voclosporin, in de novo kidney transplant patients. As a dose ranging study, the Phase 2b trial was successful in meeting the primary endpoint demonstrating non-inferiority in biopsy proven acute rejection (BPAR) episodes as compared to tacrolimus control in all three dose groups at six months and also demonstrated an improved safety profile versus tacrolimus. - Announced positive Phase 3 ESSENCE trial data evaluating its lead drug, voclosporin, in moderate to severe psoriasis patients. ESSENCE successfully met the primary endpoint of superiority to placebo in the proportion of patients achieving a score of "clear" or "almost clear" in the Static Physician's Global Assessment (SPGA) at 12 weeks of treatment. The full data set will be presented in more detail at the upcoming Canadian Dermatology Association 84th Annual Conference in Vancouver, B.C., July 1 - 5, 2009. Financial Results At March 31, 2009, the Company had $5.83 million in cash and cash equivalents. At March 31, 2009, other financial assets and liabilities were composed of a restricted term deposit in the amount of $4.48 million, accounts receivable of $316,000, accounts payable and accrued liabilities of $3.89 million and long term debt of $4.44 million. For the three months ended March 31, 2009, the Company reported a consolidated net loss of $4.13 million or $0.04 per common share, as compared to a consolidated net loss of $5.34 million or $0.05 per common share for same period in 2008. The decrease in the consolidated loss was primarily due to reduced clinical trial expenditures for both the voclosporin Phase 2b renal transplant and the Phase 3 European/Canadian psoriasis trials. Revenue increased to $817,000 for the three months ended March 31, 2009, compared to $579,000 for the three months ended March 31, 2008. Revenue in the first quarter of 2009 was comprised of $560,000 for product sales from the diagnostic division, $78,000 of contract services and product sales from the therapeutic division and $179,000 for licensing revenue as compared to $507,000 for product sales from the diagnostic division, $72,000 of contract services and product sales from the therapeutic division and $Nil for licensing fees for the same period in 2008. Research and development expenditures were $2.42 million in the first quarter of 2009, compared to $3.82 million in the first quarter of 2008, a decrease of $1.4 million. The decrease in research and development expenditures was primarily due to reduced clinical trial costs for both the voclosporin Phase 2b renal transplant and the Phase 3 European/Canadian psoriasis trials. Both of these trials were at the data analysis and close out stage during the first quarter of 2009. Corporate, administration and marketing costs were $1.04 million for the first quarter of 2009, compared to $1.48 million for the first quarter of 2008. The decrease was primarily the result of a significant reduction in stock-based compensation and deferred share unit expense as no stock options were issued in the first quarter of 2009. For further discussion of the Company's financial results for the three months ended March 31, 2009, the unaudited interim consolidated financial statements and the Management's Discussion and Analysis are accessible on Isotechnika's Web site at [ www.isotechnika.com ] or at [ www.sedar.com ]. About Isotechnika Edmonton-based Isotechnika Inc. is a biopharmaceutical company focused on the discovery and development of novel immunosuppressive therapeutics that are designed to offer advantages over other currently available treatments. There is a significant unmet medical need in the treatment of both solid organ transplantation and autoimmune disease. It is estimated that the market potential will exceed $4 billion annually in sales for calcineurin inhibitors such as voclosporin by 2010. Voclosporin is a next generation calcineurin inhibitor, which completed a Phase 2b North American trial for the prevention of kidney rejection following transplantation. Extensions to the Phase 2b trial and a combined Phase 3 European/Canadian trial for the treatment of moderate to severe psoriasis have also been completed. Our partner, Lux BioSciences, Inc., has recently completed three separate Phase 2/3 pivotal trials investigating voclosporin (referred to as LUVENIQTM by Lux) for the treatment of uveitis. In addition to the uveitis trials, Lux BioSciences Inc. has also commenced a Phase 1 trial using their proprietary voclosporin ophthalmic solution (LX214) as a candidate for dry eye syndrome. Voclosporin has also entered First-in-Man trials as the drug utilized in the CINATRA(TM) Drug Coated Coronary Stent system developed by the Company's partner, Atrium Medical Corporation. Isotechnika Inc. is a publicly traded company on the Toronto Stock Exchange under the symbol "ISA". More information on Isotechnika can be found at [ www.isotechnika.com ] or [ www.SEDAR.com ]. Forward-Looking Statements This press release may contain forward-looking statements. Forward looking statements, including the Company's belief as to the potential of its products, the Company's expectations regarding the issuance of additional patents and the Company's ability to protect its intellectual property, involve known and unknown risks and uncertainties, which could cause the Company's actual results to differ materially from those in the forward looking statements. Such risks and uncertainties include, among others, the availability of funds and resources to pursue research and development projects, the ability to economically manufacture its products, the potential of its products, the success and timely completion of clinical studies and trials, the Company's ability to successfully commercialize its products, the ability of the Company to defend its patents from infringement by third parties, and the risk that the Company's patents may be subsequently shown to be invalid or infringe the patents of others. Investors should consult the Company's quarterly and annual filings with the Canadian commissions for additional information on risks and uncertainties relating to the forward- looking statements. Investors are cautioned against placing undue reliance on forward-looking statements. Isotechnika Inc. Consolidated Interim Balance Sheets ------------------------------------------------------------------------- (expressed in thousands of Canadian dollars) March 31 2009 December 31 (Unaudited) 2008 $ $ Assets Current assets Cash and cash equivalents 5,832 25,701 Restricted term deposit 4,481 - Accounts receivable 316 495 Inventories 229 146 Prepaid expenses 361 124 ------------------------- 11,219 26,466 Property and equipment 2,957 3,206 Patents 2,634 2,771 ------------------------- 16,810 32,443 ------------------------- ------------------------- Liabilities Current liabilities Accounts payable and accrued liabilities 3,892 3,984 Current portion of deferred revenue 875 1,330 Current portion of long-term debt 2,105 5,781 Current portion of deferred lease inducements 16 16 ------------------------- 6,888 11,111 Deferred revenue 2,077 1,801 Long-term debt 2,334 9,895 Deferred lease inducements 54 58 ------------------------- 11,353 22,865 ------------------------- Nature of operations and going concern Shareholders' Equity Share capital Common stock Authorized Unlimited number of common shares without par value Issued and outstanding 106,243,492 shares (December 31, 2008 - 106,243,492) 192,706 192,706 Warrants 171 3,293 Contributed surplus 8,723 5,593 Deficit (196,143) (192,014) ------------------------- 5,457 9,578 ------------------------- 16,810 32,443 ------------------------- ------------------------- Isotechnika Inc. Consolidated Interim Statements of Operations and Comprehensive Loss (Unaudited) ------------------------------------------------------------------------- Three months ended March 31 March 31 2009 2008 $ $ Revenue Product sales and contract services 638 579 Licensing revenue 179 - ------------------------- 817 579 ------------------------- Expenses Research and development 2,420 3,818 Corporate, administration and marketing 1,044 1,484 Product sales and contract services 251 261 Amortization of property and equipment 249 328 Interest and pre-payment penalty on long-term debt 852 8 Amortization and write-down of patent costs 178 26 Gain on disposal of equipment (55) (3) ------------------------- 4,939 5,922 ------------------------- Loss before the undernoted (4,122) (5,343) ------------------------- Other income (expense) Investment income 25 260 Foreign exchange gain (loss) (32) (254) ------------------------- (7) 6 ------------------------- Net loss for the period (4,129) (5,337) Other comprehensive income - - ------------------------- Comprehensive loss for the period (4,129) (5,337) ------------------------- ------------------------- Basic and diluted loss per share (0.04) (0.05) ------------------------- ------------------------- %SEDAR: 00010508E 

For further information: Dr. Robert Foster, President & CEO, Isotechnika Inc., (780) 487-1600 (247), (780) 484-4105 (fax), [ rfoster@isotechnika.com ]; Mr. Dennis Bourgeault, Chief Financial Officer, Isotechnika Inc., (780) 487-1600 (226), (780) 484-4105 (fax), [ dbourgeault@isotechnika.com ]