SemBioSys announces second quarter results
CALGARY, Aug. 13 /CNW/ - SemBioSys Genetics Inc. (TSX:SBS), SemBioSys Genetics, Inc. a development stage biotechnology Company that utilizes its patented plant seed oilbody expression technology platforms to develop biosimilar drug candidates and high value proteins, today announced its operational and financial results for the second quarter, ended June 30, 2010.
"We made great progress during the second quarter, especially with respect to our partnering discussions in China and the rest of the world, with highly qualified candidates for both our SBS Insulin and Apo AI(Milano) programs. We are in the diligence phase with a number of parties and are working towards closing our first strategic pharmaceutical development deal in an expedient manner," stated James Szarko, President and CEO of SemBioSys. "Subsequent to the end of the quarter, in preparation for managing several strategic global initiatives, we hired a new President of U.S. and International Operations and announced the appointments of three new Vice Presidents. These announcements included a new head of business development to assist in advancing our partnering activities on insulin and Apo AIMilano. We continue to be resourceful and use innovative methods to extend our cash runway in order to facilitate a successful partnership."
Operational Highlights
- Received positive final results from an in vivo animal study of
plant-derived Apo AI(Milano), conducted by an independent third
party, demonstrating a statistically significant increase in reverse
cholesterol transport in treated animals versus control.
- Achieved inventory threshold of Apo AI(Milano) expressing seed to
meet planned Active Pharmaceutical Ingredient ("API") requirements
for the completion of preclinical and toxicology studies to support
the filing of an investigational new drug application (IND) to the
U.S. Food and Drug Administration (FDA).
- Planted approximately 40 acres of Apo AI(Milano) expressing seed in
North America.
- Completed the first outdoor planting of our second generation,
humanized insulin expressing seed line.
- Advanced partnering discussions for our insulin and Apo AI(Milano)
programs.
- Appointed Rick Pierce as President of U.S. and International
Operations and Karen Boodram as Vice President of Business
Development, to lead the Company's partnering process, and promoted
Dr. Joe Boothe to Vice President of Research and Development and Dr.
Harm Deckers to Vice President of Operations and Legal Affairs.
Financials
SemBioSys has historically operated in two reportable segments: (i) Biopharmaceuticals and Bioproducts and (ii) Specialty Ingredients. Effective July 29, 2009, the Company divested its majority interest in Botaneco Specialty Ingredients Inc. and Botaneco Inc. (collectively referred to as "Botaneco"), and, therefore, it no longer has control nor significant influence over these entities. As a result, the Specialty Ingredients segment is no longer being consolidated and its operating results are included in discontinued operations. On November 20, 2009 the Company disposed of our remaining investment in Botaneco.
Net loss for the three months ended June 30, 2010 compared to the same period last year:
- $2,891,999 or $0.06 per share from continuing operations compared to
$2,615,412 or $0.09 per share;
- $nil from discontinued operations compared to $1,270,700 or $0.04 per
share; and
- $2,891,999 or $0.06 per share in total net loss compared to
$3,886,112 or $0.13 per share.
Net loss for the three months ended June 30, 2010 increased over the same period last year, due to a one time non-cash expense of $625,000 for the renegotiation of an existing license agreement.
Net loss for the six months ended June 30, 2010 compared to the same period last year:
- $4,955,750 or $0.10 per share from continuing operations compared to
$5,073,087 or $0.18 per share;
- $nil from discontinued operations compared to $2,641,478 or $0.09 per
share; and
- $4,955,750 or $0.10 per share in total net loss compared to
$7,714,565 or $0.27 per share.
Net loss decreased in 2010 as a result of completing the insulin clinical trials in the first quarter of 2009, combined with the savings realized from the cost reduction program implemented in the third quarter of 2009.
Revenue for the three months ended June 30, 2010 compared to the same period last year:
- $111,039 in revenue from continuing operations compared to $290,199;
- $nil in revenue from discontinued operations compared to $199,331;
and
- $111,039 in total revenue compared to $489,530.
Revenue for the six months ended June 30, 2010 compared to the same period last year:
- $467,504 in revenue from continuing operations compared to
$1,451,694;
- $nil in revenue from discontinued operations compared to $337,300;
and
- $467,504 in total revenue compared to $1,788,994.
The decrease in revenue in 2010 for continuing operations is due mainly to the recognition of licensing option fees in 2009 from an option agreement entered into with MannKind related to the Company's Biosimilar Insulin program; offset by licensing fees recorded 2010 related to the Company's GLA program.
Expenditures (net of cost recoveries in each case) for the three months ended June 30, 2010 compared to the same period last year:
- $2,931,651 in expenditures from continuing operations compared to
$2,905,538;
- $nil in expenditures from discontinued operations compared to
$1,267,980; and
- $2,931,651 in total expenses net of cost recoveries compared to
$4,173,518.
Expenditures (net of cost recoveries in each case) for the six months ended June 30, 2010 compared to the same period last year:
- $5,247,543 in expenditures from continuing operations compared to
$6,494,788;
- $nil in expenditures from discontinued operations compared to
$2,610,677; and
- $5,247,543 in total expenses net of cost recoveries compared to
$9,105,465.
The overall decrease in expenditures is primarily due to the cost reductions implemented in the third quarter of 2009, in addition to decreased post-clinical costs as the majority of the post-clinical work for the insulin clinical trial was completed in early 2009.
At June 30, 2010, the Company had cash and cash equivalents of $1,635,926 as compared to $3,687,548 at December 31, 2009. The decrease in cash during the period resulted primarily from our net cash burn offset by the proceeds received relating to the private placement completed in March 2010. Total short-term debt and convertible debentures were $2,326,047 at June 30, 2010 compared to $1,534,535 at December 31, 2009. The increase in debt relates mainly to the $625,000 of convertible debentures issued in June to UTI Limited Partnerships as part of the consideration paid to renegotiate certain terms of our existing technology license agreement.
At June 30, 2010, the Company had a net negative working capital balance of $267,648 as compared to December 31, 2009, when it had a positive net working capital of $1,595,217. The decrease in working capital is primarily due to the increase in the short-term portion of long-term debt resulting from the accrued royalties on the $1,350,000 of funding SemBioSys received from AVAC in 2009 that is secured by certain SemBioSys assets. Also contributing to the decrease is the short-term portion of the convertible debentures issued in June 2010. SemBioSys has initiated discussions with AVAC regarding repayment of the outstanding investment and accrued royalties of $1,656,319. The discussions have contemplated pushing back the repayment of the investment and accrued royalties from November 2010 to the end of 2011. If the Company is successful in obtaining these terms the investment would be reclassified from short-term debt to long-term debt. Had the investment been reclassified on June 30, 2010 and December 31, 2009, the Company would have had positive working capital of $1,923,967 and $3,129,752 respectively.
As at August 13, 2010, the Company had 51,374,536 common shares outstanding, 12,655,341 warrants, 4,666,773 options, 1,423,840 broker warrants, 672,628 deferred share units and debentures which are convertible into 3,587,406 common shares.
About SemBioSys
Calgary, Alberta-based SemBioSys is a development stage biotechnology Company that utilizes its patented plant seed oilbody expression technology platforms to develop biosimilar drug candidates and high value proteins. SemBioSys' seed-based protein expression system can enable exceptionally low cost of production with unprecedented scalability and reliability. SemBioSys is focusing the platform selectivity to develop biosimilar product candidates with tremendous commercial value. The Company's current pharmaceutical development programs include insulin (SBS-1000, regulated as a biosimilar in Europe) and Apo AI(Milano), a new chemical entity and next-generation cardiovascular therapy with blockbuster revenue potential if it reaches market for treatment of atherosclerosis. SemBioSys' Apo AI(Milano) is a des-1,2- variant of Apo AI(Milano) as previously described in scientific 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 and partnerships, 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
(unaudited)
(expressed in Canadian dollars)
-------------------------------------------------------------------------
June 30, December 31,
2010 2009
$ $
------------ ------------
ASSETS
Current assets
Cash and cash equivalents 1,635,926 3,687,548
Investment 207,974 380,601
Accounts receivable 215,404 124,083
GST receivable 111,246 52,649
Prepaid expenses, deposits and other 282,566 175,894
------------ ------------
2,453,116 4,420,775
Property and equipment 2,984,902 3,683,462
------------ ------------
5,438,018 8,104,237
------------ ------------
------------ ------------
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities 917,040 1,291,023
Short-term portion of long-term debt 1,698,251 1,534,535
Short-term portion of convertible debenture 105,470 -
------------ ------------
2,720,761 2,825,558
Long-term portion of convertible debenture 522,326 -
------------ ------------
3,243,087 2,825,558
------------ ------------
------------ ------------
SHAREHOLDERS' EQUITY
Capital stock 75,444,408 73,726,414
Warrants 3,527,425 3,527,425
Contributed surplus 14,033,943 13,764,398
Accumulated other comprehensive loss (169,909) (54,372)
Deficit (90,640,936) (85,685,186)
------------ ------------
2,194,931 5,278,679
------------ ------------
5,438,018 8,104,237
------------ ------------
------------ ------------
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,
2010 2009 2010 2009
$ $ $ $
------------ ------------ ------------ ------------
REVENUE
Contract research 111,039 38,151 151,715 38,151
Licensing fees - 252,048 315,789 252,048
Licensing option fees - - - 1,161,495
------------ ------------ ------------ ------------
111,039 290,199 467,504 1,451,694
EXPENSES
Research and
development 1,104,589 1,691,554 2,202,654 3,714,462
General and
administration 327,127 328,602 700,450 890,000
Intellectual
property costs 903,196 281,508 1,134,869 546,739
Business development 174,917 123,419 314,379 279,193
Stock-based
compensation 91,050 126,054 214,548 356,699
Amortization 344,522 366,901 698,560 740,500
Cost recoveries (13,750) (12,500) (17,917) (32,805)
------------ ------------ ------------ ------------
2,931,651 2,905,538 5,247,543 6,494,788
------------ ------------ ------------ ------------
Loss before the
undernoted (2,820,612) (2,615,339) (4,780,039) (5,043,094)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Interest income 1,985 2,084 2,007 7,500
Interest expense (53,706) (28,183) (151,112) (48,311)
Foreign exchange
gain (loss) 723 26,026 (6,217) 10,818
Realized loss on
disposal of
investment (20,389) - (20,389) -
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
(71,387) (73) (175,711) (29,993)
------------ ------------ ------------ ------------
Net loss from
continuing
operations (2,891,999) (2,615,412) (4,955,750) (5,073,087)
Discontinued
operations - (1,270,700) - (2,641,478)
------------ ------------ ------------ ------------
Net loss (2,891,999) (3,886,112) (4,955,750) (7,714,565)
Deficit - Beginning
of the period (87,748,937) (82,924,757) (85,685,186) (79,096,304)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Deficit - End of
the period (90,640,936) (86,810,869) (90,640,936) (86,810,869)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Loss per share
Basic and diluted
from continuing
operations (0.06) (0.09) (0.10) (0.18)
Basic and diluted
from discontinued
operations - (0.04) - (0.09)
Basic and diluted (0.06) (0.13) (0.10) (0.27)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Weighted average
shares
outstanding 51,259,536 28,788,251 47,607,001 28,545,450
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
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,
2010 2009 2010 2009
$ $ $ $
------------ ------------ ------------ ------------
Net loss for the
period (2,891,999) (3,886,112) (4,955,750) (7,714,565)
Other comprehensive
loss
Foreign currency
translation
adjustment - (19,063) - 13,557
Foreign currency
translation
adjustment
transferred to
net income from
discontinued
operations during
the year - 19,063 - (13,557)
Unrealized loss on
investment (81,554) - (135,926) -
Realized loss on
investment 20,389 - 20,389 -
------------ ------------ ------------ ------------
Comprehensive
loss (2,953,164) (3,886,112) (5,071,287) (7,714,565)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
CONSOLIDATED STATEMENTS OF ACCUMULATED OTHER COMPREHENSIVE LOSS
(unaudited)
(expressed in Canadian dollars)
-------------------------------------------------------------------------
Three month period ended Six month period ended
June 30, June 30, June 30, June 30,
2010 2009 2010 2009
$ $ $ $
------------ ------------ ------------ ------------
Accumulated other
comprehensive loss
- beginning of
the period (108,744) - (54,372) -
Foreign currency
translation
adjustments
Change in
accounting policy - - - 26,534
Adjustments during
the year - - - (12,977)
Transferred to
net income from
discontinued
operations during
the year - - - (13,557)
------------ ------------ ------------ ------------
(108,744) - (54,372) -
Unrealized loss on
Investment (81,554) - (135,926) -
Realized loss on
investment 20,389 - 20,389 -
------------ ------------ ------------ ------------
Accumulated other
comprehensive loss
- end of the
period (169,909) - (169,909) -
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
SemBioSys Genetics Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three month period ended Six month period ended
(unaudited) June 30, June 30, June 30, June 30,
(expressed in 2010 2009 2010 2009
Canadian dollars) $ $ $ $
------------------------------- ------------ ------------ ------------
Cash provided by
(used in)
Operating activities
Net loss for the
period from
continuing
operations (2,891,999) (2,615,412) (4,955,750) (5,073,087)
Add items not
affecting cash:
Amortization 344,522 366,901 698,560 740,500
Stock-based
compensation 91,050 126,054 214,548 356,699
Shares issued for
services - - 92,935 152,985
Deferred stock
units issued 54,997 - 54,997 -
Unrealized
foreign exchange
loss (6,672) (18,057) 14,828 (14,678)
Non-cash interest
expense 50,910 15,473 148,082 15,473
Loss on disposal
of shares 20,389 - 20,389 -
Non-cash interest
on convertible
debentures 2,796 - 2,796 -
Non-cash license
fees expensed 625,000 - 625,000 -
------------ ------------ ------------ ------------
(1,709,007) (2,125,041) (3,083,615) (3,822,108)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Change in non-cash
working capital
and other balances
related to
operations 312,555 131,899 (404,922) (237,516)
------------ ------------ ------------ ------------
Cash used in
operating
activities (1,396,452) (1,993,142) (3,488,537) (4,059,624)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Financing activities
Issuance of capital
stock - - 1,778,595 1,752,000
Share issue costs (11,247) (26,411) (158,290) (69,724)
Issuance of warrants - - - 81,600
Warrant issue costs - - (6,340) (2,017)
Costs related to the
corporate
reorganization - - (182,794) -
Proceeds from
long-term debt - 950,000 - 950,000
Repayment of
long-term debt (4,659) (134,190) (30,957) (269,653)
------------ ------------ ------------ ------------
Cash provided by
(used in) financing
activities (15,906) 789,399 1,400,214 2,442,206
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Investing activities
Proceeds on
disposition of
shares 36,701 - 36,701 -
Acquisition of
property and
equipment - - - (17,311)
------------ ------------ ------------ ------------
Cash provided by
(used in) investing
activities 36,701 - 36,701 (17,311)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net change in cash
from continuing
operations (1,375,657) (1,203,743) (2,051,622) (1,634,729)
Cash flow from
discontinued
operations
Operating
activities - (906,035) - (1,726,554)
Financing
activities - 12,046 - 507,833
Investing
activities - (53,609) - (115,566)
------------ ------------ ------------ ------------
Net change in cash
from discontinued
operations - (947,598) - (1,334,287)
------------ ------------ ------------ ------------
Decrease in cash
and cash
equivalents (1,375,657) (2,151,341) (2,051,622) (2,969,016)
Cash and cash
equivalents -
Beginning of
period 3,011,583 3,002,121 3,687,548 3,819,796
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Cash and cash
equivalents - End
of period 1,635,926 850,780 1,635,926 850,780
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Cash and cash
equivalents -
discontinued
operations - 358,542 - 358,542
Cash and cash
equivalents -
from continuing
operations 1,635,926 492,238 1,635,926 492,238
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Supplemental
Information
(continuing
operations)
Cash interest
received 1,985 4,827 2,118 11,806
Cash interest
paid - 12,309 234 32,342
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
For further information: SemBioSys Genetics Inc., Rick Pierce, President, U.S. and International Operations, Phone: (617) 447-8299, E-mail: [email protected]; The Equicom Group Inc., Ross Marshall, Vice President, Phone: (416) 815-0700 ext. 238, E-mail: [email protected]
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