TORONTO, Jan. 29 /CNW/ - ARIUS Research Inc., (TSX: ARI), a biotechnology company discovering and developing the next wave of antibody therapeutics, today announced its financial and operational results for the fourth quarter and fiscal year, ended November 30, 2007.
"Fiscal 2007 was a critical year in our development, highlighted by the significant advancement we made with the pre-IND programs for our lead drug candidates, our CD44 Cancer Stem Cell Program, our Trop-2 Signal Transduction Program, our CD59 Complement Inhibitor Program and our CD9 Cancer Stem Cell Program. The majority of our programs target cancer stem cells, an area that cancer researchers are particularly excited about as cancer stem cells have been implicated as the key cells responsible for the growth and spread of cancer," said Dr. David Young, President and CEO. "Building on this momentum, fiscal 2008 will be a pivotal year for us as we transition from a pre-clinical to a clinical company with the mission of moving one or more of our lead products into human clinical trials."
Program Updates:
CD44 Cancer Stem Cell Program
- Announced positive findings demonstrating no dose-limiting toxic
effects of ARIUS' lead therapeutic, ARH460-16-2, at doses up to
95 mg/kg in a dose-ranging pilot toxicology study in a non-human
primate model.
- Achieved significant and potent tumor growth inhibitory activity in
in vivo animal models of breast, prostate, liver, and AML cancers.
- Engaged the manufacturer Avid Bioservices to produce ARIUS' lead
anti-CD44 MAb under Current Good Manufacturing Practices ("cGMP") for
human clinical trials. Cell line producing the humanized anti-CD44
antibody was successfully transferred to Avid.
- Presented key data at AACR, ASCO, ASCO's Breast Cancer Symposium,
and AACR-EORTC.
- Met with FDA to discuss plans for the upcoming IND submission.
- Prepared to file a Phase I IND application and begin human clinical
trials for the CD44 Cancer Stem Cell program in 2008.
Trop-2 Signal Transduction Program
- Announced positive findings demonstrating a significant anti-tumor
effect of the lead anti-Trop-2 antibody in animal models of human
pancreatic cancer, inhibiting tumor growth by up to 100 percent.
- Discovered that ARIUS' Trop-2 antibody inhibits a key growth
regulatory pathway in cancer cells.
- Trop-2 therapeutic antibody program was selected for presentation and
press conference at the AACR-NCI-EORTC 2007 International Conference
on Molecular Targets and Cancer Therapeutics. The abstract was one of
only 12 selected from more than 900 abstracts for presentation.
- Engaged the manufacturer Laureate Pharma Inc. for the cGMP
manufacture of humanized AR47A6.4.2 for Phase 1 clinical supply. Cell
line producing the humanized anti-Trop-2 antibody was successfully
transferred to Laureate.
- Preparing to complete the dose ranging toxicology studies in the
first quarter of 2008, followed by a pre-IND meeting with the FDA in
the third quarter of 2008, and the filing of a Phase I IND
application in late 2008.
CD59 Complement Inhibitor Program
- Announced positive findings demonstrating highly potent tumor
regression in animal models of breast cancer at doses as low as
0.2 mg/kg.
- Selected to discuss results of the CD59 therapeutic antibody program
at the AACR-NCI-EORTC 2007 International Conference on Molecular
Targets and Cancer Therapeutics press conference.
- Cell line producing humanized CD59 antibody was generated
successfully; humanized mAb retains binding characteristics and
potent in vivo activity.
- Preparing to perform preclinical toxicology studies in 2008 in
preparation for filing a Phase I IND application.
CD9 Cancer Stem Cell Program
- CD9 is more highly expressed in leukemia stems cells than normal
stem cells.
- Presented positive findings demonstrating the ability of the lead
anti-CD9 antibody to kill cancer stem cells in an in vivo model using
cells from human leukemia patients.
- Demonstrated ability to kill cancer stem cells while potentially
leaving normal cells alone.
CD63 Antibody Program
- Licensed to Genentech, Inc. in March 2006, the CD63 program continues
to advance in preclinical studies in a variety of cancer indications
as part of a program to move the lead antibody towards the clinic.
Takeda Collaboration
- Discovered and delivered novel antibodies to Takeda under the terms
of the research collaboration agreement, ARIUS has successfully met
its obligations to date and has received all scheduled research
payments from Takeda.
Additional Product Updates
- Currently, ARIUS has antibody programs targeting the MCSP antigen and
37LRP, in addition to several other undisclosed programs.
- Furthered lead optimization for antibodies covering additional novel
targets generated using ARIUS' proprietary FunctionFIRST(TM)
technology.
Other Highlights:
- Granted eight US patents for antibodies and one European patent to
date, and currently have 18 issued or allowed patents covering its
antibody programs and discovery platform and over 185 patents pending
worldwide.
- Promoted Susan Hahn, PhD to the position of Vice President of
Development.
- Appointed Mr. James Rae and Mr. Joseph Zakrzewski to its Board of
Directors and also appointed Mr. Carl Gordon as non-executive Chair
of the Board of Directors.
Financial Results:
All amounts are in Canadian dollars unless otherwise indicated.
For the year ended November 30, 2007, the Company recorded a net loss of $11,057,039 compared to a net loss of $6,444,189 for the year ended November 30, 2006. The increase in net loss was the result of higher research and development, general administrative and foreign exchange expenses and lower revenues, partially offset by lower interest expense and the absence of a loss on extinguishment of debt. For the three-month period ended November 30, 2007, the Company recorded a net loss of $2,952,338 compared to a net loss of $3,623,727 for the three-month period ended November 30, 2006. This decrease in net loss for the three-month period is primarily the result of lower research and development, general and administrative and interest expenses and the 2006 one time loss on extinguishment of debt of $782,143 relating to the repayment of the convertible bridge loan, partially offset by higher foreign exchange losses and income tax expense.
Revenue decreased to $1,144,094 for the year ended November 30, 2007, compared to $2,847,761 for the year ended November 30, 2006. The decrease during the year ended November 30, 2007, was primarily the result of the recognition of licensing fee revenue from Genentech in the fiscal 2006 period and a decrease in financial contributions from the National Research Council's Industrial Research Assistance Program, partially offset by the recognition of product and research contract revenue from the Takeda collaboration and the recognition of unearned revenue for PDL BioPharma Inc. in the fiscal 2007 period. For the three-month period ended November 30, 2007, the Company's revenue increased to $298,120 compared to $179,751 for the three-month period ended November 30, 2006. The increase was primarily the result of the recognition of product and research contract revenue from the Takeda collaboration.
Interest income decreased to $679,457 for the year ended November 30, 2007, compared to $726,308 for the same period in fiscal 2006. For the three-month period ended November 30, 2007, the Company's interest income decreased to $142,329 compared to $329,342 for the same period in fiscal 2006. The decrease in interest income is the result of lower average cash and investment balances.
Research and development costs amounted to $8,606,344 for the year ended November 30, 2007, compared to $5,688,029 for the same period in fiscal 2006. For the three-month period ended November 30, 2007, the Company's research and development costs amounted to $2,144,353 compared to $2,512,366 for the same period in fiscal 2006. For the year, this increase is primarily the result of increased product development activity, including process development and scale-up, as the Company prepares several of its programs for the clinic as well as an increase in staffing levels and stock option remuneration expense. For the three month period, the decrease in research and development costs is primarily the result of decreased stock option remuneration expense and a decrease in legal expense for patents, offset by an increase in staffing levels.
General and administrative expenses increased to $3,257,430 for the year ended November 30, 2007, compared to $2,833,802 for the same period in fiscal 2006. For the three-month period ended November 30, 2007, the Company's general and administrative expenses decreased to $691,910 compared to $806,589 for the same period in fiscal 2006. The increase for the year is the result of increased head count, stock option remuneration expense, and severance costs, partially offset by decreased consulting and legal costs. The decrease for the three month period is the result of a decrease in stock option remuneration expense, professional fees and salaries, partially offset by an increase in consulting and directors fees.
As at November 30, 2007, the Company's cash and cash equivalents, short-term investments and working capital position were $5,635,365, $6,825,190 and $9,088,712 respectively, compared with November 30, 2006 balances of $4,077,065, $16,135,490 and $20,222,321, respectively. The Company believes that it has adequate financial resources for anticipated expenditures until the fourth quarter of fiscal 2008.
Conference Call
ARIUS will host a conference call today (Tuesday January 29, 2008 at 8:00 a.m. ET) to discuss its fourth quarter and year-end fiscal 2007 results. To access the conference call by telephone, dial 416-644-3414 or 1-800-731-6941. Please connect approximately five minutes prior to the beginning of the call to ensure participation. A live audio webcast of the conference call will be available at www.ariusmabs.com. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. The webcast will be archived at the above website for 365 days.
About ARIUS
ARIUS is a biotechnology company discovering and developing the next wave of antibody therapeutics. Established in 1999, ARIUS has built a proprietary technology platform, FunctionFIRST(TM), that rapidly identifies and selects antibodies based on their functional ability to affect disease. This antibody generation engine has enabled ARIUS to assemble a portfolio of more than 500 antibody candidates. In addition to the antibodies it is developing in-house, ARIUS has ongoing partnerships with key biotechnology and drug development companies. ARIUS is listed on the TSX under the symbol "ARI". For further information, visit www.ariusmabs.com
Financial Information to follow:
ARIUS RESEARCH INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
As of November 30, 2007 and 2006
-------------------------------------------------------------------------
2007 2006
$ $
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Assets
Current assets:
Cash and cash equivalents 5,635,365 4,077,065
Short-term investments 6,825,190 16,135,490
Receivables 230,126 716,727
Refundable tax credits 400,000 400,000
Prepaid expenses 387,674 340,695
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13,478,355 21,669,977
Facilities and equipment, net 1,889,921 1,539,536
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15,368,276 23,209,513
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities 2,034,972 1,211,528
Accrued loss on embedded foreign exchange
derivative 296,064 -
Current portion of leasehold inducements 41,484 41,486
Current portion of capital lease obligation 25,710 29,630
Current portion of deferred revenue and
contract advances 1,991,413 165,012
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4,389,643 1,447,656
Leasehold inducements 235,291 276,775
Capital lease obligation 2,224 27,934
Deferred revenue and contract advances 1,758,898 2,263,091
Shareholders' equity:
Share capital:
Common shares 28,644,454 28,644,454
Warrants 9,603,644 9,603,644
Compensation warrants 912,377 912,377
Contributed surplus 2,355,378 1,510,176
Deficit (32,533,633) (21,476,594)
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8,982,220 19,194,057
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15,368,276 23,209,513
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ARIUS RESEARCH INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS, COMPREHENSIVE LOSS AND DEFICIT
-------------------------------------------------------------------------
Period from
incorporation
on August 11,
1999 to
Years ended November 30, November 30,
2007 2006 2007
$ $ $
-------------------------------------------------------------------------
Revenue:
Research contract 746,780 - 746,780
Product 158,942 - 158,942
Licensing fees 165,012 2,678,087 3,284,703
Research grant payments 73,360 169,674 273,663
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1,144,094 2,847,761 4,464,088
Expenses:
Research and development,
net of tax credits of
$200,000 (2005 - $200,000) 8,606,344 5,688,029 25,398,579
General and administrative 3,257,430 2,833,802 10,997,811
Foreign exchange loss (gain) 764,695 (38,626) 710,836
Interest expense 2,874 752,910 904,397
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12,631,343 9,236,115 38,011,623
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Loss before the undernoted (11,487,249) (6,388,354) (33,547,535)
Interest income 679,457 726,308 2,045,292
Loss on extinguishment of debt - (782,143) (782,143)
-------------------------------------------------------------------------
Loss before income taxes (10,807,792) (6,444,189) (32,284,386)
Income taxes:
Current (249,247) - (249,247)
-------------------------------------------------------------------------
Loss and comprehensive loss
for the period (11,057,039) (6,444,189) (32,533,633)
Deficit, beginning of period: (21,476,594) (15,032,405) -
-------------------------------------------------------------------------
Deficit, end of period (32,533,633) (21,476,594) (32,533,633)
-------------------------------------------------------------------------
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Loss per share -
basic and diluted (0.25) (0.18)
-------------------------------------------------------------------------
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Weighted average common shares
outstanding 44,750,964 35,751,822
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ARIUS RESEARCH INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
-------------------------------------------------------------------------
Period from
incorporation
on August 11,
1999 to
Years ended November 30, November 30,
2007 2006 2007
$ $ $
-------------------------------------------------------------------------
Cash provided by (used in):
Operating activities:
Loss for the period (11,057,039) (6,444,189) (32,533,633)
Items not involving cash:
Amortization of:
Facilities and equipment 389,713 215,793 1,278,871
Deferred costs - 55,055 55,055
Leasehold inducements (41,486) (5,852) (56,153)
Loss/(Gain) on disposal
of equipment - 31,518 23,532
Write-off of leasehold
improvements - - 86,349
Leasehold inducement - 71,095 89,148
Non-cash stock-based
compensation 845,202 593,327 1,630,601
Accretion of convertible
debentures - 396,511 429,905
Loss on extinguishment
of debt - 782,143 782,143
Services received for
common shares - - 400,024
Write-off of investment - - 20,000
Interest expense paid in
common shares - 140,032 140,032
Change in non-cash operating
working capital items 2,881,338 1,016,936 5,063,547
-----------------------------------------------------------------------
(6,982,272) (3,147,631) (22,590,579)
Financing activities:
Issue of shares, warrants
and units, net of issuance
costs - 24,853,112 38,281,778
Issuance of convertible
bridge loan, net - 2,126,619 2,196,619
Repayment of convertible
bridge loan, including costs - (2,338,886) (2,408,886)
Exercise of compensation
warrants - - 8,581
Draw of bank line of credit - - 655,000
Repayment of bank line of
credit - (85,000) (655,000)
Bridge loan - - 300,000
Repayment of bridge loan - (300,000) (300,000)
Repayment of capital lease
and equipment financing
obligations (29,630) (91,019) (290,431)
-----------------------------------------------------------------------
(29,630) 24,164,826 37,787,661
Investing activities:
Purchase of short-term
investments (27,015,587) (16,135,490) (43,151,077)
Maturity of short-term
investments 36,325,887 - 36,325,887
Leasehold inducements - 243,780 243,780
Long-term investment - - (20,000)
Acquisition of facilities
and equipment (740,098) (1,201,387) (2,969,293)
Disposal of equipment - - 8,986
-----------------------------------------------------------------------
8,570,202 (17,093,097) (9,561,717)
Increase (decrease) in cash
and cash equivalents 1,558,300 3,924,098 5,635,365
Cash and cash equivalents,
beginning of period 4,077,065 152,967 -
-------------------------------------------------------------------------
Cash and cash equivalents,
end of period 5,635,365 4,077,065 5,635,365
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Forward-Looking Statements
Certain statements in this news release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, which involve known and unknown risks, uncertainties and other factors that may cause our actual results to be materially different from any future results, performance or achievements expressed or implied by such statements. Forward-looking statements in this release include, but are not limited to, ARIUS successfully advancing its new product programs as well as licensing opportunities. These statements are only predictions and actual events or results may differ materially. Factors that could cause such actual events or results expressed or implied by such forward-looking statements to differ materially from any future results expressed or implied by such statements include, but are not limited to: early stage of development; technology and product development; dependence on and management of current and future corporate collaborations; future capital needs; uncertainty of additional funding; no assurance of market acceptance; dependence on proprietary technology and uncertainty of patent protection; intense competition; manufacturing and market uncertainties; and government regulation. These and other factors are described in detail in ARIUS' Annual Report, forthcoming news releases and other filings with Canadian securities regulatory authorities available at www.sedar.com. Forward-looking statements are based on our current expectations and ARIUS is not obligated to update such information to reflect later events or developments.
%SEDAR: 00013708E