N@N

SemBioSys announces second quarter 2009 financial and operational results

^{Published on 2009-08-13 04:05:09, Last Modified on 2009-08-13 04:05:20 - Market Wire}
 

 CALGARY, Aug. 13 /CNW/ - SemBioSys Genetics Inc. (TSX:SBS), specializing in the manufacture of high-value proteins and oils in plant seeds, today announced its second quarter 2009 financial and operational results. "Successfully completing the $4.15 million public offering in difficult capital markets, together with securing additional AVAC funding were fundamental to strengthening our balance sheet and extending our development runway into 2010," said James Szarko, Chief Executive Officer of SemBioSys. "In addition, we are encouraged by the positive preclinical data that have been obtained for Apo AI(Milano) in collaboration with Dr. Prediman K. Shah at Cedars-Sinai Heart Institute and other leading experts in cardiovascular research. Our top priorities are now advancing partnership discussions for our Apo AI(Milano) and Biosimilar Insulin programs and executing on other non-dilutive funding opportunities." Highlights Corporate - Completed a public offering of 11,865,341 units at a price of $0.35 per unit for total gross proceeds to SemBioSys of $4,152,869 subsequent to the end of the quarter - Completed a transaction with Botaneco and Avrio Ventures Limited Partnership where SemBioSys secured a 20% equity interest (on a fully converted basis) in Botaneco subsequent to the end of the quarter. The purpose of the transaction was to amend the capital structure of Botaneco to facilitate discussions that are underway related to a potential transaction between Botaneco and an independent third party. Apo AI(Milano) - Received positive results from in vivo plaque remodelling and regression studies confirming the anti-atherosclerotic effects of plant-derived Apo AI(Milano). The results demonstrated the regulation of cholesterol mobilization from the arterial wall, decreasing lipid content of atherosclerotic plaques, and reduction of overall volume of atherosclerotic plaque after multiple injections. In all, seven different types of studies have been performed at four outside laboratories with each demonstrating the molecule to be biologically active. - Completed a pre-IND (Investigational New Drug) meeting during which the U.S. Food and Drug Administration (FDA) confirmed SemBioSys' development plan necessary to file an IND application and addressed the proposed design of clinical trials for Apo AI(Milano) Insulin Program - Presented the results of the Phase I/II study with its Biosimilar Human Insulin, demonstrating that SBS-1000 was bioequivalent to Eli Lilly's Humulin(R) R in a late-breaking scientific poster at the American Diabetes Association's (ADA) 69th Scientific Sessions - Granted U.S. patent US 7,547,821 entitled "Methods for the Production of Insulin in Plants" Outlook The Company anticipates a number of milestone events in the coming months including: - Insulin: post-phase II meeting with the U.S. FDA regarding further development of SBS-1000; - Apo AI(Milano): development of a pilot scale manufacturing process; - Apo AI(Milano): completion of additional in vivo studies; and - Further progress with the partnering of both insulin and Apo AI(Milano). Financials The second quarter financials compare SemBioSys and Botaneco's financial and operating results for the three-month and six-month periods ended June 30, 2009 to SemBioSys and Botaneco's financial and operating results for the three-month and six-month periods ended June 30, 2008. Due to the completion of the divestiture of Botaneco on July 31, 2009, third quarter 2009 financials will be presented such that Botaneco's financial results will be segregated from SemBioSys' financial results. Net loss for the second quarter of 2009 was $3,886,112 or $0.13 per share, compared to a net loss of $6,414,856 or $0.25 per share for the same period last year. Net loss for the six-month period ended June 30, 2009 was $7,714,565 or $0.27 per share, compared to a net loss of $11,431,911 or $0.44 per share for the same six-month period last year. Total revenue for the three-month and six-month periods ended June 30, 2009 was $489,530 and $1,788,994 respectively, compared with $62,207 and $272,234 for the corresponding periods in 2008. The difference is due mainly to the recognition of licensing option fees in the first half of 2009 from the option agreement entered into with MannKind Corporation in the fourth quarter of 2008. In addition, $252,048 of licensing fees were recognized in the second quarter of 2009 related to the Company's GLA program. Total expenditures (net of cost recoveries) for the three-month and six-month periods ended June 30, 2009 were $4,173,518 and $9,105,465 respectively, compared with $6,542,258 and $11,799,869 for the corresponding periods in 2008. However, total expenditures excluding non-cash items (stock-based compensation and amortization) and cost recoveries for the three-month and six-month periods ended June 30, 2009 were $3,502,553 and $7,618,814 respectively, compared with $5,826,373 and $10,942,616 for the corresponding periods ended June 30, 2008. The decrease is primarily due to the cost reductions implemented in the Biopharmaceuticals and Bioproducts segment in the fourth quarter of 2008 and in 2009, 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 costs of the Specialty Ingredients segment. The reduction in cost recoveries for the three-month and six-month periods ended June 30, 2009 as compared to the corresponding periods ended June 30, 2008 resulted from the achievement of all outstanding milestones related to the agreement with AVAC Ltd. for the insulin program in 2008. As of June 30, 2009 the Company had cash and cash equivalents of $850,780 and a net positive working capital balance of $807,933, compared to $3,819,796 and $3,730,413 respectively at December 31, 2008. Subsequent to the end of the quarter, the Company completed a public offering which resulted in total gross proceeds to SemBioSys of $4,152,869. Total long-term debt and convertible debentures was $6,672,098 at June 30, 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 a result of the $500,000 of funding received from AVAC in the first quarter of 2009 that is secured by certain Botaneco assets, as well as the $950,000 of funding SemBioSys received from AVAC in the second quarter of 2009 that is secured by certain SemBioSys assets. As at August 13, 2009 the Company had 40,653,592 common shares outstanding, 14,495,341 warrants and 2,900,691 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' proprietary safflower-derived Apo AI(Milano) is a des-1,2- variant of Apo AI(Milano) as previously described in the literature. 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. Financial results included below: SemBioSys Genetics Inc. CONSOLIDATED BALANCE SHEETS (Unaudited) (expressed in Canadian dollars) ------------------------------------------------------------------------- June 30, December 31, 2009 2008 $ $ ------------ ------------ ASSETS Current assets Cash and cash equivalents 850,780 3,819,796 Accounts receivable 415,522 912,702 Prepaid expenses, deposits and other 437,789 457,693 Inventory 1,661,970 1,929,289 ------------ ------------ 3,366,061 7,119,480 Property and equipment 6,999,702 8,009,624 ------------ ------------ 10,365,763 15,129,104 ------------ ------------ ------------ ------------ LIABILITIES Current liabilities Accounts payable and accrued liabilities 1,947,226 2,237,225 Deferred revenue - 612,295 Short-term portion of long-term debt 378,520 539,547 Short-term portion of convertible debenture interest 232,381 - ------------ ------------ 2,558,127 3,389,067 Deferred cost recoveries 2,505 39,557 Long-term debt 3,226,434 1,773,776 Convertible debenture 2,834,763 2,814,506 ------------ ------------ 8,621,829 8,016,906 ------------ ------------ ------------ ------------ SHAREHOLDERS' EQUITY Capital stock 72,278,212 70,428,431 Warrants 2,630,463 2,550,880 Contributed surplus 12,205,444 11,802,064 Equity component of convertible debenture 1,427,127 1,427,127 Accumulated other comprehensive loss 13,557 - Deficit (86,810,869) (79,096,304) ------------ ------------ 1,743,934 7,112,198 ------------ ------------ 10,365,763 15,129,104 ------------ ------------ ------------ ------------ SemBioSys Genetics Inc. CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT (Unaudited) (expressed in Canadian dollars, except shares) ------------------------------------------------------------------------- Three month period ended Six month period ended June 30, June 30, June 30, June 30, 2009 2008 2009 2008 $ $ $ $ REVENUE Licensing option fees - - 1,161,495 50,110 Licensing fees 252,048 - 252,048 - Contract research 38,151 - 38,151 - Product sales 199,331 62,207 337,300 222,124 ------------ ------------ ------------ ------------ 489,530 62,207 1,788,994 272,234 EXPENSES Research and development 1,592,033 3,357,683 3,506,889 6,151,786 General and administration 1,014,723 1,666,323 2,320,180 3,061,598 Intellectual property costs 333,270 504,690 632,277 847,020 Cost of products sold 252,366 45,534 502,100 317,279 Sales and marketing 185,421 96,621 376,854 249,781 Business development 124,740 155,522 280,514 315,152 Stock-based compensation 126,907 175,947 403,381 355,850 Amortization 567,808 580,733 1,138,575 1,074,567 Cost recoveries (23,750) (40,795) (55,305) (573,164) ------------ ------------ ------------ ------------ 4,173,518 6,542,258 9,105,465 11,799,869 ------------ ------------ ------------ ------------ Loss before the undernoted (3,683,988) (6,480,051) (7,316,471) (11,527,635) ------------ ------------ ------------ ------------ Interest income 3,617 96,649 12,230 267,507 Interest expense (241,590) (43,412) (408,493) (105,076) Foreign exchange gain (loss) 35,849 11,958 (1,831) (66,707) ------------ ------------ ------------ ------------ (202,124) 65,195 (398,094) 95,724 ------------ ------------ ------------ ------------ Net loss for the period (3,886,112) (6,414,856) (7,714,565) (11,431,911) Deficit - Beginning of period (82,924,757) (61,176,218) (79,096,304) (56,159,163) ------------ ------------ ------------ ------------ Deficit - End of period (86,810,869) (67,591,074) (86,810,869) (67,591,074) ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Loss per share - basic and diluted (0.13) (0.25) (0.27) (0.44) ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Weighted average shares outstanding 28,788,251 25,937,476 28,545,450 25,936,634 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ SemBioSys Genetics Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) (expressed in Canadian dollars) ------------------------------------------------------------------------- Three month period ended Six month period ended June 30, June 30, June 30, June 30, 2009 2008 2009 2008 $ $ $ $ ------------ ------------ ------------ ------------ Net loss for the period (3,886,112) (6,414,856) (7,714,565) (11,431,911) Other comprehensive loss Foreign currency translation adjustment (19,063) - 13,557 - ------------ ------------ ------------ ------------ Comprehensive loss (3,905,175) (6,414,856) (7,701,008) (11,431,911) ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ACCUMULATED OTHER COMPREHENSIVE LOSS (Unaudited) (expressed in Canadian dollars) Six month period ended June 30, 2009 $ ----------- Accumulated other comprehensive income - beginning of period - Change in accounting policy - foreign currency translation adjustment 26,534 Foreign currency translation adjustment (12,977) Accumulated other comprehensive income - end of period 13,557 ----------- ----------- SemBioSys Genetics Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (expressed in Canadian dollars) ------------------------------------------------------------------------- Three month period ended Six month period ended June 30, June 30, June 30, June 30, 2009 2008 2009 2008 $ $ $ $ ------------ ------------ ------------ ------------ Cash provided by (used in) Operating activities Net loss for the period (3,886,112) (6,414,856) (7,714,565) (11,431,911) Add items not affecting cash: Amortization 567,808 580,733 1,138,575 1,074,567 Stock-based compensation 126,907 175,947 403,381 355,850 Stock-based payments - - 152,985 - Unrealized foreign exchange (gain) loss (40,800) 4,991 (12,730) 49,002 Non-cash interest expense 210,244 18,288 356,035 37,068 ------------ ------------ ------------ ------------ (3,021,953) (5,634,897) (5,676,319) (9,915,424) ------------ ------------ ------------ ------------ Change in non-cash working capital and other balances related to operations 122,776 88,886 (109,859) 298,802 ------------ ------------ ------------ ------------ Cash used in operating activities (2,899,177) (5,546,011) (5,786,178) (9,616,622) ------------ ------------ ------------ ------------ Financing activities Issuance of capital stock - - 1,752,000 - Share issue costs (26,411) - (69,724) (57,884) Issuance of warrants - - 81,600 - Warrant issue costs - - (2,017) - Exercise of stock options - - - 31,750 Issuance of convertible debenture - 4,000,000 - 4,000,000 Proceeds from long-term debt 970,000 - 1,470,000 634,900 Repayment of long-term debt (142,144) (158,038) (281,820) (310,584) ------------ ------------ ------------ ------------ Cash provided by financing activities 801,445 3,841,962 2,950,039 4,298,182 ------------ ------------ ------------ ------------ Investing activities Acquisition of property and equipment (53,609) (478,806) (132,877) (1,023,650) ------------ ------------ ------------ ------------ Cash used in investing activities (53,609) (478,806) (132,877) (1,023,650) ------------ ------------ ------------ ------------ Decrease in cash and cash equivalents (2,151,341) (2,182,855) (2,969,016) (6,342,090) Cash and cash equivalents - Beginning of period 3,002,121 16,284,778 3,819,796 20,444,013 ------------ ------------ ------------ ------------ Cash and cash equivalents - End of period 850,780 14,101,923 850,780 14,101,923 ------------ ------------ ------------ ------------ Supplemental Information Cash interest received 6,410 224,636 18,765 325,244 Cash interest paid 46,588 25,123 67,795 53,878 Non-cash transactions Capital items included in accounts payable - 24,831 - 24,831 Share issue costs included in accounts payable 102,766 - 102,766 - ------------ ------------ ------------ ------------ 

For further information: SemBioSys Genetics Inc., Abby Garfunkel, Investor Relations, Phone: (403) 717-4185, E-mail: [ garfunkela@sembiosys.com ]; 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 ]