TSX, FSE: "HBP"
AURORA, ON, June 14 /CNW/ - Helix BioPharma (TSX, FSE: "HBP") today
announced the appointment, effective June 15, 2005, of Frank Michalargias as
the Company's Chief Financial Officer. Mr. Michalargias replaces Ken Cawkell,
a member of the Company's board, who has served as interim CEO since last
summer.
Mr. Michalargias has over 15 years of senior management and operations
experience in both public and private industry and is experienced in
transition and growth management, strategic planning and the raising of debt
and equity financing. Prior to his appointment at Helix BioPharma, Mr.
Michalargias served as CFO of AP Plasman Corporation, a tier one North
American automotive parts supplier controlled by Schroder Ventures. Mr.
Michalargias' previous tenures include senior financial roles with CFM
Corporation, Trailmobile, Multy Industries, Huhtamaki Oyj and Unilever. Mr.
Michalargias holds a Commerce and Economics degree from the University of
Toronto and is a Chartered Accountant.
Development Update
Work is progressing steadily in the development programs for the
Company's two lead product candidates, Topical Interferon Alpha-2b and
L-DOS47. Subsequent to the end of the quarter, Helix announced that it had
opened two additional clinical sites at the CharitDe Berlin for its German
phase II clinical trial of its Topical Interferon Alpha-2b. This study is
progressing on schedule for planned completion in 2006. Also subsequent to the
end of the quarter, Helix announced that it had selected a lead product
candidate (L-DOS47) from its DOS47 cancer therapeutic program to be developed
as a treatment for adenocarcinoma of the lung, the most common form of lung
cancer in the world today. The Company is engaged in the development of
L-DOS47 with a view to submitting an Investigational New Drug (IND) filing
within two years in order to commence human clinical trials.
Work also continues to progress under the agreement between Apotex Inc.
and Helix's wholly-owned subsidiary, PharmaDerm Laboratories, entered into
during the quarter. PharmaDerm is working toward the identification and
characterization of a lead topical drug formulation for Apotex.
Financial results for the period ended April 30, 2005
Revenue from the sale of pharmaceutical products and project revenue for
the three-month period ended April 30, 2005 increased $214,263 or 42%, to
$720,366 as compared with $506,103 for the quarter ended April 30, 2004.
Building on the growth of prior quarters, this increase primarily reflects the
continued success of the Company's two leading products, Orthovisc(R) and
Klean-Prep(TM) in the Canadian marketplace, and also reflects project revenue
related to the Company's development work for Apotex. Cost of product and
project sales for the three-month period ended April 30, 2005 was $319,000, or
44%.
For the first nine months of 2005, product sales and project revenue
totalled $2.0 million representing a $627,608 or 45% increase over the
nine-month 2004 sales of $1.4 million. Consistent with the growth seen in the
recent quarter, the nine-month increase continues to reflect strong
performance of both Orthovisc(R) and Klean-Prep(TM) products in Canada. Cost
of product and project sales for the nine-month period ended April 30, 2005
was 47% of the combined product and project revenue, which compared favourably
to 50% in the same period in the prior year. Reduced product returns along
with a stronger Canadian dollar were the primary drivers behind this
improvement.
Royalty and license fee revenue for the quarter ended April 30, 2005 was
$264,250, representing a $29,446 or 10% decrease in revenue for the same
period in 2004 of $293,696. Effective January 1, 2005, the Company's royalty
rate earned from Helsinn-Birex on its sales of Klean-Prep(TM) was reduced by
half. Royalties from the sale of Klean-Prep(TM) for the quarter ended
April 30, 2005 were $185,773 compared with $293,696 for the same period in the
prior year. This reduction reflects the impact of the reduced royalty rate,
partially offset by continued volume improvements in this marketplace. In
subsequent quarters, the Company expects royalty revenue from these sales to
remain at or about the level of the last quarter.
Royalty revenue for the first nine months of 2005 was $860,261
representing an increase of $43,106 or 5%, over $817,155 in the same period of
2004. Included in royalty revenue for the nine months ended April 30, 2005 is
$92,962 in royalty revenue resulting from the Company's January 2005 licensing
of its Biochip technology to Lumera Corporation. Licensing fees of $137,536
have been deferred and will be recognized by the Company over the subsequent
three months. In the event the Company achieves certain milestones it will be
entitled to receive additional royalty income under the Agreement. As
previously noted, the royalty rate earned on sales of Klean-Prep(TM) by
Helsinn-Birex was reduced by 50% on January 1, 2005. This reduction will
impact the fourth quarter revenues of 2005.
Research and development spending for the three-month period ended
April 30, 2005 totalled $1.0 million. Included in this amount was cash
received totalling $135,000, which resulted from a re-filing of a previous
years' Scientific Research and Experimental Development (SR&ED) tax claim.
Excluding the $135,000 cash credit, research and development spending for the
three-month period ending April 30, 2005 totalled $1.1 million and is flat
compared to the three-month period ended April 30, 2004.
Research and development spending, excluding the $135,000 cash credit,
totalled $3.6 million for the first nine months of fiscal 2005. This
represents a $0.3 million or 9% increase in research and development spending
for the same period in fiscal 2004 of $3.3 million. This increase reflects the
Company's increased scientific and patent activity surrounding DOS47 as well
as the ongoing costs of conducting the clinical trial.
Marketing, general and administration expenses for the quarter ended
April 30, 2005 were $914,000, representing an increase of $39,000, or 5%, over
expenditures for the quarter ended April 30, 2004 of $875,000. Marketing,
general and administrative spending for the nine-month period ended January
2005 was $2.6 million, representing an increase of $0.2 million, or 8%, over
$2.4 million in the prior year. Increased spending reflects the impact of
higher marketing expenditures in support of sales growth, costs associated
with having the Company's auditors review its quarterly results, as well as
the impact of wage increases and the amortization of stock based compensation
of prior years' quarters.
For the three-month period ended April 30, 2005, Helix incurred a net
loss of $1.2 million, or ($0.04) per share compared with a net loss of
$1.4 million, or ($0.05) per share for the three-month period ended April 30,
2004. Net loss for the first nine months of 2005 was $4.0 million, or ($0.15)
per share, compared with a net loss of $4.1 million, or ($0.16) per share, for
the same period in the prior year. For both the most recent quarter as well as
the year to date results, increased margins resulting from the growth of
Orthovisc(R) and Klean-Prep(TM) sales in Canada as well as increased royalty
incomes from the sale of Klean-Prep(TM) and the sub-license of the Company's
Biochip technology were partially offset by increased investments in research
and development and marketing and infrastructure costs.
Liquidity and Capital Resources
Cash, cash equivalents and short-term investments at April 30, 2005
totalled $8 million. In September 2004, the Company issued 2,415,000 common
shares and 2,415,000 common share purchase warrants for net proceeds of
$5.3 million in a series of private placements. Cash used in operations during
the nine-month period was $3.6 million.
While the Company is generating royalty revenue and revenue from the
distribution of pharmaceutical products, such revenue will not be sufficient
to fund all of the Company's planned research, development and marketing
activities. Accordingly, the Company expects to incur losses in fiscal 2005
and reduce its holdings of cash, cash equivalents and short-term investments.
After taking into account the Company's recent private placements, the
scheduled decrease in royalty rate from the Helsinn license and planned
expenditures, the Company expects that its current working capital will be
sufficient to finance operations for the next 16 - 20 months. The Company
intends to actively seek additional funding in calendar 2005.
The unaudited consolidated financial statements for the third quarter are
summarized below:
<<
April 30 July 31
2005 2004
Consolidated Balance Sheets ($'000)
Assets
Cash and cash equivalents 5,463 3,597
Short-term investments 2,495 2,986
Other current assets 1,471 698
Non-current assets 4,404 5,229
---------------------
Total Assets 13,833 12,510
---------------------
---------------------
Liabilities and Equity
Current liabilities 1,402 1,254
Non-current liabilities 17 37
Share capital, options and warrants 45,945 40,709
Deficit (33,531) (29,490)
---------------------
Total Liabilities and Equity 13,833 12,510
---------------------
---------------------
Three-month Nine-month
periods ended periods ended
April 30, April 30
2005 2004 2005 2004
--------------------- ---------------------
Consolidated Statements of
Operations ($'000 except
per share amounts)
Total Revenue 984 800 2,849 2,180
Cost of Sales 319 244 932 682
Research and development 986 1,119 3,416 3,251
Marketing, general and
administration 914 875 2,599 2,431
Other expenses/(income) - net (60) 5 (57) (54)
--------------------- ---------------------
Loss for the period (1,175) (1,443) (4,041) (4,130)
--------------------- ---------------------
--------------------- ---------------------
Loss per share - basic and
fully diluted (0.04) (0.05) (0.15) (0.16)
--------------------- ---------------------
--------------------- ---------------------
Three-month Nine-month
periods ended periods ended
April 30, April 30
2005 2004 2005 2004
--------------------- ---------------------
Consolidated Statements of
Cash Flows ($'000)
Cash (used in) operating
activities (1,158) (863) (3,596) (2,313)
Cash provided by (used in)
financing activities (5) (12) 5,216 1,325
Cash provided by (used in)
investing activities (2,658) 1,691 139 3,570
Effect of foreign exchange on
cash and cash equivalents 51 15 107 83
--------------------- ---------------------
Increase (Decrease) in cash
and cash equivalents (3,770) 831 1,866 2,665
Cash and cash equivalents -
beginning of period 9,233 3,719 3,597 1,885
--------------------- ---------------------
Cash and cash equivalents -
end of period 5,463 4,550 5,463 4,550
--------------------- ---------------------
--------------------- ---------------------
The foregoing is only a summary of the financial results of the Company's
quarter ended April 30, 2005. The full unaudited interim financial statements
and accompanying Management's Discussion and Analysis are being filed on SEDAR
(www.sedar.com).
During the first and fourth quarters of fiscal 2004, the Company recorded
stock based compensation charges of $254,000 related to stock options granted
to non-employees on October 1, 2003 and July 31, 2003. These charges should
have been amortized throughout the fiscal year 2004 over their vesting period.
The Company's quarterly results for fiscal 2004, after taking into account
this change in amortization are shown below. This resulted in no change to the
Company's audited financial statements for the fiscal year ended July 31,
2004.
October 31, January April 30, July 31,
2003 31, 2004 2004 2004
Net loss, as previously
reported $ (1,387) $ (1,205) $ (1,379) $ (1,831)
Stock based compensation
expense as previously
recognized 32 nil nil 222
Stock based compensation
expense as amortized over
fiscal 2004 (64) (63) (64) (63)
-------------------------------------------
Restated net loss $ (1,419) $ (1,268) $ (1,443) $ (1,672)
-------------------------------------------
-------------------------------------------
Basic and diluted loss per
share, previously reported $(0.06) $(0.05) $(0.06) $(0.07)
Impact of amortized stock-
based compensation expense - - - -
-------------------------------------------
Restated basic and diluted
loss per share $(0.06) $(0.05) $(0.06) $(0.07)
-------------------------------------------
-------------------------------------------
About Helix BioPharma
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 main product development programs are for its Topical
Interferon Alpha-2b and its novel L-DOS47 new drug candidate. Helix is listed
on the TSX under the symbol "HBP".
The Toronto and Frankfurt Stock Exchanges have not reviewed and do not
accept responsibility for the adequacy or accuracy of the content of this News
Release. This News Release contains forward-looking statements regarding the
Company's future revenues, expenditures, operations, liquidity and capital
resources, which statements can be identified by the use of forward-looking
terminology such as "planned", "with a view to"; "within 2 years", "forward",
"expects", "will", "allow", "continues" or "intends" or the negative thereof
or any other variations thereon or comparable terminology referring to future
events or results. Forward looking statements are statements about the future
and are inherently uncertain, and the Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of numerous factors, including without limitation, the Company's need
for additional funds, which may not be available on acceptable terms or at
all; uncertainty whether an IND for L-DOS47 will be filed within 2 years or at
all or whether human clinical trials for L-DOS47 will be commenced, completed
or successful; uncertainty whether the Topical Interferon Alpha-2b will be
completed in 2006 or at all; the Company's dependence on a few customers and a
few suppliers; research and development risks; the Company's dependence on
third parties for research, development and commercialization assistance and
support; government regulation and the need for regulatory approvals, which
are not assured; uncertainty that the Company's products will be accepted in
the marketplace; rapid technological change and competition from others; the
need to attract and retain skilled employees; intellectual property risks;
risks inherent in manufacturing (including upscaling) and marketing; product
liability and insurance risks; risks associated with clinical trials,
including the possibility that trials may be terminated early, delayed or
unsuccessful; exchange rate fluctuations; political, economic and
environmental risks; the need for performance by buyers and suppliers of
products and services; the Company's dependency on performance by its
licensees; and the risk of unanticipated expenses or unanticipated reductions
in revenue, or both; as well as a description of other risks and uncertainties
affecting the Company and its business, as contained in news releases and
filings with the Canadian Securities Regulatory Authorities, any of which
could cause actual results to vary materially from current results or the
Company's anticipated future results. Forward-looking statements are based on
the beliefs, opinions and expectations of the Company's management at the time
they are made, and the Company does not assume any obligation to update its
forward-looking statement if those beliefs, opinions or expectations, or other
circumstances should change.
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