AURORA, ON, March 8 /CNW/ - Helix BioPharma Corp. (TSX: HBP/Frankfurt: WKN 918864) today announced financial results for the second quarter of fiscal 2007, ended January 31, 2007.
HIGHLIGHTS
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- Initiated enrollment in Phase II clinical trial with Topical
Interferon Alpha-2B in patients with ano-genital warts
- Completed Phase II clinical study with Topical Interferon Alpha-2B in
patients with low-grade squamous intraepithelial lesions
- Signed L-DOS47 manufacturing agreement with Biovectra DCL
- Presented L-DOS47 findings at Keystone Symposia meeting, "Antibodies
as Drugs: From Basic Biology to Clinic"
- Presented L-DOS47 findings at the fourth international conference on
"Tumour Microenvironment" in Florence, Italy
- Shareholders approved all management proposals and elected
management's slate of directors at the 2007 annual meeting of
shareholders, following a proxy dispute
RESULTS FROM OPERATIONS
Three and six month period ended January 31, 2007 and comparative periods
for the previous year
The Company recorded a loss of $1,900,000 and $3,242,000 respectively for the three and six month periods ended January 31, 2007 for a loss per common share of $0.05 and $0.09, respectively. In the comparative three and six month periods ended January 31, 2006, the Company realized a loss $1,311,000 and $2,762,000 respectively for a loss per common share of $0.04 and $0.09, respectively.
Total revenues for the three month period ended January 31, 2007 were $892,000 (2006 - $1,105,000), resulting in a decrease of $213,000 or 19.3%. Total revenues, on a year-to-date basis were $1,718,000 (2006 - $2,011,000), resulting in a decrease of $293,000 or 14.6%. Lower overall revenues for both the three and six month periods ended January 31, 2007 were due primarily to lower product revenues in the second quarter of fiscal 2007 from the sale of Orthovisc(R), as price reductions and increased product sampling of competitive product continued into the second quarter of fiscal 2007. In addition, during the three and six month periods ended January 31, 2007, no revenues were generated from research and development contract services with Apotex Inc. although the Company did complete the last milestone subsequent to the second quarter and will realize revenue of $148,000 in the third quarter of fiscal 2007.
Research & development costs totalled $1,065,000 and $1,973,000 respectively for the three and six month periods ended January 31, 2007 (three and six month periods ended January 31, 2006: $754,000 and $1,432,000 respectively). In both the three and six month periods ended January 31, 2007, the majority of research & development expenditures were allocated towards the Company's L-DOS47 project. With the Phase II trial in Sweden ramping up, research & development expenditures related to the Topical Interferon Alpha-2b projects will increase in the future quarters. In the meantime, the Company is awaiting results from the Phase II study in Germany, which is expected shortly.
The Company's commitment to expedite the commercialization of its new drug candidates has increased research and development costs, with further expenditure increases forecasted for future quarters.
Operating, general & administration expenses totalled $1,578,000 and $2,447,000 respectively for the three and six month periods ended January 31, 2007 (three and six month periods ended January 31, 2006: $961,000 and $1,751,000 respectively). In the three month period ended January 31, 2007, lower marketing promotional expenditures and sales commission from lower product revenues in Canada were more than offset by higher costs related to a shareholder proxy dispute, Director's and Officers insurance premiums, wages, accounting & consulting services.
A shareholder proxy dispute significantly increased the costs related to the Company's annual shareholder meeting held on January 23, 2007. These significantly higher than normal costs ($537,000) for an annual shareholder meeting of Helix shareholders, were mainly attributable to higher legal, investor relations, proxy solicitation and related meeting costs.
Amortization of intangible assets in the three and six month periods ended January 31, 2007 totalled $39,000 and $79,000 respectively (three and six month periods ended January 31, 2006: $214,000 and $515,000 respectively). The variance is due to a certain intangible asset which is now fully amortized.
Stock-based compensation expense in the three and six month period ended January 31, 2007 totalled $12,000 and $24,000 respectively (three and six month periods ended January 31, 2006: $12,000 and $56,000 respectively). The stock-based compensation expense relates to the ongoing amortization of compensation costs of stock options granted on June 30, 2005, over their vesting period.
Interest income in the three and six month periods ended January 31, 2007 totalled $142,000 and $244,000 respectively (three and six month periods ended January 31, 2006: $68,000 and $99,000 respectively). The increase in interest income is the result of higher cash balances.
Foreign exchange gain in the first three and six month periods ended January 31, 2007 totalled $172,000 and $127,000 respectively. In the comparative three and six month periods ended January 31, 2006, the Company realized foreign exchange losses of $30,000 and $144,000 respectively. The variance is mainly due to the foreign currency translation of the Company's integrated foreign operation in Ireland and the depreciation of the Canadian dollar versus the Euro in the three and six month periods ended January 31, 2007.
Income tax expense in the three and six month periods ended January 31, 2007 totalled $29,000 and $58,000 respectively (three and six month periods ended January 31, 2006: $31,000 and $60,000 respectively). All income taxes are attributable to the Company's operations in Ireland.
CASH FLOW
The loss in the three and six month periods ended January 31, 2007 totalled $1,900,000 and $3,242,000 respectively (three and six month periods ended January 31, 2006: $1,311,000 and $2,762,000 respectively). Adjusting for items not involving cash and non-cash working capital items, the cash used in operations for the three and six months ended January 31, 2007 totalled $1,324,000 and $2,745,000 respectively (three and six month periods ended January 31, 2006: $1,266,000 and $1,977,000 respectively).
Changes in non-cash working capital helped mitigate the cash used in operations in the three month period ended January 31, 2007. Excluding items not involving cash, the cash used in operations in the comparative three month period ended January 31, 2007 improved while on a comparative six month basis, for the period ended January 31, 2007, the cash used in operations was relatively unchanged.
Debt repayment of $6,000 represented the entire use of funds in the three month period ended January 31, 2007. In the six month period ended January 31, 2007, in addition to debt repayment totaling $13,000 the Company completed a private placement for net proceeds of $6,480,000. In the three and six month periods ended January 31, 2006, financing activities totalled $5,096,000 and $8,791,000 respectively, with virtually all the financing sources coming from the completion of two separate private placements.
Investing activities in the three and six month periods ended January 31, 2007 represented capital asset purchases of $11,000 and $26,000 respectively (three and six month periods ended January 31, 2006: $39,000 and $44,000 respectively). Redemptions of short-term investments in the three and six month periods ended January 31, 2007 totalled $nil and $6,640,000 respectively (three and six month periods ended January 31, 2006: $1,480,000 and $2,470,000 respectively). When appropriate, the Company maintains excess funds in short term investments and redeems these funds as required for its daily operating requirements.
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.
The Company did not raise any capital during the three month period ended January 31, 2007.
On January 31, 2007, the Company had cash and cash equivalents, along with short-term investments totalling $14,855,000 (July 31, 2006 - $11,032,000). The total number of common shares issued as at January 31, 2007 was 36,335,335 (July 31, 2006 - 32,685,335).
After taking into consideration the costs related to the shareholder proxy dispute in the second quarter of fiscal 2007, anticipated revenue from the Helsinn-Birex license, planned expenditures for research and development for the Phase II clinical study of the Company's Topical Interferon Alpha-2b, research expenditures relating to the Company's novel anti-cancer therapeutic, L-DOS47, and reduced revenue forecasts for Orthovisc(R) and assuming no unanticipated expenses, the Company believes its working capital is still sufficient to finance operations to July 2008. 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 January 31, 2007 and 2006 are summarized below:
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Consolidated Balance Sheets as at
($ thousands)
31-Jan 31-Jul
2007 2006
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Current assets:
Cash and cash equivalents 14,855 4,392
Short-term investments - 6,640
Accounts receivable 745 878
Inventory 438 418
Prepaid and other 52 160
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16,090 12,488
Non current assets 2,778 2,981
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18,868 15,469
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31-Jan 31-Jul
2007 2006
Current liabilities:
Accounts payable & accruals 1,722 1,572
Long-term debt -current portion 3 16
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1,725 1,588
Long term debt - -
Shareholders' equity 17,143 13,881
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18,868 15,469
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Consolidated Statements of Operations
for the three and six month periods ended January 31, 2007 and 2006
(thousand $, except for per share data)
Three months Six months
ended January 31, ended January 31,
2006 2006 2007 2006
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Revenue:
Product revenue 757 908 1,453 1,644
License fees and royalties 135 143 265 288
Research and development
contracts - 54 - 79
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892 1,105 1,718 2,011
Expenses:
Cost of sales 310 405 600 755
Research and development 1,065 754 1,973 1,432
Operating, general and admin 1,578 961 2,447 1,751
Amortization of intangibles 39 214 79 515
Amortization of capital assets 73 77 150 159
Stock-based compensation 12 12 24 56
Interest income, net (142) (68) (244) (99)
Foreign exchange loss (172) 30 (127) 144
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2,763 2,385 4,902 4,713
Loss before income taxes (1,871) (1,280) (3,184) (2,702)
Income taxes 29 31 58 60
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Loss for the period (1,900) (1,311) (3,242) (2,762)
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Loss per share:
Basic (0.05) (0.04) (0.09) (0.09)
Diluted (0.05) (0.04) (0.09) (0.09)
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Consolidated Statements of Cash Flows
for the three and six month periods ended January 31, 2007 and 2006
(thousand $)
Three months Six months
ended January 31, ended January 31,
2006 2006 2007 2006
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Cash provided by (used in):
Loss for the period (1,900) (1,311) (3,242) (2,762)
Items not involving cash:
Amortization of capital assets 73 77 150 159
Amortization of intangibles 39 214 79 515
Stock-based compensation 12 12 24 56
Foreign exchange loss (172) 30 (127) 144
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(1,948) (978) (3,116) (1,888)
Change in non-cash working
capital 624 (288) 371 (89)
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Operating activities (1,324) (1,266) (2,745) (1,977)
Financing activities (6) 5,096 6,467 8,791
Investing activities (11) 1,441 6,614 2,426
Effect of exchange rate changes
on cash 172 (30) 127 (144)
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Increase in cash (1,169) 5,241 10,463 9,096
Cash:
Beginning of the period 16,024 7,985 4,392 4,130
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End of the period 14,855 13,226 14,855 13,226
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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".
This News Release contains certain forward-looking statements and information regarding the Company's activities and finances, including anticipated revenues, expenditures and sufficiency of working capital, which statements can be identified by the use of forward-looking terminology such as "expected", "shortly", "forecasted", "anticipated", "developing", or variations thereon, or that events "can", should" or "will" occur, or comparable terminology referring to future events or results. Forward looking statements and information are statements and information about the future and are inherently uncertain, and Helix's actual results could differ materially from those anticipated in these forward-looking statements and information as a result of numerous factors, including without limitation, uncertainty of the Phase II German study; uncertainty whether the Swedish clinical trial will be completed as proposed or at all; uncertainty whether either trial results 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 Helix's latest AIF and other filings with the Canadian Securities Regulatory Authorities at www.sedar.com, any of which could cause actual results to vary materially from current results or Helix's anticipated future results. Forward-looking statements and information 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 or information should those beliefs, opinions or expectations, or other circumstances change.