Helix BioPharma Corp. Announces Fiscal Q2 2010 Results
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<p>AURORA, Ontario, <span class="xn-chron">March 10</span> /CNW/ -- Helix BioPharma Corp. (TSX, FSE: HBP / Pink Sheets: HXBPF) today announced financial results for the second quarter ended <span class="xn-chron">January 31, 2010</span>.</p>
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HIGHLIGHTS
-- Helix's GMP clinical batch of L-DOS47 has been manufactured and
vialed,
and is currently undergoing quality control testing.
-- Announced that enrollment in the ongoing Phase II clinical trial of
Topical Interferon Alpha-2b in patients with anogenital warts ("AGW")
in Sweden and Germany was completed, with the required 120th patient
randomized to enter the trial.
-- Announced positive preliminary primary endpoint findings from the
ongoing Phase II pharmacokinetic clinical study of Topical Interferon
Alpha-2b in patients with low-grade cervical lesions.
RESULTS FROM OPERATIONS
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<p>Three and six month periods ended <span class="xn-chron">January 31, 2010</span> compared to the same period in the previous year</p>
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Loss for the period
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<p>The Company recorded a loss of <span class="xn-money">$3,675,000</span> and <span class="xn-money">$7,148,000</span>, respectively for the three and six month periods ended <span class="xn-chron">January 31, 2010</span> for a loss per common share of <span class="xn-money">$0.06</span> and <span class="xn-money">$0.12</span>, respectively. In the comparative three and six month periods ended <span class="xn-chron">January 31, 2009</span>, the Company recorded a loss of <span class="xn-money">$4,252,000</span> and <span class="xn-money">$6,573,000</span> respectively, for a loss per common share of <span class="xn-money">$0.08</span> and <span class="xn-money">$0.13</span>, respectively.</p>
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Revenues
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<p>Revenues totaled <span class="xn-money">$1,121,000</span> and <span class="xn-money">$2,141,000</span> respectively for the three and six month periods ended <span class="xn-chron">January 31, 2010</span> and represent an increase of <span class="xn-money">$258,000</span> (29.9%) and <span class="xn-money">$159,000</span> (8.0%) when compared to the three and six month periods ended <span class="xn-chron">January 31, 2009</span>.</p>
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<p>Product revenues totaled <span class="xn-money">$1,012,000</span> and <span class="xn-money">$1,915,000</span> respectively for the three and six month periods ended <span class="xn-chron">January 31, 2010</span> and represent an increase of <span class="xn-money">$272,000</span> (36.8%) and <span class="xn-money">$254,000</span> (15.3%) when compared to the three and six month periods ended <span class="xn-chron">January 31, 2009</span>. Product revenue was higher in every product category for both the three and six month periods ended <span class="xn-chron">January 31, 2010</span> with the majority of the product revenue increase represented by the combined sales of Monovisc(TM) and Orthovisc®. The Company commenced distribution of Monovisc(TM) in <span class="xn-location">Canada</span> during the fiscal first quarter of 2010. While both products are used in the treatment of osteoarthritis, patients follow a three-injection regimen when using Orthovisc® and only a single injection regimen when being treated with Monovisc(TM).</p>
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<p>License fees and royalties totaled <span class="xn-money">$109,000</span> and <span class="xn-money">$226,000</span> respectively for the three and six month periods ended <span class="xn-chron">January 31, 2010</span> and represent a decrease of <span class="xn-money">$14,000</span> (11.4%) and <span class="xn-money">$95,000</span> (29.6%) when compared to the three and six month periods ended <span class="xn-chron">January 31, 2009</span>. The decrease in license fees and royalty revenues reflects a US$75,000 termination payment from Lumera Corporation ("Lumera") in the first quarter of fiscal 2009. Excluding the Lumera termination payment, license fees and royalty revenues are comprised solely of royalties related to sales of Klean-Prep® outside of <span class="xn-location">Canada</span>.</p>
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Cost of sales and margins
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<p>Cost of sales totaled <span class="xn-money">$461,000</span> and <span class="xn-money">$879,000</span> respectively for the three and six month periods ended <span class="xn-chron">January 31, 2010</span> (three and six month periods ended <span class="xn-chron">January 31, 2009</span> were <span class="xn-money">$338,000</span> and <span class="xn-money">$785,000</span> respectively). Margins, on a percentage basis, for the three and six month periods ended <span class="xn-chron">January 31, 2010</span> were 54.4% and 54.1% (three and six month periods ended <span class="xn-chron">January 31, 2009</span> were 54.3% and 52.7% respectively). The increase in margins reflects higher margins on the sales of Monovisc(TM) (and to a lesser extent, Orthovisc®).</p>
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Research & development
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<p>Research and development costs for the three and six month periods ended <span class="xn-chron">January 31, 2010</span> totaled <span class="xn-money">$2,335,000</span> and <span class="xn-money">$5,260,000</span> respectively (three and six month periods ended <span class="xn-chron">January 31, 2009</span> were <span class="xn-money">$2,734,000</span> and <span class="xn-money">$4,502,000</span> respectively). Lower research and development costs for the three month period ended <span class="xn-chron">January 31, 2010</span> mainly reflect lower costs associated with the stage of development of the Company's topical interferon programs. The clinical portion of Helix's current ano-genital warts (AGW) Phase II trial in <span class="xn-location">Europe</span> is in the late stages, the Company having announced on <span class="xn-chron">November 5, 2009</span> that it had completed enrollment of the 120 patients sought for the trial. With respect to the low-grade cervical lesion therapeutic indication (previously referred to as "cervical dysplasia" or "LSIL"), on <span class="xn-chron">February 12, 2010</span>, the Company announced preliminary findings for the first ten patients that have completed the pharmacokinetic primary endpoint portion of the ongoing Phase II study, and its intention to conclude patient recruitment once a further two patients have done so. Research and development costs for the Company's L-DOS47 program were flat for the three month period ended <span class="xn-chron">January 31, 2010</span> when compared to the prior year. The increase in research and development expenditures for the six month period ended <span class="xn-chron">January 31, 2010</span> is mainly attributable to the L-DOS47 program, which includes ongoing laboratory studies, preparations for definitive rodent and primate toxicology studies and the ongoing L-DOS47 manufacturing campaign in anticipation of furnishing product for future clinical testing.</p>
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Operating, general & administration
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<p>Operating, general and administration expenses for the three and six month periods ended <span class="xn-chron">January 31, 2010</span> totaled <span class="xn-money">$770,000</span> and <span class="xn-money">$1,446,000</span> respectively (three and six month periods ended <span class="xn-chron">January 31, 2009</span> were <span class="xn-money">$1,191,000</span> and <span class="xn-money">$2,124,000</span> respectively). The reduction in operating, general and administration expenditures is the result of higher costs in fiscal 2009 associated with the filing of a Form 20-F registration statement with the SEC which became effective during the third quarter of fiscal 2009, the implementation of a new financial reporting system which was completed early in the second quarter of fiscal 2009, lower investor and media relations expenditures and associated marketing materials and consulting services which have since been terminated.</p>
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Sales and marketing
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<p>Sales and marketing expenses for the three and six month periods ended <span class="xn-chron">January 31, 2010</span> totaled <span class="xn-money">$298,000</span> and <span class="xn-money">$559,000</span> respectively (three and six month periods ended <span class="xn-chron">January 31, 2009</span> were <span class="xn-money">$249,000</span> and <span class="xn-money">$499,000</span> respectively). The increase in sales and marketing expenditures is the result of increased marketing and promotion costs associated with the product launch of Monovisc(TM).</p>
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Amortization of intangible and capital assets
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<p>Amortization of intangible assets for the three and six month periods ended <span class="xn-chron">January 31, 2010</span> totaled $nil and $nil respectively (three and six month periods ended <span class="xn-chron">January 31, 2009</span> were <span class="xn-money">$3,000</span> and <span class="xn-money">$6,000</span> respectively). Management determined the carrying value of intangible assets was impaired and wrote down the balance at <span class="xn-chron">July 31, 2009</span>. Amortization of capital assets for the three and six month periods ended <span class="xn-chron">January 31, 2010</span> totaled <span class="xn-money">$107,000</span> and <span class="xn-money">$205,000</span> respectively (three and six month periods ended <span class="xn-chron">January 31, 2009</span> were <span class="xn-money">$63,000</span> and <span class="xn-money">$127,000</span> respectively).</p>
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Stock-based compensation
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<p>Stock-based compensation expense for the three and six month periods ended <span class="xn-chron">January 31, 2010</span> totalled <span class="xn-money">$605,000</span> and <span class="xn-money">$765,000</span> respectively (three and six month periods ended <span class="xn-chron">January 31, 2009</span> were <span class="xn-money">$631,000</span> and <span class="xn-money">$631,000</span> respectively). The stock-based compensation expense in fiscal 2010 relates to the ongoing amortization of compensation costs of stock options granted on <span class="xn-chron">December 17, 2008</span>, and <span class="xn-chron">December 14, 2009</span>, respectively over their vesting period.</p>
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Interest income
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<p>Interest income for the three and six month periods ended <span class="xn-chron">January 31, 2010</span> totaled <span class="xn-money">$10,000</span> and <span class="xn-money">$24,000</span> respectively (three and six month periods ended <span class="xn-chron">January 31, 2009</span> were <span class="xn-money">$100,000</span> and <span class="xn-money">$305,000</span> respectively). The decrease in interest income in fiscal 2010 reflects lower interest rates earned on deposits and lower cash balances.</p>
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Foreign exchange gain/loss
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<p>Foreign exchange losses for the three and six month periods ended <span class="xn-chron">January 31, 2010</span> totaled <span class="xn-money">$230,000</span> and <span class="xn-money">$188,000</span> respectively (three and six month periods ended <span class="xn-chron">January 31, 2009</span> were a gain of <span class="xn-money">$18,000</span> and a loss of <span class="xn-money">$132,000</span> respectively). Foreign exchange gains and losses are mainly the result of the foreign currency translation of the Company's integrated foreign operation in <span class="xn-location">Ireland</span> as well as a value added tax receivable, both denominated in Euro dollars.</p>
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Income taxes
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<p>Income tax expense for the three and six month periods ended <span class="xn-chron">January 31, 2010</span> totaled $nil and <span class="xn-money">$11,000</span> respectively (three and six month periods ended <span class="xn-chron">January 31, 2009</span> were <span class="xn-money">$24,000</span> and <span class="xn-money">$54,000</span> respectively). All income taxes are attributable to the Company's operations in <span class="xn-location">Ireland</span>.</p>
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CASH FLOW
Operating activities
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<p>Cash used in operating activities for the three and six month periods ended <span class="xn-chron">January 31, 2010</span> totaled <span class="xn-money">$3,098,000</span> and <span class="xn-money">$5,446,000</span> respectively, including a net loss of <span class="xn-money">$3,675,000</span> and <span class="xn-money">$7,148,000</span> respectively. Cash used in operating activities for the three and six month periods ended <span class="xn-chron">January 31, 2009</span> totaled <span class="xn-money">$3,256,000</span> and <span class="xn-money">$4,874,000</span> respectively, including a net loss of <span class="xn-money">$4,252,000</span> and <span class="xn-money">$6,573,000</span> respectively.</p>
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<p>Significant adjustments for the three and six month periods ended <span class="xn-chron">January 31, 2010</span> include amortization of capital assets of <span class="xn-money">$107,000</span> and <span class="xn-money">$205,000</span> respectively (2009 - <span class="xn-money">$63,000</span> and <span class="xn-money">$127,000</span>), amortization of intangible assets of $nil and $nil respectively (2009 - <span class="xn-money">$3,000</span> and <span class="xn-money">$6,000</span>), deferred lease credits of <span class="xn-money">$5,000</span> and <span class="xn-money">$13,000</span> (2009 - $nil and $nil), stock-based compensation related to earlier stock option grants of <span class="xn-money">$605,000</span> and <span class="xn-money">$765,000</span> respectively (2009 - <span class="xn-money">$631,000</span> and <span class="xn-money">$631,000</span>), foreign exchange losses of <span class="xn-money">$230,000</span> and <span class="xn-money">$188,000</span> respectively (2009 - <span class="xn-money">$18,000</span> gain and <span class="xn-money">$132,000</span> loss) and changes in non-cash working capital balances related to operations of $(360,000) and <span class="xn-money">$557,000</span> (2009 - <span class="xn-money">$317,000</span> and <span class="xn-money">$803,000</span>).</p>
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Financing activities
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<p>Financing activities for the three and six month periods ended <span class="xn-chron">January 31, 2010</span> totaled $nil and <span class="xn-money">$11,597,000</span> respectively (three and six month periods ended <span class="xn-chron">January 31, 2009</span> were $nil and <span class="xn-money">$9,659,000</span> respectively). All financing activities reflect the net proceeds of two separate private placements.</p>
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Investing activities
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<p>Use of cash in investing activities for the three and six month periods ended <span class="xn-chron">January 31, 2010</span> totaled <span class="xn-money">$239,000</span> and <span class="xn-money">$484,000</span> respectively (three and six month periods ended <span class="xn-chron">January 31, 2009</span> were <span class="xn-money">$37,000</span> and <span class="xn-money">$74,000</span> respectively) and represents capital acquisitions in both fiscal periods.</p>
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Liquidity and Capital Resources
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<p>Since inception, the Company has financed its operations from public and private sales of equity, the exercise of warrants and stock options, and, to a lesser extent, interest income from funds available for investment, government grants, investment tax credits, and revenues from distribution, licensing and contract services. Since the Company does not have net earnings from its operations, the Company's long-term liquidity depends on its ability to access the capital markets, which depends substantially on the success of the Company's ongoing research and development programs.</p>
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<p>At <span class="xn-chron">January 31, 2010</span>, the Company had cash and cash equivalents totaling <span class="xn-money">$19,973,000</span> (<span class="xn-chron">July 31, 2009</span> - <span class="xn-money">$14,494,000</span>). The increase in cash and cash equivalents in fiscal 2010 is the result of a private placement completed on <span class="xn-chron">September 8, 2009</span> where the Company issued 6,625,000 units at <span class="xn-money">$2.05</span> per unit, for gross proceeds of <span class="xn-money">$13,581,250</span>. Each unit consists of one common share and one common share purchase warrant with each whole common share purchase warrant entitling the holder to purchase, subject to adjustment, one common share at a price of <span class="xn-money">$2.87</span> until <span class="xn-chron">5pm</span> (<span class="xn-location">Toronto</span> time) on <span class="xn-chron">September 7, 2012</span>. The total number of common shares issued as at <span class="xn-chron">January 31, 2010</span> was 59,800,335 (<span class="xn-chron">July 31, 2009</span> - 53,175,335).</p>
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<p>At <span class="xn-chron">January 31, 2010</span>, the Company's working capital was <span class="xn-money">$20,218,000</span> (<span class="xn-chron">July 31, 2009</span> - <span class="xn-money">$15,296,000</span>).</p>
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<p>Based on our planned expenditures and assuming no material unanticipated expenses, our forecasts indicate that our cash reserves and expected cash from operations will be sufficient to meet our anticipated cash needs for working capital and capital expenditures to the end of fiscal 2011. These planned expenditures do not include those necessary to conduct the proposed U.S. Phase I and Polish Phase I/II clinical trials for L-DOS47 or the proposed U.S. Phase II/III and European Phase III clinical trials for Topical Interferon Alpha-2b (low-grade cervical lesions). As previously stated, these trials will require substantial funding beyond the Company's current resources.</p>
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<p>The Company will continue to seek additional funding to carry out its business plan and to minimize risks to its operations. Equity financing has historically been Helix's primary source of funding, however, the market for equity financings for companies such as Helix is challenging, and the global economic downturn and credit crisis have added further challenges. There can be no assurance that additional funding by way of equity financing will be available. Any additional equity financing, if secured, may result in significant dilution to the existing shareholders at the time of such financing. The Company may also seek additional funding from other sources, including technology licensing, co-development collaborations, and other strategic alliances, which, if obtained, may reduce the Company's interest in its projects or products. There can be no assurance, however, that any alternative sources of funding will be available. The failure of the Company to obtain additional funding on a timely basis may result in the Company reducing, delaying or cancelling one or more of its planned research, development and marketing programs and reducing related personnel, any of which could impair the current and future value of the business. It may also have a material adverse effect on the Company's ability to continue as a going concern.</p>
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<p>The Company's unaudited interim consolidated statements of operations and cash flows for the three and six month periods ended <span class="xn-chron">January 31, 2010</span> and 2009 are summarized below:</p>
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Consolidated Statements of Operations
for the three and six month periods ended January 31, 2010 and 2009
($ thousands, except for per share data)
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<p> </p>
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Three months Six months
ended January 31 ended January 31
2010 2009 2010 2009
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Revenue:
Product revenue 1,012 740 1,915 1,661
License fees & royalties 109 123 226 321
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1,121 863 2,141 1,982
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<p> </p>
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Expenses:
Cost of sales 461 338 879 785
Research and development 2,335 2,734 5,260 4,502
Operating, general and admin 770 1,191 1,446 2,124
Sales and marketing 298 249 559 499
Amortization of intangible assets - 3 - 6
Amortization of capital assets 107 63 205 127
Stock-based compensation 605 631 765 631
Interest income, net (10) (100) (24) (305)
Foreign exchange loss / (gain) 230 (18) 188 132
--- --- --- ---
4,796 5,091 9,278 8,501
Loss before income taxes (3,675) (4,228) (7,137) (6,519)
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Income taxes - 24 11 54
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<p> </p>
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Loss for the period (3,675) (4,252) (7,148) (6,573)
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<p> </p>
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Loss per share:
Basic (0.06) (0.08) (0.12) (0.13)
Diluted (0.06) (0.08) (0.12) (0.13)
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Consolidated Statements of Cash Flows
for the three and six month periods ended January 31, 2010 and 2009
($ thousands)
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Three months Six months
ended January 31 ended January 31
2010 2009 2010 2009
---- ---- ---- ----
Cash provided by (used in):
Loss for the period (3,675) (4,252) (7,148) (6,573)
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<p> </p>
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Items not involving cash:
Amortization of capital assets 107 63 205 127
Amortization of intangibles - 3 - 6
Deferred lease credit (5) - (13) -
Stock-based compensation 605 631 765 631
Foreign exchange loss / (gain) 230 (18) 188 132
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(2,738) (3,573) (6,003) (5,677)
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<p> </p>
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Change in non-cash working capital (360) 317 557 803
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Operating activities (3,098) (3,256) (5,446) (4,874)
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<p> </p>
<p>Financing activities - - 11,597 9,659</p>
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Investing activities (239) (37) (484) (74)
Effect of exchange rate changes
on cash and cash equivalents (230) 18 (188) (132)
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<p> </p>
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Increase in cash (3,567) (3,275) 5,479 4,579
Cash:
Beginning of the period 23,540 26,911 14,494 19,057
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End of the period 19,973 23,636 19,973 23,636
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<p>The Company's unaudited interim consolidated balance sheet as at <span class="xn-chron">January 31, 2010</span> and the audited consolidated balance sheet as at <span class="xn-chron">July 31, 2009</span> are summarized below:</p>
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Consolidated Balance Sheets as at
($ thousands)
31-Jan 31-Jul 31-Jan 31-Jul
2010 2009 2010 2009
---- ---- ---- ----
Current assets: Current liabilities:
Cash and cash
equivalents 19,973 14,494 Accounts payable 1,341 1,299
Accounts
receivable 973 1,053 Accrued liabilities 394 834
Inventory 881 858 Deferred lease credit 25 25
Prepaid and other 151 1,049 -- --
--- ----- 1,760 2,158
21,978 17,454
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<p> </p>
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Non current
liabilities 85 98
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<p> </p>
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Non current Shareholders'
assets 2,140 1,865 equity 22,273 17,063
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<p> </p>
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24,118 19,319 24,118 19,319
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<p>The Company's unaudited interim consolidated financial statements and management's discussion and analysis of financial condition and results of operations are being filed today with Canadian securities regulatory authorities and will be available at SEDAR at <a href="http://www.sedar.com">www.sedar.com</a>.</p>
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About Helix BioPharma Corp.
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<p>Helix BioPharma Corp. is a biopharmaceutical company specializing in the field of cancer therapy. The Company is actively developing innovative products for the prevention and treatment of cancer based on its proprietary technologies. Helix's product development initiatives include its novel L-DOS47 new drug candidate and its Topical Interferon Alpha- 2b. Helix is listed on the TSX and FSE under the symbol "HBP" and the OTCQX International Market under the symbol "HXBPF".</p>
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For further information contact:
Investor Relations Media Relations
Robert Flamm, Ph.D. Ian Stone
Russo Partners LLC Russo Partners LLC
Tel: (212) 845-4226 Tel: (619) 814-3510
Email: Fax: (619) 955-5318
[email protected] Email:
www.russopartnersllc.com [email protected]
Forward-Looking Statements and Risks and Uncertainties
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<p>This News Release contains forward-looking statements and forward-looking information (collectively, "forward-looking statements"), within the meaning of applicable securities laws, regarding the Company's development of its L-DOS47 and Topical Interferon Alpha-2b new drug candidates, including proposed clinical trials; the Company's intention to conclude the pharmacokinetic study; sufficiency of the Company's cash reserves and expected cash from operations; and other information in future periods. Forward-looking statements, including financial outlooks, are intended to provide information about management's current plans and expectations regarding future operations, including but not limited to, future financing requirements, and may not be appropriate for other purposes. Certain material factors or assumptions which have been applied in making forward-looking statements, include, but are not limited to, assumptions regarding the filing of investigative new drug applications / clinical trial applications with the FDA and European regulatory authorities; future revenue and costs; the safety and efficacy of the Company's drug candidates; and the receipt of required regulatory approvals and necessary financing. Important risk factors that could cause actual results to differ materially from these forward-looking statements include, without limitation, the Company's continuing need for additional capital, which may not be available in a timely manner or at all; uncertainty whether L-DOS47 or Topical Interferon Alpha-2b will be successfully developed and commercialized; the need for further regulatory approvals, which are not assured; the Company's dependence on performance by its third party providers of intellectual property, services and supplies, including supplies of drug product; uncertainty whether any of the Company's planned or future clinical trials will be approved, conducted or achieve expected results; product liability and insurance risks; uncertainties related to research and development, including manufacturing risks; intellectual property risks; uncertainties regarding future expenses and revenue; uncertainties related to economic conditions; and the risk of changes in business strategy or development plans. Investors should consult the Company's quarterly and annual filings, including its Form 20-F, with the Canadian and U.S. securities commissions at <a href="http://www.sedar.com">www.sedar.com</a> and at <a href="http://www.sec.gov/edgar.shtml">www.sec.gov/edgar.shtml</a> for additional information on these and other risks and uncertainties which may affect the Company. Investors are cautioned against placing undue reliance on forward-looking statements. The Company does not undertake to update these forward-looking statements, except as required by applicable laws.</p>
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For further information: Investor Relations: Robert Flamm, Ph.D., Russo Partners LLC, +1-212-845-4226, [email protected], www.russopartnersllc.com; or Media Relations: Ian Stone, Russo Partners LLC, +1-619-814-3510, Fax: +1-619-955-5318, [email protected]
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