AURORA, ON, March 14 /CNW/ - Helix BioPharma Corp. (TSX, FSE: "HBP")
today announced financial results for the second quarter of fiscal 2006, ended
January 31, 2006.
HIGHLIGHTS IN THE QUARTER
-------------------------
- Completed private placement financing during the quarter for gross
proceeds of $5,524,000.
- Signed an agreement for the development of a cGMP manufacturing
process for L-DOS47, in support of upcoming pre-clinical animal
studies and planned future Investigational New Drug regulatory
filings to commence human studies.
- Signed a collaboration agreement with the National Research
Council of Canada to assist in the ongoing characterization of a
specific lung cancer antibody for L-DOS47 in addition to further
novel tumour targeting antibodies.
RESULTS FROM OPERATIONS
Three and six month periods ended January 31, 2006 and comparative
periods
The Company recorded a loss of $1,311,000 and $2,762,000 respectively for
the three and six month periods ended January 31, 2006 for a loss per common
share of $0.04 and $0.09, respectively. In the comparative three and six month
periods ended January 31, 2005, the Company realized a loss of $1,513,000 and
$2,866,000 respectively for a loss per common share of $0.06 and $0.11,
respectively.
Revenues for the three month period ended January 31, 2006 totalled
$1,105,000, resulting in an increase of $222,000 or 25.1% when compared to
total revenues for the three month period ended January 31, 2005 of $883,000.
On a year to date basis, total revenues were $2,011,000. This represents an
increase of $150,000 or 8.1% when compared to total year to date revenues of
$1,861,000 for the comparative period in fiscal 2005. Higher product revenues
from the sale of Orthovisc(R) and research development work for Apotex Inc.
were slightly offset by lower royalty revenues resulting from the royalty rate
reduction for Klean-Prep(TM) sales in Europe.
Cost of sales totalled $405,000 (44.6% of product revenue) and $755,000
(45.9% of product revenue) respectively for the three and six month periods
ended January 31, 2006. For the three and six month periods ended January 31,
2005, cost of sales totalled $297,000 (49.7% of product revenue) and $612,000
(48.5% of product revenue) respectively. The Company's improved product
margins are mainly due to higher product sales volumes and the continuing
appreciation of the Canadian dollar.
Research and development expenses totalled $716,000 and $1,355,000
respectively for the three and six month periods ended January 31, 2006 for a
decrease of $100,000 and $191,000 respectively, when compared to the three and
six month periods ended January 31, 2005.
The decrease in research and development expenses for the comparative
three and six month periods ended January 31, 2006 and 2005 is mainly due to
lower patent filing activities related to DOS47, which were partially offset
by higher wages, contract manufacturing costs related to the Phase II trial of
Topical Interferon Alpha-2b and the recent cGMP manufacturing arrangement for
L-DOS47.
The Company expects research and development expenditures to increase as
the Company moves forward with its two lead products in development, Topical
Interferon Alpha-2b and L-DOS47.
Operating, general and administration expenses totalled $999,000 and
$983,000 respectively for the three month periods ended January 31, 2006 and
2005. For the six month periods ended January 31, 2006 and 2005, operating,
general and administration expenses totalled $1,828,000 and $1,778,000
respectively. Operating, general and administration expenses remained
relatively flat for the three month period ended January 31, 2006 when
compared to the three month period ended January 31, 2005. For the six month
period ended January 31, 2006, higher marketing expenditures in support of
sales growth along with higher administrative wages and directors' fees were
partially offset by lower consulting services. The directors' fee structure
was implemented in the second quarter of fiscal 2005.
Amortization of intangible assets totalled $214,000 and $311,000
respectively for the three month periods ended January 31, 2006 and 2005. For
the six month periods ended January 31, 2006 and 2005, amortization of
intangible assets totalled $515,000 and $622,000, respectively. The write-down
of intangible assets in the fourth quarter of fiscal 2005 resulted in a lower
net book value and in turn a decrease in the amortization expense of
intangible assets rolled forward into fiscal 2006. In addition, a certain
intangible asset was fully amortized in the three months ended January 31,
2006 and will result in a lower amortization expense of intangible assets in
future quarters.
Stock-based compensation expense in the three and six month periods ended
January 31, 2006 totalled $12,000 and $56,000, respectively. Stock-based
compensation expense for the comparative three and six month periods ended
January 31, 2005 were $nil, respectively. The $12,000 in stock-based
compensation expense is the result of stock options being amortized over their
vesting period.
Interest income totalled $68,000 and $99,000 respectively for the three
and six month periods ended January 31, 2006 for an increase of $30,000 and
$20,000 respectively, when compared to the three and six month periods ended
January 31, 2005. The increase in interest income is the result of higher cash
balances during the first six months of fiscal 2006 versus 2005.
Foreign exchange losses totalled $30,000 and $144,000 respectively for
the three and six month periods ended January 31, 2006. In the comparative
three and six month periods ended January 31, 2005, the Company realized
foreign exchange gains of $123,000 and $53,000, respectively. The foreign
exchange losses are the result of the foreign currency translation of the
Company's integrated foreign operation in Europe. These foreign exchange
losses were partially offset, by foreign exchange gains from Euro and US
dollar denominated purchases of product sold in Canada. The net assets of the
Company's integrated foreign operation in Europe consist mainly of cash,
denominated in Euro currency and are used to fund its Phase II Topical
Interferon Alpha-2b clinical program in Europe.
Income tax expense totalled $31,000 and $60,000 respectively for the
three and six month periods ended January 31, 2006. In the comparative three
and six month periods ended January 31, 2005, the Company recorded income tax
expense of $69,000 and $139,000, respectively. The reduced income tax
liability is mainly the result of lower royalty revenue related to sales of
Klean-Prep(TM) in Europe.
CASH FLOW
The loss for the three month period ended January 31, 2006 totalled
$1,311,000 for a decrease of $202,000 when compared to the three month period
ended January 31, 2005 of $1,513,000. Adjusting for non-cash and working
capital items, the cash used in operations for the three month period ended
January 31, 2006 totalled $1,266,000 and is a slight decrease of $76,000 when
compared to the cash used in operations for the three month period ended
January 31, 2005.
The loss for the six month period ended January 31, 2006 totalled
$2,762,000 for a decrease of $104,000 when compared to the six month period
ended January 31, 2005. Adjusting for non-cash and working capital items, the
cash used in operations for the six month periods ended January 31, 2006
totalled $1,977,000 and is a decrease of $457,000 when compared to the cash
used in operations for the six month period ended January 31, 2005.
Long-term debt repayment offset proceeds from the exercise of stock
options while private placements added net proceeds of $5,096,000 and
$8,795,000 respectively, in the three and six month periods ended January 31,
2006. Proceeds from the issuance of common shares and warrants for the
comparative three and six month periods ended January 31, 2005 were $nil and
$5,236,000, respectively.
The Company maintains excess funds in short-term investments and redeems
these funds as required, for its daily operating requirements. The Company
redeemed short-term investments of $1,480,000 and $nil respectively, in the
three month periods ended January 31, 2006 and 2005. For the six month period
ended January 31, 2006 and 2005, the Company redeemed short-term investments
of $2,470,000 and $2,986,000 respectively.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has financed its operations from public and
private sales of equity, the exercise of warrants and stock options, interest
income on funds available for investment, government grants, investment tax
credits and revenues from distribution, licensing and contract services.
On November 7, 2005 the Company raised net proceeds of $5,096,000 through
a private placement of 3,156,428 units at $1.75 per unit. Each unit consists
of one common share and one share purchase warrant. Each share purchase
warrant can be exercised on or before March 31, 2008 for one common share, at
an exercise price of $2.45.
As at January 31, 2006, the Company had cash and short-term investments
totalling $13,226,000, compared with $6,600,000 at July 31, 2005. The total
number of common shares issued and outstanding at January 31, 2006 was
32,681,835 (July 31, 2005 - 27,183,726).
After taking into consideration the improved working capital resulting
from the successful completion of the private placements, the decrease in
royalty rate from the Helsinn-Birex license, planned expenditures for research
and development for the Phase II clinical program of the Company's Topical
Interferon Alpha-2b, research expenditures relating to the Company's novel
anti-cancer therapeutic, L-DOS47, and marketing expenditures relating
primarily to Orthovisc(R), the Company expects that its working capital is
still sufficient to finance operations through to December 2007. The Company
will continue to seek additional funding, primarily by way of equity
offerings, to carry out its business plan and to minimize risks to its
operations. The market, however, for equity financings for companies such as
Helix is challenging, and there can be no assurance that additional funding by
way of equity financing will be available. The failure of the Company to
obtain additional funding on a timely basis may result in the Company reducing
or delaying one or more of its planned research, development and marketing
programs and reducing related personnel, any of which could impair the current
and future value of the business. Any additional equity financing, if secured,
may result in significant dilution to the existing shareholders at the time of
such financing. The Company may also seek additional funding from other
sources, including technology licensing, co-development collaborations, and
other strategic alliances, which, if obtained, may reduce the Company's
interest in its projects or products. There can be no assurance, however, that
any alternative sources of funding will be available.
The Company's unaudited interim consolidated financial statements for the
three and six month periods ended January 31, 2006 and 2005 are summarized
below:
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Consolidated Statements of Operations
for the three and six month periods ended January 31, 2006 and 2005
(thousand $, except for per share data)
Three months Six months
ended January 31, ended January 31,
2006 2005 2006 2005
-----------------------------------
Revenue:
Product revenue 908 597 1,644 1,261
License fees and royalties 143 286 288 600
Research and development contracts 54 - 79 -
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1,105 883 2,011 1,861
Expenses:
Cost of sales 405 297 755 612
Research and development 716 816 1,355 1,546
Operating, general and admin 999 983 1,828 1,778
Amortization of intangibles 214 311 515 622
Amortization of capital assets 77 81 159 162
Stock-based compensation 12 - 56 -
Interest income, net (68) (38) (99) (79)
Foreign exchange loss 30 (123) 144 (53)
-----------------------------------
2,385 2,327 4,713 4,588
Loss before income taxes (1,280) (1,444) (2,702) (2,727)
Income taxes 31 69 60 139
-----------------------------------
Loss for the period (1,311) (1,513) (2,762) (2,866)
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Loss per share:
Basic (0.04) (0.06) (0.09) (0.11)
Diluted (0.04) (0.06) (0.09) (0.11)
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Consolidated Statements of Cash Flows
for the three and six month periods ended January 31, 2006 and 2005
(thousand $)
Three months Six months
ended January 31, ended January 31,
2006 2005 2006 2005
-----------------------------------
Cash provided by (used in):
Loss for the period (1,311) (1,513) (2,762) (2,866)
Items not involving cash:
Amortization of capital assets 77 81 159 162
Amortization of intangibles 214 311 515 622
Stock-based compensation 12 - 56 -
Foreign exchange loss 30 (123) 144 (53)
-----------------------------------
(978) (1,244) (1,888) (2,135)
Change in non-cash working capital (288) (98) (89) (299)
-----------------------------------
Operating activities (1,266) (1,342) (1,977) (2,434)
Financing activities 5,096 (5) 8,791 5,221
Investing activities 1,441 (29) 2,426 2,796
Effect of exchange rate
changes on cash (30) 123 (144) 53
-----------------------------------
Increase in cash 5,241 (1,253) 9,096 5,636
Cash:
Beginning of the period 7,985 10,486 4,130 3,597
-----------------------------------
End of the period 13,226 9,233 13,226 9,233
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Consolidated Balance Sheets as at
($ thousands)
January 31 July 31
2006 2005
--------------------
Current assets:
Cash 13,226 4,130
Short-term investments - 2,470
Accounts receivable 720 461
Inventory 211 474
Prepaid and other 268 283
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14,425 7,818
Non current assets 3,002 3,632
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17,427 11,450
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January 31 July 31
2006 2005
--------------------
Current liabilities:
Accounts payable & accruals 975 1,060
Deferred revenue 27 50
Long-term debt - current portion 26 20
--------------------
1,028 1,130
Long term debt 3 18
Shareholders' equity 16,396 10,302
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17,427 11,450
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The Company's unaudited interim consolidated financial statements and
management's discussion and analysis of financial condition and results of
operations have been filed, today, with Canadian securities regulatory
authorities and will be available at SEDAR at www.sedar.com.
About Helix BioPharma Corp.
Helix BioPharma Corp. is a biopharmaceutical company specializing in the
field of cancer therapy. The Company is actively developing innovative
products for the prevention and treatment of cancer based on its proprietary
technologies. Helix's product development initiatives include its Topical
Interferon Alpha-2b and its novel L-DOS47 new drug candidate. Helix is listed
on the TSX under the symbol "HBP", and quoted on the Frankfurt, Berlin, Munich
and Stuttgart Stock Exchanges under the same symbol.
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 certain forward-looking statements
regarding the Company's activities and finances, which statements can be
identified by the use of forward-looking terminology such as "leading",
"future", "identify", "characterize", "planned", "expects", "developing",
"with a view to", or variations thereon, or that events "can", "should" or
"will" occur, or comparable terminology referring to future events or results.
Forward looking statements are statements about the future and are inherently
uncertain, and Helix's actual results could differ materially from those
anticipated in these forward-looking statements as a result of numerous
factors, including without limitation, uncertainty whether the proposed
Swedish clinical trial will be commenced or completed as proposed or at all;
uncertainty whether the results of either the German study or the Swedish
trial, will show efficacy and safety of Topical Interferon Alpha-2b as
anticipated or at all; the need for additional clinical trials, the occurrence
and success of which cannot be assured; product liability and insurance risks;
research & development risks, the risk of technical obsolescence; the need for
further regulatory approvals, which may not be obtained in a timely matter or
at all; intellectual property risks; marketing/manufacturing and
partnership/strategic alliance risks; the effect of competition; uncertainty
of the size and existence of a market opportunity for Helix's products;
uncertainty as to whether the Company's products will be successfully
commercialized, or at all; Helix's need for additional future capital, which
may not be available in a timely manner or at all; as well as a description of
other risks and uncertainties affecting Helix 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 Helix's anticipated future results. Forward-looking
statements are based on the beliefs, opinions and expectations of Helix's
management at the time they are made, and Helix does not assume any obligation
to update any forward-looking statement should those beliefs, opinions or
expectations, or other circumstances change.
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