TORONTO, July 11 /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 second fiscal quarter of 2008, ended May 31st, 2008.
"Throughout the second quarter, we maintained our focus on moving ARIUS' anti-cancer antibodies towards human clinical trial. Most notably, our lead drug candidates received significant attention from the scientific community this quarter as five abstracts were presented at the AACR Annual Meeting in April, disclosing new findings about our CD44, Trop-2, CD59, and CD9 antibody programs," said Dr. David Young, President and CEO of ARIUS. "Additionally, abstracts on our CD44 program were selected for publication at the ASCO Annual Meeting in May. The inclusion of ARIUS' findings at these important conferences demonstrates the high quality of our research and reinforces the value of our lead drug candidates."
Program Updates:
CD44 Cancer Stem Cell Program
- Presented two CD44-focused posters at AACR the American Association
for Cancer Research (AACR) Annual Meeting held from April 12-16, 2008
in San Diego, California.
- Published two CD44-focused abstracts at the American Association for
Clinical Oncology (ASCO) Annual Meeting held from May 30-June 3, 2008
in Chicago, Illinois.
- Held meeting with FDA to discuss plans for the upcoming IND
submission in the first quarter of 2008.
- ARIUS plans to have clinical trials' materials prepared in the fourth
quarter of 2008 and then a Phase I IND application is expected to be
filed and human clinical trials commenced.
Trop-2 Signal Transduction Program
- Completed two toxicology studies with no dose-limiting toxicity.
- Presented a Trop-2-focused poster at AACR Annual Meeting.
- Engaged Laureate Pharma Inc. for cGMP manufacturing of humanized
antibody for Phase 1 clinical supply. A cell line producing the
humanized anti-Trop-2 antibody was successfully transferred to
Laureate.
- Preparing for a pre-IND meeting with the FDA.
- ARIUS intends to have clinical trials' materials prepared in the
fourth quarter of 2008 and then a Phase I IND application is expected
to be filed and human clinical trials commenced.
CD59 Complement Inhibitor Program
- Presented a CD59-focused poster at AACR Annual Meeting.
- Generated a cell line producing humanized CD59 antibody that
successfully retained binding characteristics and potent in vivo
activity.
- Preparing to perform preclinical toxicology studies planned for 2008
in preparation for a Pre-IND meeting with the FDA and filing a
Phase I IND application.
CD9 Cancer Stem Cell Program
- Presented a CD9-focused poster at AACR Annual Meeting.
- 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 at the American Association of
Cancer Research Special Conference on Cancer Stem Cells in the first
quarter of 2008.
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.
- ARIUS now has 26 issued or allowed patents covering its antibody
programs and discovery platform and over 273 patents pending
worldwide.
Corporate Updates
- Dr. Young was awarded "Most Innovative" award by the Association of
Chinese Canadian Entrepreneurs for demonstration of exceptional
innovation in his field and contribution to the marketplace.
- Secured a sponsored research agreement with the University of Toronto
Health Network and cancer stem cell pioneer, Dr. John E. Dick. In
collaboration with Dr. Dick, ARIUS is assessing the impact of certain
antibodies on cancer stem cells.
- Continued to evaluate its strategic options with global
pharmaceutical and biotechnology companies.
Financial Results:
All amounts are in Canadian dollars unless otherwise indicated.
For the six-month period ended May 31, 2008, the Company recorded a net loss of $6,401,018 ($0.14 per share) compared to a net loss of $5,342,827 ($0.12 per share) for the six-month period ended May 31, 2007. For the three-month period ended May 31, 2008, the Company recorded a net loss of $3,816,937 ($0.08 per share) compared to a net loss of $3,036,132 ($0.07 per share) for the three-month period ended May 31, 2007. This increase in net loss for both periods is primarily the result of higher research and development, and general administrative expenses, partially offset by higher revenues and foreign exchange gains.
For the six-month period ended May 31, 2008, the Company's revenue increased to $1,471,447 compared to $129,846 for the same period in fiscal 2007. For the three-month period ended May 31, 2008, the Company's revenue increased to $424,153 compared to $21,392 for the same period in fiscal 2007. The increase for both periods was primarily the result of the recognition of product and research contract revenue from the Takeda collaboration and the recognition of licensing fee revenue for an extension fee payment under the agreement with PDL Biopharma Inc.
For the six-month period ended May 31, 2008, the Company's interest income decreased to $176,512 compared to $381,407 for the same period in fiscal 2007. For the three-month period ended May 31, 2008, the Company's interest income decreased to $69,720 compared to $181,484 for the same period in fiscal 2007. The decrease for both periods was primarily the result of lower average cash and investment balances.
For the six-month period ended May 31, 2008, the Company's research and development costs increased to $5,933,367 compared to $4,059,931 for the same period in fiscal 2007. For the three-month period ended May 31, 2008, the Company's research and development costs increased to $3,337,461 compared to $2,102,603 for the same period in fiscal 2007. The increases were primarily the result of an increase in staffing levels related to an overall increase in activity as the Company is preparing three products for the clinic, accompanied by increased patent and licensing activity and an increase in stock option remuneration expense.
For the six-month period ended May 31, 2008, the Company's general and administrative expenses increased to $2,170,683 compared to $1,437,009 for the same period in fiscal 2007. For the three-month period ended May 31, 2008, the Company's general and administrative expenses increased to $1,149,402 compared to $762,673 for the same period in fiscal 2007. The increases were primarily the result of an increase in staffing levels, consulting fees, legal expenses and stock option remuneration expense.
As at May 31, 2008, ARIUS' cash and cash equivalents, and net working capital position were $8,543,124 and $5,807,638, respectively, compared with November 30, 2007 cash and cash equivalents, short-term investments and net working capital of $5,635,365, $6,825,190 and $9,088,712, respectively. The Company currently believes that it has adequate financial resources to continue into the fourth quarter of fiscal 2008 based on planned research and development expenditures and operating costs.
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)
INTERIM BALANCE SHEETS
(Unaudited)
-------------------------------------------------------------------------
May 31, November 30,
2008 2007
$ $
-------------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents 8,543,124 5,635,365
Short-term investments - 6,825,190
Receivables 185,672 230,126
Refundable tax credits 600,000 400,000
Prepaid expenses 473,080 387,674
-----------------------------------------------------------------------
9,801,876 13,478,355
Facilities and equipment, net 1,763,960 1,889,921
-------------------------------------------------------------------------
11,565,836 15,368,276
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities 2,060,753 2,034,972
Accrued loss on embedded foreign exchange
derivative 129,930 296,064
Current portion of leasehold inducements 41,484 41,484
Current portion of capital lease obligation 15,304 25,710
Current portion of deferred revenue 1,746,767 1,991,413
-----------------------------------------------------------------------
3,994,238 4,389,643
Leasehold inducements 214,548 235,291
Capital lease obligation - 2,224
Deferred revenue 1,752,104 1,758,898
Shareholders' equity:
Share capital:
Common shares 31,084,346 28,644,454
Warrants 10,325,740 9,603,644
Compensation warrants - 912,377
Contributed surplus 3,129,511 2,355,378
Deficit (38,934,651) (32,533,633)
-----------------------------------------------------------------------
5,604,946 8,982,220
Nature of operations and going concern
uncertainty
Commitments
Subsequent events
-------------------------------------------------------------------------
11,565,836 15,368,276
-------------------------------------------------------------------------
-------------------------------------------------------------------------
ARIUS RESEARCH INC.
(A DEVELOPMENT STAGE COMPANY)
INTERIM STATEMENTS OF OPERATIONS, COMPREHENSIVE LOSS AND DEFICIT
(Unaudited)
-----------------------------------------------------------
Six-month Six-month
period ended period ended
May 31, May 31,
2008 2007
$ $
-----------------------------------------------------------
Revenue:
Research contract 1,249,340 -
Product 121,107 56,486
Licensing fees 101,000 -
Research grant payments - 73,360
---------------------------------------------------------
1,471,447 129,846
Expenses:
Research and development,
net of tax credits 5,933,367 4,059,931
General and administrative 2,170,683 1,437,009
Foreign exchange loss (gain) (202,635) 235,234
Interest expense 2,371 1,646
---------------------------------------------------------
7,903,786 5,733,820
---------------------------------------------------------
Loss before the undernoted (6,432,339) (5,603,974)
Interest income 176,512 381,407
Loss on extinguishment of debt - -
-----------------------------------------------------------
Loss before income taxes (6,255,827) (5,222,567)
Income taxes:
Current (145,191) (120,260)
-----------------------------------------------------------
Loss and comprehensive loss
for the period (6,401,018) (5,342,827)
Deficit, beginning of period (32,533,633) (21,476,594)
-----------------------------------------------------------
Deficit, end of period (38,934,651) (26,819,421)
-----------------------------------------------------------
-----------------------------------------------------------
Loss per share - basic and
diluted (0.14) (0.12)
-----------------------------------------------------------
-----------------------------------------------------------
Weighted average common shares
outstanding 46,239,912 44,750,964
-----------------------------------------------------------
-----------------------------------------------------------
-------------------------------------------------------------------------
Cumulative
Three-month Three-month since
period ended period ended inception on
May 31, May 31, August 11,
2008 2007 1999
$ $ $
-------------------------------------------------------------------------
Revenue:
Research contract 262,478 - 1,996,120
Product 60,675 21,392 280,049
Licensing fees 101,000 - 3,385,703
Research grant payments - - 273,663
-----------------------------------------------------------------------
424,153 21,392 5,935,535
Expenses:
Research and development,
net of tax credits 3,337,461 2,102,603 31,331,946
General and administrative 1,149,402 762,673 13,168,494
Foreign exchange loss (gain) (236,020) 319,481 508,201
Interest expense 551 771 906,768
-----------------------------------------------------------------------
4,251,394 3,185,528 45,915,409
-----------------------------------------------------------------------
Loss before the undernoted (3,827,241) (3,164,136) (39,979,874)
Interest income 69,720 181,484 2,221,804
Loss on extinguishment of debt - - (782,143)
-------------------------------------------------------------------------
Loss before income taxes (3,757,521) (2,982,652) (38,540,213)
Income taxes:
Current (59,416) (53,480) (394,438)
-------------------------------------------------------------------------
Loss and comprehensive loss
for the period (3,816,937) (3,036,132) (38,934,651)
Deficit, beginning of period (35,117,714) (23,783,289) -
-------------------------------------------------------------------------
Deficit, end of period (38,934,651) (26,819,421) (38,934,651)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Loss per share - basic and
diluted (0.08) (0.07)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Weighted average common shares
outstanding 47,062,644 44,750,964
-------------------------------------------------------------------------
-------------------------------------------------------------------------
ARIUS RESEARCH INC.
(A DEVELOPMENT STAGE COMPANY)
INTERIM STATEMENTS OF CASH FLOWS
(Unaudited)
-----------------------------------------------------------
Six-month Six-month
period ended period ended
May 31, May 31,
2008 2007
$ $
-----------------------------------------------------------
Cash provided by (used in):
Operating activities:
Loss for the period (6,401,018) (5,342,827)
Items not involving cash:
Amortization of:
Facilities and equipment 187,307 166,479
Deferred costs - -
Leasehold inducements (20,743) (20,743)
Loss on disposal of equipment - -
Write-off of leasehold
improvements - -
Write-off of receivable 42,109 -
Leasehold inducement - -
Non-cash stock-based
compensation 866,895 434,620
Accretion of convertible
debentures - -
Loss on extinguishment of
debt - -
Services received for common
shares - -
Write-off of investment - -
Interest expense paid in
common shares - -
Change in non-cash operating
working capital items (674,854) 1,221,090
---------------------------------------------------------
(6,000,304) (3,541,381)
Financing activities:
Issue of shares, warrants and
units, net of issuance costs 305,486 -
Issuance of convertible bridge
loan, net - -
Repayment of convertible bridge
loan, including costs - -
Exercise of compensation
warrants 1,697,446 -
Exercise of stock options 153,917 -
Draw of bank line of credit - -
Repayment of bank line of
credit - -
Bridge loan - -
Repayment of bridge loan - -
Repayment of capital lease
and equipment financing
obligations (12,630) (17,433)
---------------------------------------------------------
2,144,219 (17,433)
Investing activities:
Purchase of short-term
investments (1,299,844) (10,240,605)
Maturity of short-term
investments 8,125,034 17,661,017
Leasehold inducements - -
Long-term investment - -
Acquisition of facilities
and equipment (61,346) (517,554)
Disposal of equipment - -
---------------------------------------------------------
6,763,844 6,902,858
Increase in cash & cash
equivalents 2,907,759 3,344,044
Cash & cash equivalents,
beginning of period 5,635,365 4,077,065
-----------------------------------------------------------
Cash & cash equivalents,
end of period 8,543,124 7,421,109
-----------------------------------------------------------
-----------------------------------------------------------
-------------------------------------------------------------------------
Cumulative
Three-month Three-month since
period ended period ended inception on
May 31, May 31, August 11,
2008 2007 1999
$ $ $
-------------------------------------------------------------------------
Cash provided by (used in):
Operating activities:
Loss for the period (3,816,937) (3,036,132) (38,934,651)
Items not involving cash:
Amortization of:
Facilities and equipment 94,993 85,064 1,466,178
Deferred costs - - 55,055
Leasehold inducements (10,372) (10,371) (76,896)
Loss on disposal of equipment - - 23,532
Write-off of leasehold
improvements - - 86,349
Write-off of receivable 42,109 - 42,109
Leasehold inducement - - 89,148
Non-cash stock-based
compensation 696,818 224,036 2,497,496
Accretion of convertible
debentures - - 429,905
Loss on extinguishment of
debt - - 782,143
Services received for common
shares - - 400,024
Write-off of investment - - 20,000
Interest expense paid in
common shares - - 140,032
Change in non-cash operating
working capital items 109,584 549,700 4,388,693
-----------------------------------------------------------------------
(2,883,805) (2,187,703) (28,590,883)
Financing activities:
Issue of shares, warrants and
units, net of issuance costs 305,486 - 38,587,264
Issuance of convertible bridge
loan, net - - 2,196,619
Repayment of convertible bridge
loan, including costs - - (2,408,886)
Exercise of compensation
warrants - - 1,706,027
Exercise of stock options 118,825 153,917
Draw of bank line of credit - - 655,000
Repayment of bank line of
credit - - (655,000)
Bridge loan - - 300,000
Repayment of bridge loan - - (300,000)
Repayment of capital lease
and equipment financing
obligations (6,370) (5,941) (303,061)
-----------------------------------------------------------------------
417,941 (5,941) 39,931,880
Investing activities:
Purchase of short-term
investments - (2,577,726) (44,450,921)
Maturity of short-term
investments 1,299,844 7,662,879 44,450,921
Leasehold inducements - - 243,780
Long-term investment - - (20,000)
Acquisition of facilities
and equipment (51,129) (295,296) (3,030,639)
Disposal of equipment - - 8,986
-----------------------------------------------------------------------
-----------------------------------------------------------------------
1,248,715 4,789,857 (2,797,873)
Increase in cash & cash
equivalents (1,217,149) 2,596,213 8,543,124
Cash & cash equivalents,
beginning of period 9,760,273 4,824,896 -
-------------------------------------------------------------------------
Cash & cash equivalents,
end of period 8,543,124 7,421,109 8,543,124
-------------------------------------------------------------------------
-------------------------------------------------------------------------
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