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BioSyntech announces year end and fourth quarter fiscal 2009 financial results and management changes

^{Published on 2009-06-29 06:04:01, Last Modified on 2009-06-29 06:07:07 - Market Wire}
 

 LAVAL, QC, June 29 /CNW/ - BioSyntech, Inc. (TSX: BSY), a biotechnology company developing biotherapeutic thermogels for regenerative medicine, today announced its financial and operational results for the fiscal year, ending March 31, 2009. BioSyntech also announced that Mr. Michel Lagueux, Executive Chairman of the Board of Directors and Interim President and Chief Executive Officer, and Mr. Louis Lemire, Chief Financial Officer, have informed the Board of Directors that they will leave the Company effective July 17, 2009 and July 10, 2009 respectively. Mr. Lagueux also resigns, effective immediately, as Director and Chairman of the Board. "We would like to thank Mr. Lagueux and Mr. Lemire for their contribution to BioSyntech, including completing the implementation of the streamlined business plan, adopted by the Board on July 18, 2008, resulting in a greatly reduced monthly burn rate and highly effective and efficient operations. Under Mr. Lagueux's direction, the BioSyntech team was able to complete the enrolment of the 80 patient pivotal trial for BST-CarGel(R) and release positive data from a well conducted interim analysis," said Dr. Joyce Tsang, Director and Chair of the Governance Committee of BioSyntech. "The Board of Directors will evaluate different options to ensure appropriate management of the operations of the Company in light of these departures and taking into account the on-going review of strategic alternatives by the Special Committee of the Board, created in March 2009, as well as the positive scientific developments disclosed on June 17, 2009." Subsequent to the fiscal year end, the Company announced positive results from an analysis of patients who completed their 12 month follow-up in its BST-CarGel(R) randomized clinical trial. According to the analyses performed on tissues biopsied from the knees of 22 patients, treatment of cartilage lesions with BST-CarGel(R) produced statistically significant evidence of improved repair tissue quality. These findings are initial results of a subset component of this Interim Analysis. The Company expects to have the final results on all 80 patients in the first half of calendar year 2010. HIGHLIGHTS OF THE YEAR PRODUCT MILESTONES One of the Company's key milestones was to complete enrolment for the Canadian-European pivotal trial of its cartilage repair device, BST-CarGel(R). The Company completed enrolment of 80 patients into the randomized trial on February 2, 2009. The Company is also working to complete the Investigational Device Exemption ("IDE") application process with the U.S. Food and Drug Administration (the "FDA"), which will define the data requirements for the regulatory clearance of BST-CarGel(R) in the United States of America. Management believes that obtaining this clarity will enhance the attractiveness of the Company's product to potential partners and, as such, is an important near term milestone for the Company to achieve. On March 12, 2009, the Company announced that it will conduct an interim analysis of the available clinical data from 40 subjects who have completed their 12 month follow-up in the 80 subject trial for its cartilage repair device, BST-CarGel(R). The Company expects to have the results from this analysis available in the summer of 2009. On June 17, 2009, the Company announced statistically significant evidence of improved tissue quality from an analysis of 22 consenting patients having completed the 12 month follow up in the BST-CarGel(R) randomized clinical trial. The final results from this 80 patient study are intended to support marketing applications in Canada and Europe. These final results are anticipated in the first half of calendar year 2010. FINANCING On July 15, 2008, the Company closed its previously announced financing. The syndicate, led by Dundee Securities Corporation, and including Macquarie Capital Markets Canada Ltd., Versant Partners Inc. and Laurentian Bank Securities Inc. has purchased an aggregate of 11,000 Units, each comprised of $1,000 principal amount of subordinated secured convertible debentures and 2,500 common share purchase warrants, representing aggregate gross proceeds of $11,000,000 to the Company. On July 18, 2008, the Company announced that as part of the exercise of the over-allotment option in its previously announced financing, the Company has sold to the syndicate, an aggregate of 1,550 Unit, each comprised of $1,000 principal amount of subordinated secured convertible debentures and 2,500 common share purchase warrants, representing aggregate gross additional proceeds of $1,550,000 to the Company. As a result, total aggregate gross proceeds to the Company from the financing increased to $12,550,000. During the year, 120 units have been converted into 600,000 common shares and 5,227,133 common shares were issued in lieu of payment of accrued interest in the amount of $689,102. As a result of the Company's budgetary constraints and the implementation of the streamlined business plan we limited our spending in research and development and focused our efforts on the development of BST-CarGel(R). Other development programs such as BST-DermOn(TM), BST-InPod(TM) were suspended. Accordingly, on August 22, 2008, a significant reduction of our work force took place. The consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles ("GAAP") on a going concern basis, which assumes that the Company will continue its operations for the foreseeable future and be able to realize its assets and discharge its liabilities in the normal course of business. The use of the going concern basis may not be appropriate because, as at March 31, 2009, there was substantial doubt that the Company will be able to continue as a going concern without securing additional financial resources. On March 30, 2009, the Company's Board of Directors formed a Special Committee to review the strategic alternatives of the Company, including partnering activities with the orthopaedic industry, and recommend appropriate actions to the Board. The members of the Special Committee are Dr. Joyce Tsang (chair of the committee), Mr. Jean-Pierre Desmarais and Mr. Rudy Huber. The Board intends to engage external advisors to assist the Company in such tasks. There can be no assurance that such strategic and financing alternatives will materialize on a timely basis or be obtained on favourable terms. The Company's anticipated level of annual expenditures exceeds the Company's cash and cash equivalents on hand on March 31, 2009. Financial Review For the three-month period ended March 31, 2009, the Company had revenues of $23,701 compared to $148,568 for the three-month period ended March 31, 2008. For the twelve-month period ended March 31, 2009, the Company had revenues of $40,766 compared to revenues of $273,925 for the twelve-month period ended March 31, 2008. Revenues were mainly due to non-core activities including sales of instrumentation products and research contracts. Interest revenue for the three-month period ended March 31, 2009 was $20,537 compared to $43,559 for the three-month period ended March 31, 2008. Interest revenue for the year ended March 31, 2009 was $141,370 compared to $322,868 for the year ended March 31, 2008. The decreases in interest revenue were mainly due to the decrease in the average cash position as well as an overall reduction in interest rates compared to the same periods last year. Interest on long-term debt was $50,963 for the three-month period ended March 31, 2009 compared to $92,687 for the three-month period ended March 31, 2008. Interest on long-term debt was $255,972 for the year ended March 31, 2009 compared to $380,674 for the year ended March 31, 2008. The decrease is due to lower interest rates and lower debt levels. Research and development expenses were $1,168,855 for the three-month period ended March 31, 2009 compared to $1,619,995 for the three-month period ended March 31, 2008. Research and development expenses were $5,800,068 for the twelve-month period ended March 31, 2009 compared to $6,024,121 for the same period a year ago. The decreases were mainly due to reductions in staffing following the termination of certain research projects. General and administrative expenses were $762,994 for the three-month period ended March 31, 2009 compared to $901,855 for the three-month period ended March 31, 2008. General and administrative expenses were $3,006,713 for the year-ended March 31, 2009 compared to $3,668,513 for the same period a year ago. The decreases were mainly due to lower remuneration as a result of the restructuring, lower compensation expenses related to options granted and lower marketing and investor relations expenses partly offset by higher professional fees. The accretion in the carrying value of the convertible debenture and interest was respectively of $1,183,733 and $3,002,988 for the quarter and twelve-month periods ended March 31, 2009 compared to nil for the three-month and twelve-month periods ended March 31, 2008. During fiscal 2009 as a condition of the 2008 financing, the Company restructured its operations focusing its efforts and capital expenditure on the advancement of BST-CarGel(R) for cartilage repair. The restructuring costs were $1,563,652 for the year ended March 31, 2009 compared to nil for the year ended March 31, 2008. The restructuring costs are mainly comprised of severances as dictated by contractual agreements and termination fees in accordance with Quebec common practice. Net loss for the fourth quarter was $3,056,127 or ($0.03 per share), compared to a net loss of $2,414,429 or ($0.03 per share) for the same period last year. The loss for the year ended March 31, 2009 amounted to $12,938,767 ($0.13 per share), compared $9,269,131 ($0.10 per share) for the year ended March 31, 2008. As of March 31, 2009, the Company had cash and cash equivalents in the amount of $3,803,036 compared to $2,835,806 at March 31, 2008. The Company believes that the current cash and cash equivalents will not be sufficient to carry out its current research and development plans and operations for the next twelve months. The Company's ability to continue as a going concern is dependent upon our ability to obtain additional financing. Management is currently exploring various strategic and financing alternatives; a restructuring is also under way. If the Company is unable to obtain additional financing, it may be required to curtail its operations. There can be no assurance that such strategic and financing alternatives will materialize on a timely basis or be obtained of favourable terms. Furthermore, the Company gave notice to its debenture holders on June 5, 2009 that it exercised its right to make the interest payment due on June 30, 2009, of an amount of $745,800, by issuing common shares. The number of common shares to be issued on June 30, 2009 will be equal to the amount of the interests, divided by 95% of the volume weighted average trading price per common share for the five trading days immediately preceding. The Company's Management's Discussion and Analysis is available on the BioSyntech website at [ www.biosyntech.com ] and with the Company's regulatory filings at [ www.sedar.com ]. About BioSyntech BioSyntech is a medical device company specialized in the development, manufacturing and commercialization of advanced biotherapeutic thermogels for regenerative medicine (tissue repair) and therapeutic delivery. BioSyntech's platform technology is a family of hydrogels called BST-Gel(R), some of which are liquid at low temperature and solid at human body temperature. These gels can be injected or applied to a specific local site and offer beneficial properties for the local repair of damaged tissue such as cartilage, bone and chronic wounds and provide the benefit of avoiding invasive surgery. For additional information, visit [ www.biosyntech.com ]. Forward-Looking Statements This press release contains forward-looking statements and information which are subject to material risks and uncertainties. Such statements are not historical facts and are based on the current expectations of management. You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause actual results, future circumstances, or events to differ materially from those projected in the forward-looking information. These risks include, but are not limited to, those associated with our capacity to finance our activities, the adequacy, timing, and results of our clinical trials, the regulatory approval process, competition, securing and maintaining corporate alliances, market acceptance of the Company's products, the availability of government and insurance reimbursements for the Company's products, the strength of intellectual property, the success of research and development programs, reliance on subcontractors and key personnel, and other risks and uncertainties detailed from time-to-time in our filings with the Canadian securities commissions. Readers should not place undue reliance on the forward-looking information, given that (i) our actual results could differ materially from a conclusion, forecast or projection in the forward-looking information, and (ii) certain material factors or assumptions which were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information, could prove to be inaccurate. Additional information about (i) the material factors that could cause actual results to differ materially from the conclusion, forecast or projection in the forward-looking information, and (ii) the material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information, is contained in the Company's annual report and other documents filed from time to time with the Canadian securities commissions which are available at [ www.sedar.com ]. These statements speak only as of the date they are made, and we assume no obligation to revise such statements as a result of any event, circumstance or otherwise, except in accordance with law.

For further information: James Smith, The Equicom Group, (416) 815-0700 x229, [ Jsmith@equicomgroup.com ]