Akela Pharma reports results the three months and year ended 2009 and files
its fourth default status report
AUSTIN, TX, May 31 /CNW Telbec/ - Akela Pharma, Inc. ("Akela"), (TSX: AKL), a leader in the development of therapeutics for the treatment of pain, and the company's wholly owned subsidiary, PharmaForm, today announced its financial results for the three months and year ended December 31, 2009.
During the past year, the Company has achieved the following:
- On February 9, 2009 we announced the implementation of measures to cut
costs and preserve cash. The reduction in costs targeted the
Pharmaceutical Development programs as well as, PharmaForm. The
measures were taken to allow sufficient time for the completion of
ongoing financing and M&A efforts.
- On March 10, 2009, the Company agreed to accept a payment of $2,000 Cdn
($1,563 US) and 500,000 common share purchase warrants with an exercise
price of $0.50 Cdn ($0.39 US) from LAB Research Inc. (LRI) as full and
final settlement of its lawsuit relating to a failed Fentanyl TAIFUN(R)
toxicology study.
- On May 21, 2009, we acquired all of the issued and outstanding
securities of Nventa Biopharmaceuticals Corporation ("Nventa") by way
of plan of arrangement (the "Arrangement") under the Business
Corporations Act (British Columbia). Bob Rieder and Greg McKee were
appointed to our Board of Directors.
- On June 26, a new Board was elected consisting of Gordon Busenbark,
Michael Lagueux, Raj Maheshwari, Greg McKee, Bob Rieder, Robert
Williams
- On September 2, 2009, Akela announced a change in leadership with the
appointment of Greg McKee to the position of President and Chief
Executive Officer and Robert Rieder to the position of Chairman of the
Board of Directors.
- On September 3, 2009, we announced a comprehensive corporate
restructuring designed to achieve several operational objectives. As
part of its efforts to preserve its ability to execute on its
development strategy for Fentanyl TAIFUN(R) and to optimize the
infrastructure required to support its PharmaForm clients, the Company
reduced its head count by 32 employees to a workforce of 65. Further,
Akela announced the closure of its international operations and the
centralization of the Company's operational headquarters in Austin,
Texas.
- During the first quarter of 2010, we began negotiating the sale of our
contract service operations, PharmaForm. Proceeds from this
disposition, will be dedicated to the reduction of the Company's
outstanding liabilities. Remaining funds will be utilized in the
further advancement of Fentanyl TAIFUN(R).
- On February 4, 2010 Akela announced the outcomes of two legal cases
involving former employees. In Michael Crowley v. Formulation
Technologies, LLC d/b/a PharmaForm, the arbitrator found in favour of
Mr. Crowley. As a result, Mr. Crowley has been awarded $325 for payment
under Mr. Crowley's employment agreement, commissions and vacation
accruals earned over his employment period, partial payment of Mr.
Crowley's legal fees and Mr. Crowley's out-of-pocket expenses.
- On February 4, 2010 Akela also announced in the matter of Stephen
Lermer v. Akela Pharma Inc. and Formulation Technologies, LLC d/b/a
PharmaForm, a jury sided with Mr. Lermer and awarded him $189 in
severance pay and approximately $47 in vacation pay earned during the
period which he was employed by the company. The judgment was solely
against Akela Pharma. On May 11, 2010, Akela announced the The District
Court of Travis County, Texas issued an Order Denying Plaintiff's
Motion for Judgment and issued a final judgment in the legal case
involving former employee Stephen Lermer. The May 11, 2010 ruling
reduced the judgment and previous award by $189 disallowing the claim
of severance to Mr. Lermer.
- On February 11, 2010, Akela achieved a near term development milestone
in the pharmaceutical development of the Fentanyl TAIFUN(R) inhaler
(the "Product"). The milestone achievement was related to Akela's
Fentanyl TAIFUN(R) license and co-development agreement with Teikoku
Seiyaku Co. Ltd which was amended in June 2009 in order to advance
certain milestone payments to support the continued development of the
Product.
- On April, 16, 2010 Akela announced that PharmaForm reached agreement
with HEP Davis Spring, L.P. to terminate its lease for a planned new
laboratory facility located at 9825 Spectrum Drive, Austin, Texas,
eliminating $14,481 in future lease payment obligations to the Company.
As part of the agreement, Akela released $937 of funds from an
associated cash secured letter-of-credit. Akela also undertook to issue
1,250,000 common shares and assumed an obligation to pay HEP Davis
Spring, L.P. in monthly instalments of $10 through March 2020.
Total consolidated revenues for the three months ended December 31, 2009 were $3.0 million, including $2.4 million of contract services, as compared to $3.5 million, including $2.9 million of contract services, for the same period during the previous year. For the year ended December 31, 2009, total consolidated revenues were $13.9 million, including $10.5 million of contract services, as compared to $14.8 million, including $12.3 million of contract services, for 2008. During 2009 revenues were adversely impacted by the continued weakness of the global economy and limited funding of core research and development projects for corporations and clients within the pharmaceutical and biotech industries.
Consolidated net loss for the three and twelve months ended December 31, 2009 was $14.1 million, ($0.46) per share, and $21 million, ($0.77) per share, versus $13.6 million, ($0.63) per share, and $26.0 million, ($1.35) per share, for the same respective periods in 2008.
Operating results for the three and twelve months ended December 31, 2009 include $10.5 million in one time charges resulting from an impairment of goodwill and intangibles and the termination of our lease with HEP Davis Spring L.P.. The Company's 2009 cost reduction plan resulted in additional charges of charges of $0.3 million and $1.1 million for the three and twelve months ended December 31, 2009, respectively. The twelve months ended December 31, 2009 was also affected by a $1.5 million provision for repayment of government grants associated with the Company's Finnish subsidiary. These charges were partially offset by a $1.7 million gain in March 2009 resulting from the settlement of Akela's lawsuit against LRI relating to a failed Fentanyl TAIFUN(R) toxicology study. The three and twelve months ended December 31, 2008 includes $9.6 million in charges associated with the impairment of intangibles and other assets associated with Akela's product programs. Excluding these one time gains and losses, Akela's consolidated net loss for the three and twelve months ended December 31, 2009 was $2.1 million, ($0.07) per share, and $8.4 million, ($0.31) per share, versus $4.9 million, ($0.23) per share, and $17.5 million, ($0.91) per share, for the same respective periods in 2008.
The Company had a cash balance of $0.1 million as of December 31, 2009 compared with $2.3 million as of December 31, 2008.
FOURTH DEFAULT STATUS REPORT AND MANAGEMENT CEASE TRADE ORDER
Further to the filing of its annual financial statements for the year ended December 31, 2009, Akela wishes to provide its fourth bi-weekly Default Status Report under National Policy 12-203 - Cease Trade Orders for Continuous Disclosure Defaults ("NP 12-203") as Akela remains in default of filing its interim financial statements for the 3-month period ended March 31, 2010.
As a result, the management cease trade order prohibiting certain directors, officers and insiders of Akela from trading in securities of Akela will remain outstanding as long as the interim financial statements, CEO and CFO certifications and related MD&A and AIF are not filed (the "Management Cease Trade Order").
Akela is diligently working on finalizing its interim financial statements and anticipates that the filing of same will occur on or around June 15, 2010.
Akela reports that, since announcing the Management Cease Order of April 6, 2010 and except for the filing of its annual financial statement described above, there have not been any material changes to the information contained therein; nor any failure by Akela to fulfill its intentions as stated therein with respect to satisfying the provisions of the alternative information guidelines, and there are no additional defaults or anticipated defaults subsequent to such announcement. Further, there have been no additional material changes respecting Akela and its affairs. Akela intends to file, if required, its next Default Status Report by June 15, 2010.
About Akela Pharma Inc.
Akela Pharma is a drug development company with its lead product, Fentanyl TAIFUN(R), being developed for the treatment of breakthrough cancer pain. Fentanyl TAIFUN is a fast-acting fentanyl formulation delivered using the company's TAIFUN multi-dose dry powder inhaler platform.
About PharmaForm
PharmaForm, Akela's wholly owned subsidiary, is a leading specialty contract service provider in the area of pharmaceutical dosage form development and manufacturing, specializing in controlled release and bioavailability enhancement technologies, such as hot melt extrusion, liquid filled capsules, and spray drying. Through its diverse offerings, PharmaForm solutions help pharmaceutical and biotechnology clients reach their development targets, reduce development costs and accelerate time-to-market.
Akela's common shares trade on The Toronto Stock Exchange ("TSX") under the symbol "AKL" with 30.9 million shares outstanding.
This press release contains statements which may constitute forward-looking information under applicable Canadian securities legislation or forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1955. Such forward-looking statements or information may include financial and other projections as well as statements regarding the company's future plans, objectives, performance, revenues, growth, profits, operating expenses or the company's underlying assumptions. The words "may", "would", "could", "will", "likely", "expect", anticipate", "intend", "plan", "forecast", "project", "estimate" and "believe" or other similar words and phrases may identify forward-looking statements or information. Persons reading this press release are cautioned that such statements or information are only expectations, and that the company's actual future results or performance may be materially different.
Forward-looking statements or information in this press release include, but are not limited to, statements or information concerning our ongoing drug development programs and collaborations as well as the possible receipt of future payments upon achievement of milestones.
Such forward-looking statements or information involve known and unknown risks, uncertainties and other factors that may cause our actual results, events or developments to be materially different from results, events or developments expressed or implied by such forward-looking statements or information. Such factors include, among others, the possibility that risks associated with requirements for approvals by government agencies such as the FDA before products can be tested in clinical trials; the possibility that such government agency approvals will not be obtained in a timely manner or at all or will be conditioned in a manner that would impair our ability to advance development; risks associated with the requirement that a drug candidate be found safe and effective after extensive clinical trials; our dependence on suppliers, collaborative partners and other third parties and the prospects and timing for negotiating supply agreements, corporate collaborations or licensing arrangements; our ability to attract and retain key personnel; and other factors as described in detail in our filings with the Canadian securities regulatory authorities at http:www.sedar.com.
Assumptions underlying our expectations regarding forward-looking statements or information contained in this press release include, among others, that future clinical trial results will be favorable; that our drug candidate will treat target diseases as intended; that we will raise enough capital, on reasonable terms and in a timely manner; that we will retain our key personnel; that we will obtain the necessary regulatory approvals.
In the event that any of these assumptions prove to be incorrect, or in the event that we are impacted by any of the risks identified above, we may not be able to continue in our business as planned.
For a complete discussion of the assumptions, risks and uncertainties related to our business, you are encouraged to review our filings with Canadian securities regulatory authorities, filed on SEDAR at http://www.sedar.com.
All forward-looking statements and information made herein are based on our current expectations as of the date hereof and we disclaim any intention or obligation to revise or update such forward-looking statements and information to reflect subsequent events or circumstances, except as required by law.
AKELA PHARMA INC.
Consolidated Balance Sheets
As at December 31st
(in thousands of US dollars)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
2009 2008
-------------------------------------------------------------------------
Assets
Current assets:
Cash $ 107 $ 2,345
Restricted cash 938 600
Accounts receivable 1,679 6,070
Prepaid expenses and other current assets 417 346
-----------------------------------------------------------------------
3,141 9,361
Restricted cash and deposits - 1,258
Property and equipment 4,217 5,229
Intangible assets - 4,755
Goodwill - 6,457
Other assets 598 1,397
-------------------------------------------------------------------------
$ 7,956 $ 28,457
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Liabilities and Shareholders' Deficiency
Current liabilities:
Accounts payable and accrued liabilities $ 7,801 $ 7,307
Deferred revenue 2,795 4,515
Current portion of long-term debt 1,015 1,311
-----------------------------------------------------------------------
11,611 13,133
Deferred revenue 14,630 16,266
Long-term debt 6,615 4,894
Income taxes 799 610
Shareholders' deficiency:
Common shares (unlimited authorized, 30,890,338
and 21,655,577 common shares issued and
outstanding with no par value at December 31,
2009 and December 31, 2008, respectively) 67,544 66,346
Warrants 2,954 2,814
Additional paid-in capital 8,511 8,105
Accumulated other comprehensive income 3,110 3,110
Deficit (107,818) (86,821)
-----------------------------------------------------------------------
Total shareholders' deficiency (25,699) (6,446)
Commitments, contingencies and guarantees
-------------------------------------------------------------------------
$ 7,956 $ 28,457
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes to audited consolidated financial statements.
AKELA PHARMA INC.
Consolidated Statements of Operations and Comprehensive Loss
Periods ended December 31st
(in thousands of US
dollars, except share
and per share data)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three months ended Year ended
December 31, December 31,
-----------------------------------------------
2009 2008 2009 2008
-------------------------------------------------------------------------
Revenues $ 3,048 $ 3,527 $ 13,893 $ 14,774
Expenses:
Direct costs 1,773 2,132 8,158 7,730
Selling, general and
administrative 1,667 1,618 6,183 7,103
Research and development 1,019 2,934 3,711 11,563
Stock-based compensation 37 93 238 477
Depreciation of property
and equipment 342 461 1,464 1,866
Amortization of
intangible assets 424 715 1,693 2,875
Interest on long-term
debt 81 46 268 158
Unrealized loss on
securities held for
trading 92 - 23 -
Foreign exchange loss (188) 473 600 471
-----------------------------------------------------------------------
5,247 8,472 22,338 32,243
Loss before under noted
items (2,199) (4,945) (8,445) (17,469)
Other (expenses) income:
Settlement with LRI - - 1,664 -
Impairment of goodwill,
intangible and other
assets (9,601) (9,635) (9,601) (9,635)
Lease termination (1,936) - (1,936) -
Provision for repayment
of government grants - - (1,544) -
Restructuring (263) - (1,071) -
-----------------------------------------------------------------------
Loss before income taxes (13,999) (14,580) (20,933) (27,104)
(Provision for) recovery
of income taxes:
Current (64) - (64) -
Future - 976 - 1,115
-----------------------------------------------------------------------
(64) 976 (64) 1,115
-------------------------------------------------------------------------
Net loss and
comprehensive loss $ (14,063) $ (13,604) $ (20,997) $ (25,989)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Basic and diluted net
loss per share $ (0.46) $ (0.63) $ (0.77) $ (1.35)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Basic and diluted
weighted average number
of shares outstanding 30,890,338 21,615,577 27,283,487 19,276,943
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes to audited consolidated financial statements.
AKELA PHARMA INC.
Consolidated Statements of Cash Flows
Periods ended December 31st
(in thousands of US dollars)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three months ended Year ended
December 31, December 31,
-----------------------------------------------
2009 2008 2009 2008
-------------------------------------------------------------------------
Cash flows from operating
activities:
Net loss $ (14,063) $ (13,604) $ (20,997) $ (25,989)
Adjustments for:
Depreciation of
property and
equipment 342 461 1,464 1,866
Amortization of
intangible assets 424 715 1,693 2,875
Impairment of
intangible and other
assets 9,601 9,635 9,601 9,635
Lease termination 1,936 - 1,936 -
Provision for
repayment of
government grants - - 1,544 -
Restructuring 153 - 471 -
Settlement with LRI - - (101) -
Stock-based
compensation 37 93 238 477
Unrealized foreign
exchange loss (29) (48) 649 54
Unrealized loss on
securities held for
trading 92 - 23 -
Income taxes 64 (976) 64 (1,115)
Net changes in working
capital 607 2,825 1,653 5,375
-------------------------------------------------------------------------
(836) (899) (1,762) (6,822)
Cash flows from financing
activities:
Repayments of long-term
debt (897) (163) (1,517) (626)
Proceeds from issuance
of units - - - 10,200
Unit issue costs - 31 - (1,182)
-------------------------------------------------------------------------
(897) (132) (1,517) 8,392
Cash flows from investing
activities:
Acquisition of property
and equipment 88 (1,289) (1,036) (4,315)
Acquisition of Nventa 25 - 1,157 -
Restricted cash 920 - 920 (1,258)
Addition to intangible
assets - - - (340)
-------------------------------------------------------------------------
1,033 (1,289) 1,041 (5,913)
Net decrease in cash (700) (2,320) (2,238) (4,343)
Cash, beginning of year 807 4,665 2,345 6,688
-------------------------------------------------------------------------
Cash, end of year $ 107 $ 2,345 $ 107 $ 2,345
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes to audited consolidated financial statements.
%SEDAR: 00003466E
For further information: Gregory M. McKee, President and Chief Executive Officer, Akela Pharma Inc., (512) 834-0449
Share this article