Bioniche Life Sciences Inc. Reports Fiscal 2012 Year-End Results

- Animal Health product sales revenues increase by 10% over Fiscal 2011 -

(all figures are in Canadian dollars unless otherwise noted)

BELLEVILLE, ON, Sept. 12, 2012 /CNW/ - Bioniche Life Sciences Inc. (TSX: BNC) (ASX: BNC), a research-based, technology-driven Canadian biopharmaceutical company, today announced financial results for its fiscal year ended June 30, 2012.

"During the course of its history, Bioniche Life Sciences Inc. has evolved from a modest animal health business with a focus on researching and developing alternatives to antibiotics in food producing animals to a three-pronged business (Animal Health, Human  Health and Food Safety) with consistent revenues, successful commercialization of internally developed technologies, late-stage human clinical development, top-of-the-line production facilities in both animal and human health, and significant potential for future growth and value creation," said Graeme McRae, President & CEO. "The evolution of the Company continues as many of our R&D projects are nearing the end of their development cycle and approaching the marketplace. The next five years will be particularly important in this respect, as several significant technologies become commercialized globally."

Fiscal 2012 Financial Results Highlights

Consolidated revenues related to Bioniche Animal Health product sales for the fiscal year were $29.8 million, as compared to $27.3 million in Fiscal 2011. Gross margins were 50% for the year ended June 30, 2012, as compared to 51% in the year ended June 30, 2011. This reduction in margins is largely the result of cost increases relative to sales processes, and in particular, products acquired through licensing and distribution agreements, many of them introduced over the last 2 quarters of the year ended June 30 2012. These margins are expected to improve progressively as the markets for these new products grow over the next year.

In addition to product sales revenues, the Company recorded research collaboration income of $2.0 million in Fiscal 2012, as compared to $3.1 million in Fiscal 2011. This is related to certain reimbursements by the Endo Health Solutions Inc. (Endo), with whom the Company has a license, development and supply agreement for its human bladder cancer therapy, Urocidin^TM. Total revenues from all sources for Fiscal 2012 were $31.8 million, as compared to $34.6 million in Fiscal 2011. The difference in revenues was largely due to a non-recurring milestone payment of US$4 million that was received from Endo in November, 2010, which is included in the Fiscal 2011 revenues.

The Company generated Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) - before research and development expenses - of $0.3 million, as compared to $4.4 million in Fiscal 2011.

Fiscal year-end cash, cash equivalents and short-term investments amounted to $20.0 million at June 30, 2012, as compared to $15.4 million at June 30, 2011. At June 30, 2012, the Company's net working capital totaled $27.5 million, compared to net working capital of $22.9 million at June 30, 2011.

The Company's cash flow used in operations for the year ended June 30, 2012 was $14.7 million, as compared to cash used in operations of $12.9 million in 2011. A $4.0 million milestone offset the cash flow used in operations in Fiscal 2011, where no milestone revenue was recorded in Fiscal 2012. Further, minor variations in income and changes in non-cash working capital balances affected the cash flow used in operations in Fiscal 2012. The average monthly burn rate was $1.4 million for Fiscal 2012, vs. $1.1 million for Fiscal 2011. In the year ahead, the Company expects to reduce the average monthly burn rate progressively throughout the year as it completes the development and commercialization of several new products. The Company's goal is to neutralize its burn rate and develop sustainable cash flows in Fiscal 2014.

The value of the Company's Property, Plant and Equipment has increased to $40.1 million at June 30, 2012, compared to $37.6 million at June 30, 2011. This increase reflects an ongoing investment in the Animal Health and Food Safety Vaccine Manufacturing Centre at the Company's corporate headquarters in Belleville, Ontario. This facility has been undergoing commissioning and validation to meet North American production standards.

"The Vaccine Manufacturing Centre initially was constructed to produce Econiche^TM," said Mr. McRae. "Sales of Econiche^TM have been limited to date, as there is presently no mandatory requirement for cattlemen in Canada to vaccinate their animals, nor do they receive any compensation or incentive to do so.  Additionally, the Company has not yet achieved a conditional license for the vaccine in the U.S. market, and the Company is just beginning to access ex-North American markets. Beyond Econiche^TM, the Company expects to manufacture other vaccine products, including internally developed products, such as our Rhodococcus equi vaccine for horses, and to offer manufacturing services for companies seeking high quality production."

Added Mr. McRae, "We are continuing to the next level of validation in the facility, which will allow the production of vaccines for sale in European and Asian markets, where premium pricing is available. It will take approximately 6-12 months of additional validation work to achieve this Good Manufacturing Practices (GMP) compliance."

Econiche^TM U.S. Regulatory Status

The Company continues to pursue the registration of its E. coli O157 cattle vaccine in the United States. Subsequent to the February, 2008 notice from the United States Department of Agriculture (USDA) that the data for its E. coli O157 cattle vaccine "meets the 'expectation of efficacy' standard" and is eligible for a conditional license, there has been little progress.  Ongoing discussions revealed significant additional requirements which the Company has decided are not justifiable in terms of cost and time for a conditional license.  The Company is consequently focused on developing a critical path agreement with the USDA for a full license.  In the interim, research permits are an option for any U.S. customers wanting access to the Canadian vaccine.

Additional Fiscal 2012 Financial Results Highlights

Administrative expenses were $10.6 million in Fiscal 2012, as compared to $10.8 million at June 30, 2011. Marketing, selling and distributed expenses were $7.4 million in Fiscal 2012, as compared to $6.9 million in Fiscal 2011. The additional expenditure in this category is related to increased staffing to support the launch and distribution of several new Animal Health products.

Research and development (R&D) expenditures were $20.5 million in Fiscal 2012, as compared to $21.0 million in Fiscal 2011. R&D resources are focused on the advancement of certain development programs in Animal Health and Food Safety. Additionally, there is continued investment in the staffing and infrastructure associated with the GMP production of the Company's Urocidin^TM bladder cancer treatment that is in Phase III clinical testing. Endo has assumed financial responsibility for the external costs of clinical activities as they relate to Urocidin^TM, and the Company is focusing its human clinical development activities for the underlying technology - Mycobacterial Cell Wall-DNA Complex (MCC) - on other indications. Until such time as the Company's Vaccine Manufacturing Centre in Belleville is making commercial product, the carrying costs associated with this facility are also accounted for under R&D.

The Company's financing activities provided $22.4 million during the year ended June 30, 2012 from the closing of the debt financing with Capital Royalty Partners of US$20.million, as compared to the $38.0 million in Fiscal 2011, primarily from the concurrent share offerings netting $26.0 million and from loan advances to fund the Vaccine Manufacturing Centre of $9.8 million.

The basic and fully-diluted net loss per share for Fiscal 2012 is ($0.24), as compared to a net loss per share of ($0.14) in Fiscal 2011. Total Common Shares outstanding at June 30, 2012 were 103,574,370, as compared to 102,108,692 at June 30, 2011.

More information on the Company's year-end financial results is provided in the Company's Fiscal 2012 Management's Discussion and Analysis dated September 12, 2012.

Fiscal 2012 Year-End Results Conference Call

The Company will discuss its year-end results during a:

Conference Call & Audio Web Cast
Wednesday, September 19, 2012
7:00 p.m. (Eastern)

To participate in the conference call from North America, call [phone] or [phone].

To participate in the conference call from Australia, call 1-800-287-011.

In order to join this conference call, all participants will be required to provide the topic, Company name or conference ID number: 25364133.

A listen-only audio web cast will be available at:

http://event.on24.com/r.htm?e=510747&s=1&k=D5EE4A57B99BADE02CE30C5FCD8791EB

A replay of the conference call will be available until September 24, 2012 at midnight by calling 1-855-859-2056 (passcode: 25364133#).

The web cast will be available for replay using the above link until September 19, 2013.

About Bioniche Life Sciences Inc.

Bioniche Life Sciences Inc. is a research-based, technology-driven Canadian biopharmaceutical company focussed on the discovery, development, manufacturing, and marketing of proprietary and innovative products for human and animal health markets worldwide. The fully-integrated company employs more than 200 skilled personnel and has three operating divisions: Human Health, Animal Health, and Food Safety. The Company's primary goal is to develop and commercialize products that advance human or animal health and increase shareholder value.

Bioniche Life Sciences Inc. has been named one of the Top 50 Best Small and Medium-Sized Employers in Canada for 2011. For more information, please visit www.Bioniche.com.

Except for historical information, this news release may contain forward-looking statements that reflect the Company's current expectation regarding future events. These forward-looking statements involve risk and uncertainties, which may cause, but are not limited to, changing market conditions, the successful and timely completion of clinical studies, 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 quarterly and annual reporting.

Bioniche Life Sciences Inc.
Amalgamated under the laws of Ontario

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at (thousands of Canadian dollars)		June 30, 2012 $	June 30, 2011 $	July 1, 2010 $
ASSETS Current
Cash and cash equivalents		20,020	15,353	11,070
Other current financial assets		—	1,493	—
Trade and other receivables		6,787	6,460	8,601
Income taxes receivable		—	254	63
Inventories		7,776	8,523	6,582
Prepayments		1,081	1,067	788
		35,664	33,150	27,104
Non-current
Property, plant and equipment		40,134	37,582	25,330
Intangible assets		5,206	6,306	6,500
Goodwill		456	456	456
Other non-current receivables		183	1,756	1,156
Deferred tax assets		509	539	494
Total assets		82,152	79,789	61,040
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Trade and other payables		6,713	8,520	9,716
Income taxes payable		94	—	—
Current portion of long-term debt		997	700	256
Current portion of repayable government assistance		366	1,049	960
		8,170	10,269	10,932
Non-current
Long-term debt		25,438	2,717	2,525
Repayable government assistance		30,921	26,387	21,889
Employee benefit liability		1,875	1,808	—
Deferred government incentives		—	—	2,382
		66,404	41,181	37,728
Shareholders' equity
Share capital		126,354	125,630	96,677
Other paid-in capital		9,327	8,771	8,813
Deficit		(118,807)	(94,619)	(82,094)
Foreign currency translation reserve		(1,126)	(1,174)	(84)
Total shareholders' equity		15,748	38,608	23,312
Total liabilities and shareholders' equity		82,152	79,789	61,040

Bioniche Life Sciences Inc.

CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

For the years ended June 30 (thousands of Canadian dollars, except share and per share amounts)		2012 $	2011 $
REVENUES
Sales		29,811	27,366
Licensing		—	4,046
Research collaborations		1,986	3,146
		31,797	34,558
EXPENSES
Cost of sales		14,916	13,441
Administration		10,555	10,840
Marketing and selling		7,395	6,897
Financial expenses (income)		3,163	(2,029)
Foreign exchange gain		(413)	(879)
		35,616	28,270
(Loss) income before research and development expenses and other items		(3,819)	6,288
Research and development expenses		20,549	21,031
Less: government assistance		(289)	(1,954)
Loss before income taxes		(24,079)	(12,789)
Income tax expense (recovery)		109	(281)
Net loss for the year		(24,188)	(12,508)
OTHER COMPREHENSIVE INCOME (LOSS) Exchange difference on translation of foreign operations		48	(1,090)
Total comprehensive loss for the year		(24,140)	(13,598)
Basic and fully diluted net loss per share		(0.24)	(0.14)
Weighted-average number of common shares outstanding		102,818,009	88,896,923

Bioniche Life Sciences Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS
For the year ended June 30 (thousands of Canadian dollars)			2012 $	2011 $
OPERATING ACTIVITIES
Net loss for the year			(24,188)	(12,508)
Items not affecting cash and other reconciling items:
	Depreciation of property, plant and equipment		1,511	1,384
	Amortization of intangible assets		1,092	881
	Unrealized foreign exchange loss (gain)		248	(1,530)
	Accreted interest on government incentives and repayable government assistance		2,354	(2,118)
	Related party transaction		—	20
	Stock-based compensation expense		553	619
	Employee share ownership plan		875	836
	Employee future benefit		67	1,808
	Impairment of intangible assets		268	—
	Deemed government assistance		(7)	(61)
	Amortization of deferred government incentives		—	(1,005)
	Deferred future income taxes		39	(69)
	Other		1	1
			(17,187)	(11,742)
Net change in non-cash working capital balances			2,530	(1,145)
Cash (used in) operating activities			(14,657)	(12,887)
INVESTING ACTIVITIES
Proceeds on settlement of other non-current receivables			—	100
Proceeds (purchase) of other current financial assets			1,493	(1,493)
Proceeds on disposal of property, plant and equipment			15	103
Purchases of intangible assets			(260)	(687)
Purchases of property, plant and equipment			(4,286)	(18,912)
Cash used in investing activities			(3,038)	(20,890)
FINANCING ACTIVITIES
Proceeds from repayable government assistance on account of property, plant and equipment			—	1,496
Proceeds from repayable government assistance			1,230	9,342
Proceeds from long-term debt			22,728	500
Payment of financing fees			(545)	—
Proceeds from shares issued			6	30,587
Payment of share issuance costs			—	(2,969)
Proceeds from deferred government incentives			—	691
Repayment of repayable government assistance			(91)	(960)
Redemption of shares			(156)	(173)
Repayment of finance lease obligations			(439)	(431)
Repayment of long-term debt			(371)	(24)
Cash provided by financing activities			22,362	38,059
Net increase in cash and cash equivalents during the year			4,667	4,283
Cash and cash equivalents, beginning of year			15,353	11,070
Cash and cash equivalents, end of year			20,020	15,353

 

 

SOURCE: Bioniche Life Sciences Inc.

Jennifer Shea, Vice-President, Communications, Investor & Government Relations
Bioniche Life Sciences Inc.
Telephone: [phone]; from Australia: 0011 1 613-966-8058
Cell: [phone]; from Australia: 0011 1 613-391-2097
[email protected]