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SemBioSys announces first quarter 2009 financial and operational results

^{Published on 2009-05-15 04:10:01, Last Modified on 2009-05-15 04:14:18 - Market Wire}
 

 CALGARY, May 15 /CNW/ - SemBioSys Genetics Inc. (TSX:SBS), specializing in the manufacture of high-value proteins and oils in plant seeds, today announced its first quarter 2009 financial and operational results. "SemBioSys continues to meet key milestones, and most importantly we achieved the successful completion of the Phase I/II clinical trial of safflower-produced insulin," said James Szarko, Chief Executive Officer of SemBioSys. "The positive results of the insulin study are a validation of SemBioSys' enabling technology for protein expression: we have now firmly established that our proprietary safflower seed platform is capable of making a biopharmaceutical that is equivalent to currently marketed drugs. In addition, we expect preclinical remodeling and regression results shortly for our Apo AI(Milano) product candidate. Data from both of these programs should further enhance the partnership discussions that are ongoing." Szarko continued, "Strengthening our balance sheet and extending our runway remain our top priorities. Subsequent to quarter end, we reached an agreement with AVAC for a non-dilutive investment of up to $1.5 million for the development of our Apo AI(Milano) candidate and we continue to pursue a number of other funding opportunities." Highlights Insulin Program - Announced in March 2009 the preliminary results of a single-dose three-arm Phase I/II clinical trial of SBS-1000 in the United Kingdom wherein safflower-produced insulin was shown to be bioequivalent to Humulin(R) R. - Received a US$500,000 option payment from MannKind Corporation (MannKind) in January 2009 together with a US$2,000,000 investment in return for 2,400,000 units of SemBioSys comprising one common share of SemBioSys and one-tenth of one common share purchase warrant of SemBioSys. The option for MannKind to license rights to SemBioSys' plant-produced insulin for AFRESA(TM) expired on March 31, 2009. Apo AI(Milano) - Announced that an agreement was reached with AVAC Limited, subsequent to the end of the quarter, where AVAC will provide a non-dilutive investment of up to $1.5 million for the development of the Apo AI(Milano) candidate. - Successfully completed the harvest of approximately 15 tonnes of Apo AI(Milano) seed, subsequent to the end of the quarter, which should provide sufficient material to conduct toxicology studies and the filing of an investigational new drug application (IND) to the US Food and Drug Administration (FDA). - Continued to carry out the in vivo plaque remodeling and regression studies initiated in the third quarter of 2008 at Cedars Sinai Hospital at UCLA. Botaneco - Subsequent to the end of the quarter, Botaneco launched its third product, Hydresia(TM) Dulcé, a natural emulsion base isolated from sweet almonds that retains all of the functional properties of Hydresia(TM) and Hydresia(TM) G2 while offering the skin benefits of sweet almond oil. Hydresia(TM) Dulcé has been authorized by ECOCERT(R) as an approved raw material, complying with the standards for ecological and organic cosmetics. - Continued to expand the formulation of new products and customer base, including the launch of a product line by a multinational consumer healthcare company. - Received milestone payments of a non-dilutive investment of a total of CDN$1,173,000 from AVAC. Outlook The Company anticipates a number of upcoming milestone events including: - Insulin: post Phase II meeting with the US FDA regarding further development of SBS-1000 - Apo AI(Milano): in vivo plaque remodeling and regression data in the first half of 2009 - In-house manufacture of Apo AI(Milano) material for toxicology studies - Further progress with the partnering of both insulin and Apo AI (Milano) - Botaneco: further expansion of the customer/product base (currently more than 30 customers and approximately 40 Hydresia(TM) SKUs) - Financing activities to extend cash runway Financials Net loss for the three-month period ended March 31, 2009 was $3,828,453 or $0.14 per share, compared to a net loss of $5,017,055 or $0.19 per share for the three-month period ended March 31, 2008. Total revenue for the three-month period ended March 31, 2009 was $1,299,464 compared with $210,027 for the corresponding period in 2008. The difference is due mainly to the recognition of licensing option fees in the first quarter of 2009 from the option agreement entered into with MannKind in the fourth quarter of 2008. The increase is partially offset by the 2008 licensing option fee payment received from The Instituto de Agrobiotecnologia Roasario S.A. Total expenditures (net of cost recoveries) for the three-month period ended March 31, 2009 were $4,931,946 compared with $5,257,611 for the three-month period ended March 31, 2008. However, total expenditures excluding non-cash items (stock-based compensation, amortization) and cost recoveries for the three-month period ended March 31, 2009 were $4,116,260 compared with $5,116,243 for the three-month period ended March 31, 2008. The decrease is primarily due the cost reductions implemented in the Biopharmaceuticals and Bioproducts segment in the fourth quarter of 2008 and decreased preclinical costs as the majority of the preclinical work for the insulin clinical trial was completed in 2008. This decrease was offset by a modest increase in the Specialty Ingredients segment due to the growth of the business. The reduction in cost recoveries for the three month period ended March 31, 2009 as compared to the three month period ended March 31, 2008 resulted from the achievement of all outstanding milestones related to the agreement with AVAC Ltd. for the insulin program in 2008. As of March 31, 2009 the Company had cash and cash equivalents of $3,002,121 and a net positive working capital balance of $3,049,417, compared to $3,819,796 and $3,730,413 respectively at December 31, 2008. Total long-term debt and convertible debentures was $5,650,858 at March 31, 2009 compared to $5,127,829 at December 31, 2008. The decrease in cash and working capital during the period resulted primarily from net cash burn, which includes significant costs for the insulin clinical trial that was completed in the first quarter of 2009. The increase in long-term debt and convertible debentures is primarily a result of the $500,000 of a non-dilutive investment received from AVAC in the first quarter of 2009 that is secured by certain Botaneco assets. Further information surrounding the Company's financial results and Management's discussion of those results can be found in the Company's unaudited consolidated financial statements and related notes for the three month period ended March 31, 2009 as well as Management's Discussion and Analysis for the same period. These documents are available by accessing the SEDAR website at [ www.sedar.com ]. As at May 15, 2009 the Company had 28,788,251 common shares outstanding, 2,630,000 warrants and 3,046,086 options. About SemBioSys Calgary, Alberta-based SemBioSys is a world leader in manufacturing high-value proteins and oils in plant seeds. With its unique, proprietary platform, SemBioSys provides partners with product enablement, exceptionally low cost and unprecedented scalability. The Company applies this platform with high selectivity to opportunities where it has a unique competitive advantage. Since its inception, SemBioSys has produced more than 50 non-native proteins and oils using its patented seed technology, demonstrating applicability across a broad range of industries such as pharmaceuticals, personal care and industrial products. The Company's current pharmaceutical development programs include insulin (SBS-1000, regulated as a biosimilar in Europe) and Apo AI(Milano), a next-generation cardiovascular therapy. SemBioSys is listed on the Toronto Stock Exchange under the ticker SBS. More information is available at [ www.sembiosys.com ]. This press release contains certain forward-looking statements, including, without limitation, statements containing the words "believe", "may", "plan", "will", "estimate", "continue", "anticipate", "intend", "expect" and other similar expressions which constitute "forward-looking information" within the meaning of applicable securities laws. Forward-looking statements reflect the Company's current expectation and assumptions, and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. These forward-looking statements involve risks and uncertainties including, but not limited to, changing market conditions and market size, the acceptance of an IND by the FDA in respect of clinical studies, the submission of a CTA to the appropriate European authorities, the successful initiation and timely and successful completion of clinical studies, the fact that Apo AI(Milano) is currently a development stage drug, the establishment of corporate alliances, the impact of competitive products and pricing, new product development, uncertainties related to the regulatory approval process and other risks detailed from time-to-time in the Company's ongoing filings with the Canadian securities regulatory authorities which filings can be found at [ www.sedar.com ]. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements either as a result of new information, future events or otherwise, except as required by applicable Canadian securities laws. SemBioSys Genetics Inc. CONSOLIDATED BALANCE SHEETS March 31, December 31, (Unaudited) 2009 2008 (expressed in Canadian dollars) $ $ ------------------------------------------------------------------------- ASSETS Current assets Cash and cash equivalents 3,002,121 3,819,796 Accounts receivable 177,528 912,702 Prepaid expenses and deposits 290,199 457,693 Inventory 1,737,844 1,929,289 ----------------------------- 5,207,692 7,119,480 Property and equipment 7,535,993 8,009,624 ----------------------------- 12,743,685 15,129,104 ----------------------------- ----------------------------- LIABILITIES Current liabilities Accounts payable and accrued liabilities 1,561,365 2,237,225 Deferred revenue - 612,295 Short-term portion of long-term debt 477,709 539,547 Short-term portion of convertible debenture interest 119,201 - ----------------------------- 2,158,275 3,389,067 Deferred cost recoveries 9,259 39,557 Long-term debt 2,237,838 1,773,776 Convertible debenture 2,816,110 2,814,506 ----------------------------- 7,221,482 8,016,906 ----------------------------- ----------------------------- SHAREHOLDERS' EQUITY Capital stock 72,278,212 70,428,431 Warrants 2,630,463 2,550,880 Contributed surplus 12,078,538 11,802,064 Equity component of convertible debenture 1,427,127 1,427,127 Accumulated other comprehensive loss 32,620 - Deficit (82,924,757) (79,096,304) ----------------------------- 5,522,203 7,112,198 ----------------------------- 12,743,685 15,129,104 ----------------------------- ----------------------------- SemBioSys Genetics Inc. CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT Three month period ended March 31, March 31, (Unaudited) 2009 2008 (expressed in Canadian dollars, except shares) $ $ ------------------------------------------------------------------------- REVENUE Licensing option fees 1,161,495 50,110 Product sales 137,969 159,917 ----------------------------- 1,299,464 210,027 EXPENSES Research and development 1,914,856 2,794,103 General and administration 1,305,456 1,395,275 Intellectual property costs 299,007 342,330 Cost of products sold 249,734 271,745 Sales and marketing 191,433 153,160 Business development 155,774 159,630 Stock-based compensation 276,474 179,903 Amortization 570,767 493,834 Cost recoveries (31,555) (532,369) ----------------------------- 4,931,946 5,257,611 ----------------------------- Loss before the undernoted (3,632,482) (5,047,584) ----------------------------- ----------------------------- Interest income 8,612 170,858 Interest expense (166,903) (61,664) Foreign exchange loss (37,680) (78,665) ----------------------------- ----------------------------- (195,971) 30,529 ----------------------------- Net loss for the period (3,828,453) (5,017,055) Deficit - Beginning of period (79,096,304) (56,159,163) ----------------------------- Deficit - End of period (82,924,757) (61,176,218) ----------------------------- ----------------------------- Loss per share - basic and diluted (0.14) (0.19) ----------------------------- ----------------------------- Weighted average shares outstanding 28,299,952 25,935,792 ----------------------------- ----------------------------- SemBioSys Genetics Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS Three month period ended March 31, March 31, (Unaudited) 2009 2008 (expressed in Canadian dollars) $ $ ------------------------------------------------------------------------- Net loss for the period (3,828,453) (5,017,055) Other comprehensive loss Foreign currency translation adjustment 32,620 - ----------------------------- Comprehensive loss (3,795,833) (5,017,055) ----------------------------- ----------------------------- ACCUMULATED OTHER COMPREHENSIVE LOSS Three month period ended March 31, (Unaudited) 2009 (expressed in Canadian dollars) $ ------------------------------------------------------------------------- Accumulated other comprehensive income - beginning of period - Change in accounting policy - foreign currency translation adjustment 26,534 Foreign currency translation adjustment 6,086 ----------------------------- Accumulated other comprehensive income - end of period 32,620 ----------------------------- ----------------------------- SemBioSys Genetics Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS Three month period ended March 31, March 31, (Unaudited) 2009 2008 (expressed in Canadian dollars) $ $ ------------------------------------------------------------------------- Cash provided by (used in) Operating activities Net loss for the period (3,828,453) (5,017,055) Add items not affecting cash: Amortization 570,767 493,834 Stock-based compensation 276,474 179,903 Stock-based payments 152,985 - Unrealized foreign exchange loss 28,070 44,011 Non-cash interest expense 145,610 18,780 ----------------------------- (2,654,547) (4,280,527) ----------------------------- ----------------------------- Change in non-cash working capital and other balances related to operations (232,456) 209,916 ----------------------------- Cash used in operating activities (2,887,003) (4,070,611) ----------------------------- ----------------------------- Financing activities Issuance of capital stock 1,752,000 - Share issue costs (43,312) (57,884) Issuance of warrants 81,600 - Warrant issue costs (2,017) - Exercise of stock options - 31,750 Proceeds from long-term debt 500,000 634,900 Repayment of long-term debt (139,675) (152,546) ----------------------------- Cash provided by financing activities 2,148,596 456,220 ----------------------------- ----------------------------- Investing activities Acquisition of property and equipment (79,268) (544,844) ----------------------------- Cash used in investing activities (79,268) (544,844) ----------------------------- ----------------------------- Decrease in cash and cash equivalents (817,675) (4,159,235) Cash and cash equivalents - Beginning of period 3,819,796 20,444,013 ----------------------------- ----------------------------- Cash and cash equivalents - End of period 3,002,121 16,284,778 ----------------------------- ----------------------------- Supplemental Information Cash interest received 12,355 100,607 Cash interest paid 21,207 28,755 Non-cash transactions Capital items included in accounts payable 8,106 112,838 Share issue costs included in accounts payable 11,892 - ----------------------------- ----------------------------- 

For further information: The Trout Group, Christine Labaree, Managing Director, Phone: (617) 583-1307, E-mail: [ clabaree@troutgroup.com ]; The Equicom Group Inc., Ross Marshall, Vice President, Phone: (416) 815-0700 ext. 238, E-mail: [ rmarshall@equicomgroup.com ]