EDMONTON, April 27 /CNW/ - Biomira Inc. (Nasdaq:BIOM) (TSX:BRA), a
leading developer of cancer vaccines, today reported financial results for the
three months ended March 31, 2006.
Highlights
- Financial results for the three months ended March 31, 2006 reflect a
consolidated net loss from operations of $5.8 million or $0.07 per
share compared to $4.4 million or $0.06 per share for the same period
in 2005. The increased net loss of $1.4 million in 2006 arises from
lower revenues of $0.4 million and lower investment and other income
of $0.2 million, combined with increases in research and development
expenditures of $0.4 million and general and administrative expenses
of $0.4 million.
- In January 2006, Biomira announced the signing of a letter of intent
to amend the agreements governing the collaboration between Biomira
and Merck KGaA of Darmstadt, Germany for Stimuvax(R) (formerly BLP25
Liposome Vaccine (L-BLP25)). Under the letter of intent, approved by
the Boards of both Companies, effective March 1, 2006 Merck will
assume most of the administrative and financial responsibility for
the development and commercialization of Stimuvax(R), including the
planned phase 3 trial in non-small cell lung cancer, which is
expected to commence in the summer of 2006. Merck also plans to
investigate the use of Stimuvax(R) to treat other types of cancer. In
return Biomira's co-promotion interest in U.S. sales will be
converted to a specified royalty rate, which will be higher than what
Merck has agreed to pay on its sales of Stimuvax(R) in markets
outside of North America. The Companies are currently in the process
of revising the agreements governing the collaboration.
- In January, Biomira announced the completion of a U.S. $16.07 million
financing.
- Biomira has resolved an accelerated stability issue discovered
earlier during the manufacturing process of Stimuvax(R).
Manufacturing for the phase 3 study has now recommenced.
Additionally, on April 3rd, Biomira announced that Alex McPherson, M.D.,
Ph.D. will step down as the Company's President and Chief Executive Officer
following the Annual General Meeting scheduled for May 17, 2006. The Board has
initiated a search process for Dr. McPherson's successor. An interim
succession plan has been put in place, should it be necessary.
"Our recently revised arrangements, pursuant to the letter of intent,
with Merck KGaA was a significant and positive development for the progress of
Stimuvax(R), for patients and for the future of Biomira," said Dr. Alex
McPherson, M.D., Ph.D., President and CEO of Biomira. "Not only does Biomira
retain upside potential from a successful product candidate, but our risk is
greatly reduced. The revised arrangement, along with the U.S. $16.07 million,
before issue costs, we raised earlier this year, should provide sufficient
funding as we now focus on developing our follow-on vaccine, BGLP40, and on
building our pipeline. This is an exciting time in the evolution of Biomira,
as the Company seeks a next generation of leadership to focus on new growth
opportunities."
Financial Update
Financial results for the three months ended March 31, 2006 reflect a
consolidated net loss from operations of $5.8 million or $0.07 per share
compared to $4.4 million or $0.06 per share for the same period in 2005. The
increased net loss of $1.4 million in 2006 arises from lower revenues of
$0.4 million and lower investment and other income of $0.2 million, combined
with increases in research and development expenditures of $0.4 million and
general and administrative expenses of $0.4 million. The increase in expenses
primarily relates to workforce reduction costs of $1.4 million partially
offset by decreased clinical expenditures in anticipation of finalizing the
amendments to the agreements governing the collaboration with Merck for
Stimuvax(R).
In January 2006, Biomira raised U.S. $16.07 million (CDN. $18.4
million), before issue costs, by issuing 10,572,368 units, each unit
consisting of one common share and 0.25 of a warrant, at an issue price of
U.S. $1.52. Each warrant entitles the holder thereof to purchase one common
share of the Company at an exercise price of U.S. $2.50. The warrants have a
42 month term and a no-exercise period of six months.
As at March 31, 2006, Biomira's cash and cash equivalents and short-term
investments were $33.8 million compared to $21.4 million at the end of 2005,
an increase of $12.4 million or 58%.
For a further discussion of the Company's financial results for the three
months ended March 31, 2006, please refer to the Company's unaudited
consolidated financial statements and the Company's Management Discussion &
Analysis of Financial Condition and Results of Operations included in this
news release.
Biomira Inc.
Biomira is a biotechnology company specializing in the development of
innovative therapeutic approaches to cancer management. Biomira's commitment
to the treatment of cancer currently focuses on the development of synthetic
vaccines and novel strategies for cancer immunotherapy. We are The Cancer
Vaccine People(TM).
Management's Discussion and Analysis of Financial Condition and Results
of Operations
Management's Discussion and Analysis of Financial Condition and Results
of Operations (MD&A), prepared as at April 14, 2006, should be read in
conjunction with the unaudited consolidated financial statements and
accompanying notes for the three months ended March 31, 2006, included
hereafter, as well as the audited consolidated financial statements and MD&A
for the fiscal year ended December 31, 2005. Except as discussed below, all
other factors referred to and discussed in the MD&A for fiscal 2005 remain
substantially unchanged.
Overview of the Business
Biomira Inc. is an international biotechnology company headquartered in
Canada operating primarily in a single business segment, the research and
development of innovative therapeutic approaches to cancer management. Our
research and development efforts are currently focused on our core competency
in immunotherapeutics, particularly developing synthetic vaccines and novel
strategies for cancer immunotherapy. Our strategic mission is to build a
sustainable and profitable company by bringing patients innovative, targeted
therapeutics that extends quality and duration of life.
Biomira/Merck KGaA Collaboration
In January 2006, we announced the signing of a letter of intent to amend
the agreements governing the collaboration between the Company and Merck KGaA
(Merck) of Darmstadt, Germany for Stimuvax(R) (formerly BLP25 Liposome
Vaccine), currently in development for the treatment of non-small cell lung
cancer (NSCLC). Under the letter of intent, approved by the Boards of both
Companies, effective March 1, 2006 Merck will assume most of the
administrative and financial responsibility for the development and
commercialization of Stimuvax(R), including the planned phase 3 trial in
NSCLC, which is expected to commence in the summer of 2006. Merck also plans
to investigate the use of Stimuvax(R) to treat other types of cancer.
In return, under the letter of intent, our co-promotion interest in U.S.
sales will be converted to a specified royalty rate, which will be higher than
what Merck has agreed to pay on its sales of Stimuvax(R) in markets outside of
North America (the Rest of World (ROW)). The royalty and other arrangements
with respect to the ROW will remain generally unchanged (Merck to assume a
specified third party royalty obligation on behalf of Biomira). Similarly, the
milestone payments to be made by Merck pursuant to the collaboration will
remain essentially the same. The agreed upon royalty rate for the U.S.
territory reflects the current stage and promise of Stimuvax(R).
Under the letter of intent, we will retain responsibility for
manufacturing Stimuvax(R), both for clinical trials and following any
marketing approval. The existing arrangements for Canada remain in place with
Biomira responsible for the Canadian territory.
The Companies are currently in the process of revising the agreements
governing the collaboration.
Stimuvax(R)
Corporate resources in the first quarter of 2006 were primarily directed
towards transition activities related to Stimuvax(R). Transition teams have
now been established by both Biomira and Merck and the task of transitioning
most of the operational, administrative and financial responsibilities for the
development of Stimuvax(R) has commenced. It is anticipated that it will take
at least 6 months from the initial transition date of March 1, 2006 to
complete these activities.
In September 2005, Biomira and Merck announced a change to the
anticipated timetable for the start of the planned Stimuvax(R) phase 3 study
in the treatment of NSCLC due to an accelerated stability issue discovered
during the manufacturing of the vaccine to be used in the phase 3 trial.
Further testing has demonstrated that the corrective actions taken to resolve
the stability issue have been successful and manufacturing for the phase 3
trial has now recommenced.
Corporate Update
As a result of the signing of the letter of intent with Merck, we began a
limited restructuring process for the Company to ensure that we have the right
people and expertise to carry out the business of the Company, while we
continue to carry out the transition of Stimuvax(R) responsibilities to Merck.
Initially we have reduced our workforce by 14 employees at a cost of
$1.4 million; however we will continue to maintain our core expertise in all
necessary areas to take advantage of the opportunities presented to us. We
expect further workforce reductions once we have clarity on how long the Merck
transition will take and we understand more fully what expertise we need for
potential new product candidates that we hope to in-license. As we have
retained responsibility for manufacturing, positions associated with that
activity will remain in place.
On April 3, 2006, we announced that Alex McPherson, M.D., Ph.D. will step
down as the Company's President and Chief Executive Officer following the
Annual General Meeting scheduled for May 17, 2006. The Board has initiated a
search process for Dr. McPherson's successor. Edward Taylor, the Company's
Chief Financial Officer and Vice President Finance and Administration, has
agreed to assume the role of President and Chief Executive Officer on an
interim basis, if a successor has not been identified by the date of
Dr. McPherson's departure.
In January 2006, we completed a financing totaling U.S. $16.07 million
(CDN. $18.4 million), before issue costs, with Rodman & Renshaw, LLC of New
York acting as exclusive placement agent. The Company issued 10,572,368 units,
each consisting of one common share and 0.25 of a warrant, at an issue price
of U.S. $1.52. Each warrant entitles the holder thereof to purchase one common
share of the Company at an exercise price of U.S. $2.50. The warrants have a
42 month term, from the date of closing, and a no-exercise period of six
months. The financing closed at the end of January and was fully subscribed.
With this additional money in our treasury and the development program of
Stimuvax(R) in the hands of Merck effective March 1, 2006, we are well
positioned to begin further development of our follow-on vaccine, BGLP40, and
assessing potential in-licensing opportunities. We are excited about the
challenges of seeking new business and development opportunities as we move
forward with a focus on building additional shareholder value through the
development of a pipeline for the future of the Company.
Results of Operations
Financial results for the three months ended March 31, 2006 reflect a
consolidated net loss from operations of $5.8 million or $0.07 per share
compared to $4.4 million or $0.06 per share for the same period in 2005. The
increased net loss of $1.4 million in 2006 arises from lower revenues of
$0.4 million and lower investment and other income $0.2 million, combined with
increases in research and development expenditures of $0.4 million and general
and administrative expenses of $0.4 million. The increase in expenses
primarily relates to workforce reduction costs of $1.4 million partially
offset by decreased clinical expenditures in anticipation of finalizing the
amendments to the agreements governing the collaboration with Merck for
Stimuvax(R).
Revenues
Contract research and development revenue for the three months ended
March 31, 2006, totalling $0.3 million compared to $0.6 million for the same
period in 2005, represents contract research and development funding received
from Merck KGaA associated with Stimuvax(R). The decrease in revenues is
attributable to decreased clinical expenditures in anticipation of finalizing
the amendments to the agreements governing the collaboration with Merck for
Stimuvax(R).
Licensing revenues from collaborative arrangements for the three months
ended March 31, 2006, totalling $0.1 million compared to $0.1 million for the
same period in 2005, represents the amortization of upfront payments received
from Merck KGaA and an upfront sub-licensing fee from Cancer Vac upon
commencement of the respective collaborations.
Licensing, royalties and other revenue for the three months ended
March 31, 2006, were $0.2 million less than the similar period in 2005.
Licensing, royalties and other revenue relates to contract manufacturing
activities utilizing various Biomira patented technologies and compounds for
external customers.
Operating Expenses
Research and Development
Research and development expenditures for the three months ended
March 31, 2006 totalled $4.0 million compared to $3.5 million for the same
period in 2005. The increase of $0.5 million is primarily attributable to
$1.2 million in workforce reduction costs partially offset by decreased
clinical expenditures in anticipation of finalizing the amendments to the
agreements governing the collaboration with Merck for Stimuvax(R).
General and Administrative
General and administrative expenses for the three months ended March 31,
2006 totalled $2.1 million compared to $1.7 million for the same period in
2005. The increase of $0.4 million is primarily due to workforce reduction
costs of $0.2 million and increased professional fees.
Marketing and Business Development
Marketing and business development expenditures for the three months
ended March 31, 2006, totalling $0.2 million, was similar to the same period
in 2005. Marketing and business development expenditures include corporate
administrative expenses associated with these functions, as well as costs
associated with licensing activities related to pre-clinical and early stage
technologies.
Amortization
Amortization expense for the three months ended March 31, 2006, totalling
$0.1 million, was similar to the same period in 2005. Amortization expense
relates to facility leaseholds and equipment, certain licensing rights, and
other assets.
Investment and Other Income
Investment and other income for the three months ended March 31, 2006,
totalling $0.2 million, compared to $0.4 million for the same period in 2005,
comprises income from cash and investments and foreign exchange gains and
losses. The decrease of $0.2 million is primarily attributable to foreign
exchange gains which were nil for the three months ended March 31, 2006
compared to $0.2 million for the same period in 2005.
Liquidity and Capital Resources
Liquidity
As at March 31, 2006, our cash and cash equivalents and short-term
investments were $33.8 million compared to $21.4 million at the end of 2005,
an increase of $12.4 million or 58%. Major contributors to the net change
included $17.5 million in net financing proceeds offset by $5.1 million used
in operations, which includes workforce reduction costs of $0.7 million. With
the additional net financing proceeds in our treasury, we now have sufficient
funding to move forward with further development of BGLP40 and assessing
in-licensing opportunities.
Working capital, defined as current assets less current liabilities,
increased by $12.3 million from the end of 2005, to $32.2 million from
$19.9 million and is attributable to a $12.4 million increase in cash reserves
and a $0.9 million increase in prepaid expenses and other, offset by an
increase of $0.3 million in accrued liabilities and a decrease of $0.7 million
in accounts receivable. The increase in prepaid expenses and other primarily
relates to deferred third party costs. The increase in accrued liabilities
primarily relates to accrued workforce reduction costs and the decrease in
accounts receivable primarily relates to reduced contract research and
development funding as we began the process of transitioning most of the
administrative and financial responsibilities for the development of
Stimuvax(R) over to Merck in the first quarter of 2006.
Given that the development program for Stimuvax(R) will be in the hands
of Merck effective March 1, 2006, coupled with the additional net financing
proceeds which we were able to secure in January 2006, we believe that
sufficient cash reserves are in place to operate well into the latter half of
2007 and potentially into early 2008.
Financing
In January 2006, we were able to raise U.S. $16.07 million
(CDN. $18.4 million), before issue costs, by issuing 10,572,368 units, each
unit consisting of one common share and 0.25 of a warrant, at an issue price
of U.S. $1.52. Each warrant entitles the holder thereof to purchase one common
share of the Company at an exercise price of U.S. $2.50. The warrants have a
42 month term and a no-exercise period of six months.
Capital Resources
Under the U.S. $100 million Base Shelf Prospectus registered with the
applicable regulatory authorities in Canada and the U.S. on July 13, 2004, and
expected to remain in place into the third quarter of 2006, just over
U.S. $71 million is still available for future financings. In addition, there
are 3.8 million warrants outstanding, at a weighted-average exercise price of
U.S. $2.77. Based on our NASDAQ closing share price of U.S. $1.60 on March 31,
2006, the warrants outstanding are currently not in the money. Assuming
continuing investor support for our equity offerings, and the successful
registration of a planned new Base Shelf Prospectus in the third or fourth
quarter of 2006, this form of financing mechanism should allow us to pursue
financing opportunities in the foreseeable future.
Contractual Obligations and Contingencies
In our continuing operations, we have entered into long-term contractual
arrangements from time to time for our facilities, debt financing, the
provision of goods and services, and acquisition of technology access rights,
among others. The contractual obligations arising from these arrangements,
currently in force over the next ten years, are disclosed in the MD&A section
of our 2005 Annual Report. During the three months ended March 31, 2006, we
did not enter into any new material long-term contractual obligations.
Off-Balance Sheet Arrangements
As at March 31, 2006, we have not entered into any off-balance sheet
arrangements, except as disclosed in Note 15 Contingencies, Commitments, and
Guarantees in the notes to our audited 2005 consolidated financial statements.
Transactions with Related Parties
During the three months ended March 31, 2006, we did not enter into any
material transactions with related parties.
Outlook
Until one of our products receives regulatory approval and is
successfully commercialized, we anticipate losses for at least the foreseeable
future as our lead product candidate undergoes the final stages of clinical
development. The magnitude of these operating losses will be largely affected
by the timing and scope of future clinical trials and pre-launch activities
related to our products, as well as any new initiatives. Finally, the duration
of the pre-operating losses will depend on the scientific results of such
clinical trials.
We expect that clinical development expenses will decline considerably in
the second half of 2006 given that the development program for Stimuvax(R)
will be in the hands of Merck effective March 1, 2006. Coupling this with the
U.S. $16.07 million (CDN. $18.4 million), before issue costs, in financing we
were able to secure in January 2006 and the expected cash inflows from
collaborative funding arrangements, investment income, and technology
licensing efforts, we believe that our cash and short-term investments in
place will be sufficient to meet operating and capital requirements into the
latter half of 2007 and potentially into early 2008.
We believe that we have in place several key value drivers that may
increase shareholder value in the future. These include: a strong relationship
with Merck; the planned advancement by Merck of Stimuvax(R) into a pivotal
phase 3 registration trial; the possible advancement of clinical programs
related to early stage technologies; and out-licensing opportunities for early
stage product technologies. The key value drivers described above could be
negatively impacted by many factors including: a decision by Merck not to move
forward with or abandon the planned Stimuvax(R) phase 3 registration trial;
Merck's inability to successfully complete the planned Stimuvax(R) phase 3
registration trial; unfavorable results from the planned Stimuvax(R) phase 3
registration trial; ultimate denial or delay of regulatory approval; the
inability to find collaborators or funding for our early stage technologies;
and, a lack of interest in licensing our early stage technologies.
Risks and Uncertainties
The immediate risks and uncertainties facing Biomira may include, but are
not limited to: changing market and industry conditions; clinical trial
results; the establishment of new and continuation of existing corporate
alliances; the impact of competitive products and their pricing; timely
development of existing and new products; the difficulty of predicting
regulatory approval and market acceptance for our products; our ability to
secure and manufacture vaccine supplies for future clinical trials and
commercialization activities on a consistent and economical basis;
availability of capital or other funding; the ability to patent and defend our
intellectual property; the ability to retain and recruit qualified personnel;
and other risks, known or unknown.
Our ability to continue to generate cash to fund the advancement of
clinical programs related to early stage technologies and out-licensing
opportunities for early stage product technologies will depend on several
factors. Among others, these include regulatory support for the planned
phase 3 pivotal Stimuvax(R) registration trial; the availability of new
financing through private and/or public offerings on acceptable terms; the
timely advancement of clinical studies; the costs in obtaining regulatory
approvals for our products, if such can be obtained; and the value and timing
of securing licensing and collaborative arrangements in building our pipeline.
Other business risks and uncertainties have not changed significantly
from those disclosed in the MD&A in our 2005 annual report and in other
regulatory filings.
Critical Accounting Policies and Estimates
All of our accounting policies are in accordance with Canadian GAAP
including some which require management to make assumptions and estimates that
could significantly affect the results of operations and financial position.
The significant accounting policies that we believe are the most critical in
fully understanding and evaluating the reported financial results are
disclosed in the MD&A section of our 2005 Annual Report. As well, our
significant accounting policies are disclosed in Note 2, Significant
Accounting Policies, of the notes to our audited consolidated financial
statements for the fiscal year ended December 31, 2005.
Changes in Accounting Policies
Non-Monetary Transactions
Effective January 1, 2006, we adopted the recommendations of CICA
Handbook Section 3831, Non-Monetary Transactions, replacing Section 3830 of
the same title. The new accounting standard requires all non-monetary
transactions be measured at fair value unless certain conditions are
satisfied. The new requirements are effective for non-monetary transactions
initiated in periods beginning on or after January 1, 2006.
We have determined that adoption of Section 3831 does not have an effect
on our financial position or results of operations in the current period
presented.
Implicit Variable Interests under AcG-15
Effective January 1, 2006, we adopted the recommendations of Abstract
No. 157, Implicit Variable Interests under AcG-15 (EIC-157). The new abstract
addresses whether a company has an implicit variable interest in a variable
interest entity (VIE) or potential VIE when specific conditions exist. An
implicit variable interest acts the same as an explicit variable interest
except it involves the absorbing and/or receiving of variability indirectly
from the entity (rather than directly). The identification of an implicit
variable interest is a matter of judgment that depends on the relevant facts
and circumstances.
We have determined that adoption of EIC-157 does not have an effect on
our financial position, results of operations or cash flows in the current
period presented.
Supplemental Information
Summary of Quarterly Results
The following is selected quarterly consolidated financial information
from our unaudited quarterly financial statements for each of the eight most
recently completed quarters ending March 31, 2006. Certain of the comparative
figures have been reclassified to conform to the current period's
presentation.
<<
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For the three month period ended
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(expressed in 000's
except per share Mar. 31, Dec. 31, Sept. 30, June 30,
data) 2006 2005 2005 2005
-------------------------------------------------------------------------
Total Revenue $ 380 $ 1,115 $ 1,338 $ 1,120
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Research and
development cost $ 3,956 $ 4,455 $ 4,625 $ 4,320
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Net loss $ (5,800) $ (4,388) $ (5,476) $ (4,803)
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Basic and diluted
loss per share $ (0.07) $ (0.05) $ (0.07) $ (0.06)
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Common shares
outstanding 89,389 78,817 78,817 78,817
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Weighted average
number of common
shares outstanding 85,865 78,660 78,607 78,500
-------------------------------------------------------------------------
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For the three month period ended
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(expressed in 000's
except per share Mar. 31, Dec. 31, Sept. 30, June 30,
data) 2005 2004 2004 2004
-------------------------------------------------------------------------
Total Revenue $ 804 $ 974 $ 531 $ 6,493(1)
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Research and
development cost $ 3,507 $ 3,198 $ 3,229 $ 3,358
-------------------------------------------------------------------------
Net (loss) income $ (4,358) $ (3,581) $ (4,804) $ 1,012
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Basic and diluted loss
(income) per share $ (0.06) $ (0.05) $ (0.06) $ 0.01
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Common shares
outstanding 78,360 78,340 72,562 72,562
-------------------------------------------------------------------------
Weighted average
number of common
shares outstanding 78,352 72,941 72,560 72,558
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(1) The increased revenues for the three months ended June 30, 2004
resulted from the recognition into income of the remaining deferred
licensing revenues related to Theratope(R), totalling $5.9 million,
due to the return of the Theratope(R) development and
commercialization rights from Merck KGaA announced in June 2004.
Outstanding Share Data
As at April 14, 2006, the following classes of shares and equity
securities potentially convertible into common shares were outstanding:
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Class A preference shares (non-voting) 12,500
Class B preference shares (non-voting) nil
Common shares 89,388,932
Convertible equity securities:
Stock options 4,230,253
Restricted share units 114,000
Warrants 3,825,937
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Upon exercise or conversion, the stock options, restricted share units
and warrants are convertible into an equal number of common voting shares. Had
the outstanding stock options, restricted share units and warrants been fully
exercised or converted, the aggregate number of common shares outstanding
would be 97,559,122 as at March 31, 2006.
For details relating to the stock options, restricted share units and
warrants, please refer to Notes 10 and 11 of the notes to the audited
consolidated financial statements for the fiscal year ended December 31, 2005
and Note 3 of the unaudited interim consolidated financial statements for the
three months ended March 31, 2006.
Forward-Looking Statements
This report may contain forward-looking statements. Various factors could
cause actual results to differ materially from those projected in forward-
looking statements, including those predicting the timing or availability of
clinical trial analyses; efficacy, safety and clinical benefit of products;
ability to secure, and timing of, regulatory clearances; timing of product
launches in different markets; ability to retain or secure collaborative
partners; ability to secure and manufacture vaccine supplies; adequacy of
financing and reserves on hand; scope and adequacy of insurance coverage;
retention and performance of contractual third parties, including key
personnel; the achievement of contract milestones; currency exchange rate
fluctuations; changes in general accounting policies; and general economic
factors. Although we believe that the forward-looking statements contained
herein are reasonable, we can give no assurance that our expectations are
correct. All forward-looking statements are expressly qualified in their
entirety by this cautionary statement. For a detailed description of our risks
and uncertainties, you are encouraged to review the official corporate
documents filed with the securities regulators in Canada and the United
States.
Additional Information
Additional information relating to Biomira, including a copy of our
Annual Information Form and Proxy Circular, can be found on SEDAR at
www.sedar.com or U.S. EDGAR at www.sec.gov.
BIOMIRA INC.
Consolidated Balance Sheets
(expressed in thousands of Canadian dollars, except share amounts)
(unaudited)
March 31 December 31,
2006 2005(x)
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ASSETS
CURRENT
Cash and cash equivalents $ 16,023 $ 9,264
Short-term investments 17,750 12,151
Accounts receivable 539 1,279
Prepaid expenses and other 1,236 284
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35,548 22,978
CAPITAL ASSETS, net 566 646
INTANGIBLE ASSET, net 349 375
LONG-TERM INVESTMENT 264 264
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$ 36,727 $ 24,263
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LIABILITIES
CURRENT
Accounts payable and accrued liabilities $ 3,111 $ 2,801
Current portion of capital lease obligation 46 45
Current portion of deferred revenue 207 207
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3,364 3,053
CAPITAL LEASE OBLIGATION 68 81
DEFERRED REVENUE 984 1,036
CLASS A PREFERENCE SHARES 30 30
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4,446 4,200
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SHAREHOLDERS' EQUITY
Share capital (Notes 3 and 4)
Issued and outstanding - 89,388,932
and 78,816,564 389,447 375,497
Warrants (Note 3) 6,483 2,959
Contributed surplus (Note 4) 20,323 19,779
Deficit (383,972) (378,172)
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32,281 20,063
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$ 36,727 $ 24,263
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(See accompanying notes to the consolidated financial statements)
(CAD $1.00 (equal sign) USD $0.86)
(x) Figures excerpted from the 2005 audited consolidated financial
statements.
BIOMIRA INC.
Consolidated Statements of Operations
(expressed in thousands of Canadian dollars, except share and per share
amounts)
(unaudited)
Three Months Ended March 31
2006 2005
-------------------------------------------------------------------------
REVENUE
Contract research and development $ 324 $ 591
Licensing revenue from collaborative
agreements 55 52
Licensing, royalties, and other revenue 1 161
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380 804
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EXPENSES
Research and development 3,956 3,507
General and administrative 2,130 1,723
Marketing and business development 218 268
Amortization 106 84
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6,410 5,582
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OPERATING LOSS 6,030 4,778
Investment and other income 237 420
Interest expense (7) -
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NET LOSS $ 5,800 $ 4,358
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BASIC AND DILUTED LOSS PER SHARE $ 0.07 $ 0.06
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WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 85,864,809 78,352,338
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(See accompanying notes to the consolidated financial statements)
Consolidated Statements of Deficit
(expressed in thousands of Canadian dollars)
(unaudited)
Three Months Ended March 31
2006 2005
-------------------------------------------------------------------------
DEFICIT, BEGINNING OF PERIOD $ 378,172 $ 359,147
Net loss for period 5,800 4,358
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DEFICIT, END OF PERIOD $ 383,972 $ 363,505
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(See accompanying notes to the consolidated financial statements)
BIOMIRA INC.
Consolidated Statements of Cash Flow
(expressed in thousands of Canadian dollars)
(unaudited)
Three Months Ended March 31
2006 2005
-------------------------------------------------------------------------
OPERATING
Net loss $ (5,800) $ (4,358)
Amortization 106 84
Stock compensation expense (Note 4) 544 190
Decrease in deferred revenue (52) (168)
Unrealized foreign exchange gain on cash and
cash equivalents (43) (54)
Net change in non-cash working capital
balances from operations
Accounts receivable 740 124
Prepaid expenses and other (952) 5
Accounts payable and accrued liabilities 285 (282)
-------------------------------------------------------------------------
(5,172) (4,459)
-------------------------------------------------------------------------
INVESTING
Purchase of short-term investments (17,174) (14,978)
Redemption of short-term investments 11,575 15,606
Purchase of capital assets - (40)
-------------------------------------------------------------------------
(5,599) 588
-------------------------------------------------------------------------
FINANCING
Proceeds on issue of common shares and
warrants, net of issue costs 17,499 (100)
Proceeds from exercise of stock options - 42
Repayment of capital lease obligation (12) -
-------------------------------------------------------------------------
17,487 (58)
-------------------------------------------------------------------------
NET CASH INFLOW (OUTFLOW) 6,716 (3,929)
EFFECT OF EXCHANGE RATE FLUCTUATIONS ON
CASH AND CASH EQUIVALENTS 43 54
-------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 6,759 (3,875)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 9,264 19,887
-------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 16,023 $ 16,012
-------------------------------------------------------------------------
-------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Amount of interest paid in the period $ 7 $ -
Amount of income taxes paid in the period $ - $ -
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(See accompanying notes to the consolidated financial statements)
BIOMIRA INC.
Notes to the Consolidated Financial Statements
(expressed in thousands of Canadian dollars, except share and per share
amounts)
(unaudited)
-------------------------------------------------------------------------
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated interim financial statements
have been prepared by the Company in accordance with Canadian
generally accepted accounting principles (Canadian GAAP) for interim
financial statements. The accounting principles and methods of
computation adopted in these consolidated financial statements are
the same as those of the audited consolidated financial statements
for the year ended December 31, 2005, except as disclosed in Note 2
below.
Omitted from these statements are certain information and note
disclosures normally included in the annual consolidated financial
statements prepared in accordance with Canadian GAAP. The
consolidated financial statements and notes presented should be read
in conjunction with the audited consolidated financial statements for
the year ended December 31, 2005 filed with the appropriate
securities commissions.
Comparative figures for prior periods have been restated to conform
to the current period's presentation.
2. ACCOUNTING POLICY CHANGES
Non-monetary transactions
Effective January 1, 2006, the Company adopted the recommendations of
CICA Handbook Section 3831, Non-Monetary Transactions, replacing
Section 3830 of the same title. The new accounting standard requires
all non-monetary transactions be measured at fair value unless
certain conditions are satisfied. The new requirements are effective
for non-monetary transactions initiated in periods beginning on or
after January 1, 2006.
The Company has determined that adoption of Section 3831 does not
have an effect on our financial position or results of operations in
the current period presented.
Implicit variable interests under AcG-15
Effective January 1, 2006, the Company adopted the recommendations of
Abstract No. 157, Implicit Variable Interests under AcG-15 (EIC-157).
The new abstract addresses whether a company has an implicit variable
interest in a variable interest entity (VIE) or potential VIE when
specific conditions exist. An implicit variable interest acts the
same as an explicit variable interest except it involves the
absorbing and/or receiving of variability indirectly from the entity
(rather than directly). The identification of an implicit variable
interest is a matter of judgment that depends on the relevant facts
and circumstances.
The Company has determined that adoption of EIC-157 does not have an
effect on our financial position, results of operations or cash flows
in the current period presented.
3. SHARE CAPITAL
March 31 December 31
2006 2005
---------------------------------------------------------------------
Common shares
Issued and outstanding, beginning of
period 78,816,564 78,339,978
Equity placements 10,572,368 -
Exercise of warrants - 454,679
Exercise of stock options - 21,907
---------------------------------------------------------------------
Issued and outstanding, end of period 89,388,932 78,816,564
---------------------------------------------------------------------
Issued and outstanding as at April 14,
2006 89,388,932
---------------------------------------------------------------------
March 31 December 31
2006 2005
---------------------------------------------------------------------
Warrants
Issued and outstanding, beginning of
period 1,077,121 3,631,800
Issued 2,748,816 -
Exercised - (454,679)
Expired - (2,100,000)
---------------------------------------------------------------------
Issued and outstanding, end of period 3,825,937 1,077,121
---------------------------------------------------------------------
Issued and outstanding as at April 14,
2006 3,825,937
---------------------------------------------------------------------
The warrants provide the holders with the right to purchase common
shares at a range of prices from U.S. $2.50 to U.S. $3.45 per share.
In January 2006, the Company issued 10,572,368 common shares and
2,748,816 detachable warrants for proceeds of $18,389, before issue
costs of $915, of which $25 is in accounts payable at March 31, 2006.
Of the net proceeds, $13,950 and $3,524 have been allocated to common
shares and warrants, respectively. The warrants have an exercise
price of US $2.50 and are not exercisable until after July 30, 2006,
with the exception of 105,724 warrants that are not exercisable until
after January 30, 2007. The 2,748,816 warrants expire on July 30,
2009.
The Company used the Black-Scholes option pricing model to calculate
the fair value of the warrants issued.
March 31 December 31
2006 2005
---------------------------------------------------------------------
Stock options
Outstanding, beginning of period 4,360,940 3,736,599
Granted 40,000 1,282,065
Exercised - (21,907)
Cancelled (170,687) (635,817)
---------------------------------------------------------------------
Outstanding, end of period 4,230,253 4,360,940
---------------------------------------------------------------------
Outstanding as at April 14, 2006 4,230,253
---------------------------------------------------------------------
Stock options are exercisable at a range of exercise prices from
$1.51 to $23.10 per share.
March 31 December 31
2006 2005
---------------------------------------------------------------------
Restricted Share Units
Outstanding, beginning of period 114,000 -
Granted - 114,000
---------------------------------------------------------------------
Outstanding, end of period 114,000 114,000
---------------------------------------------------------------------
Outstanding as at April 14, 2006 114,000
---------------------------------------------------------------------
Each restricted share unit will be converted into one common share at
the end of the grant period (not to exceed five years) without any
further consideration payable.
4. STOCK-BASED COMPENSATION
Stock Option Plan
In the first quarter of 2006, stock compensation expense of $534
(2005 - $190) was recognized, representing the amortization
applicable to the current period of the estimated fair value of stock
options granted since January 1, 2002. The current period expense
includes an adjustment of $274 relating to the workforce reduction
described in Note 6. This adjustment includes the immediate expensing
of the remaining unamortized fair value of the affected stock options
and a modification adjustment relating to extension of the expiry
date of the affected stock options to 24 months from the 6 months
provided in the original stock option agreements.
An amount of nil (2005 - $29) arising from the exercise of stock
options for the three months ended March 31, 2006 was credited to
share capital from contributed surplus.
The Company uses the Black-Scholes option pricing model to value the
stock options at each grant date, under the following weighted
average assumptions:
Three Months Ended March 31
2006 2005
---------------------------------------------------------------------
Weighted average grant-date fair value per
share option $ 1.36 $ 1.86
Expected dividend rate 0.0% 0.0%
Expected volatility 107.05% 113.13%
Risk-free interest rate 4.16% 3.83%
Expected life of options in years 6.0 6.0
---------------------------------------------------------------------
The amounts estimated according to the Black-Scholes option pricing
model may not be indicative of the actual values realized upon the
exercise of these stock options by the holders.
Restricted Share Unit Plan
In the first quarter of 2006, stock compensation expense of $10
(2005 - nil) was recognized, representing the amortization applicable
to the current period of the estimated fair value of restricted share
units granted.
5. COLLABORATIVE AGREEMENTS
On January 26, 2006, Biomira announced the signing of a letter of
intent to amend the agreements governing the collaboration between
Biomira and Merck KGaA for Stimuvax(R) (formerly BLP25 Liposome
Vaccine), currently in development for the treatment of non-small
cell lung cancer (NSCLC).
Under the letter of intent, approved by the Boards of both Companies,
effective March 1, 2006 Merck KGaA will assume most of the
administrative and financial responsibility for the development and
commercialization of Stimuvax(R), including the planned phase 3 trial
in NSCLC, which is expected to commence in the summer of 2006. Merck
KGaA also plans to investigate the use of Stimuvax(R) to treat other
types of cancer.
In return, under the letter of intent, Biomira's co-promotion
interest in U.S. sales will be converted to a specified royalty rate,
which will be higher than what Merck KGaA has agreed to pay on its
sales of Stimuvax(R) in markets outside of North America (the Rest of
World (ROW)). The royalty and other arrangements with respect to the
ROW will remain generally unchanged (Merck KGaA to assume a specified
third party royalty obligation on behalf of Biomira). Similarly, the
milestone payments to be made by Merck KGaA pursuant to the
collaboration will remain essentially the same. The agreed upon
royalty rate for the U.S. territory reflects the current stage and
promise of Stimuvax(R).
Under the letter of intent, Biomira will retain responsibility for
manufacturing Stimuvax(R), both for clinical trials and following any
marketing approval. The existing arrangements for Canada remain in
place with Biomira responsible for the Canadian territory.
The Companies are currently in the process of revising the agreements
governing the collaboration.
6. WORKFORCE REDUCTION COSTS
As a result of the signing of the letter of intent described in
Note 5, Biomira has initially reduced its workforce by 14 employees.
In total, the Company recorded workforce reduction costs of $1,396 in
the first quarter of 2006, of which $1,203 and $193 have been
reported as research and development and general and administrative
respectively in the consolidated statement of operations.
Once the transfer of the Stimuvax(R) phase 3 clinical trial
activities to Merck KGaA has been completed, the Company will engage
in a limited reorganization to reflect the reduced activities
previously associated with Stimuvax(R).
The following table provides details of the workforce reduction cost
for the period ended March 31, 2006:
Accrued
Workforce
Reduction
Workforce Cumulative Drawdowns Costs at
Reduction ------------------------ March 31,
Costs Cash Non-Cash 2006
---------------------------------------------------------------------
Salaries and
benefits $ 1,088 $ 680 $ - $ 408
Stock compensation
expense (Note 4) 274 - 274 -
Other 34 26 - 8
---------------------------------------------------------------------
$ 1,396 $ 706 $ 274 $ 416
---------------------------------------------------------------------
7. SEGMENTED INFORMATION
The Company is engaged worldwide primarily in the biotechnology
healthcare industry in a single business segment, research and
development of therapeutic products for the treatment of cancer.
Operations and long-lived assets by geographic region for the periods
indicated are as follows:
Three Months Ended March 31
2006 2005
---------------------------------------------------------------------
Revenue from operations in
Canada $ 23 $ 190
United States - 1
Barbados 337 593
Europe 20 20
---------------------------------------------------------------------
$ 380 $ 804
---------------------------------------------------------------------
Three Months Ended March 31
2006 2005
---------------------------------------------------------------------
Amortization in
Canada $ 70 $ 52
United States 10 6
Barbados 26 26
---------------------------------------------------------------------
$ 106 $ 84
---------------------------------------------------------------------
March 31 December 31
2006 2005
---------------------------------------------------------------------
Long-lived assets, net, in
Canada $ 523 $ 593
United States 43 53
Barbados 349 375
---------------------------------------------------------------------
$ 915 $ 1,021
---------------------------------------------------------------------
Long-lived assets and amortization consist of capital assets and
intangible assets and the amortization of capital assets and
intangible assets recorded thereon.
The Company derives significant revenue from certain customers. The
number of customers that individually accounts for more than 10% of
revenue and total revenue from transactions with those customers are
as follows:
Number of
Customers Revenue
---------------------------------------------------------------------
2006 1 $ 371
2005 1 $ 638
Corporate Information
Share Registrar and Transfer Agents
Computershare Investor Services Inc.
Suite 600, 530 - 8 Ave SW
Calgary AB T2P 3S8
Canada
Phone: 1-800-564-6253 (toll free North America)
Phone: 1-514-982-7555 (International)
Fax: 1-888-453-0330 (toll free North America)
Fax: 1-416-263-9394 (International)
E-Mail: service(at)computershare.com
Internet: http://www.computershare.com
Stock Listings and Symbols
Toronto Stock Exchange: BRA
Nasdaq National Market: BIOM
We invite you to visit our web site at www.biomira.com or call our
investor relations department toll free at 1-877-234-0444 Ext. 241.
This release/report may contain forward-looking statements. Various
factors could cause actual results to differ materially from those projected
in such statements, a number of which are set forth under the Management
Discussion and Analysis section above. All forward-looking statements in this
release/report are expressly qualified in their entirety by this cautionary
statement and by the section on Forward-Looking Statements under the
Management Discussion and Analysis section.
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