AURORA, ON, June 7 /CNW/ - Helix BioPharma Corp. (TSX, FSE: "HBP") today
announced financial results for the third quarter of fiscal 2006, ended
April 30, 2006.
HIGHLIGHTS
----------
- Received milestone payment from the biochip license agreement with
Lumera Corporation
- Announced the appointment of Noonan Russo, a division of Euro RSCG
Life PR, to assist in expanding the Company's profile among the
scientific research, pharmaceutical and investment communities in
the USA.
RESULTS FROM OPERATIONS
Three and nine month periods ended April 30, 2006 and comparative periods
The Company recorded a loss of $1,360,000 and $4,122,000 respectively for
the three and nine month periods ended April 30, 2006 for a loss per common
share of $0.04 and $0.13, respectively. In the comparative three and nine
month periods ended April 30, 2005, the Company realized a loss $1,175,000 and
$4,041,000 respectively for a loss per common share of $0.04 and $0.15,
respectively.
Revenues for the three month period ended April 30, 2006 totalled
$1,099,000, resulting in an increase of $97,000 or 9.7% when compared to total
revenues for the three month period ended April 30, 2005 of $1,002,000. On a
year to date basis, revenues totalled $3,110,000. This represents an increase
of $248,000 or 8.7% when compared to total year to date revenues of $2,862,000
for the comparative period in fiscal 2005. Higher product revenues from the
sale of Orthovisc(R), research development work for Apotex Inc. and milestone
payments from the Company's license of biochips to Lumera Corporation were
offset by lower royalty revenues from Klean-Prep(TM) sales in Europe.
Cost of sales totalled $284,000 (42.7% of product revenue) and $1,039,000
(45.0% of product revenue) respectively for the three and nine month periods
ended April 30, 2006. For the three and nine month periods ended April 30,
2005, cost of sales totalled $283,000 (45.4% of product revenue) and $895,000
(47.5% of product revenue). 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 $1,025,000 and $2,380,000
respectively for the three and nine month periods ended April 30, 2006 for an
increase of $443,000 and $252,000 respectively, when compared to the three and
nine month periods ended April 30, 2005. The increase in research and
development expenses for the comparative three and nine month periods ended
April 30, 2006 and 2005 is mainly due to higher wages, contract manufacturing
costs and preclinical work specifically related to L-DOS47, which where offset
by lower consulting services and patent filing activities.
The Company expects research and development expenditures to increase as
the Company moves forward with its two lead product development programs for
Topical Interferon Alpha-2b and L-DOS47.
Operating, general and administration expenses totalled $1,126,000 and
$2,954,000 respectively for the three and nine month periods ended April 30,
2006 for an increase of $149,000 and $199,000 respectively, when compared to
the three and nine month periods ended April 30, 2005. The increase in
operating, general and administration expenses for the comparative three month
period ended April 30, 2006 is also reflective of the increase in the
comparative nine month period, with higher wages, directors' fees and
marketing expenditures in support of sales growth, being offset by lower
consulting, legal and accounting services. The directors' fee structure was
newly implemented in the second quarter of fiscal 2005.
Amortization of intangible assets totalled $40,000 and $314,000
respectively for the three month periods ended April 30, 2006 and 2005. For
the nine month periods ended April 30, 2006 and 2005, amortization of
intangible assets totalled $555,000 and $936,000, 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 rolling forward into fiscal 2006. In addition and as
previously disclosed, a certain intangible asset was fully amortized in the
second quarter of fiscal 2006, resulting in the reduced amortization expense
in the current quarter. In future quarters, the Company expects quarterly
amortization expense to remain at the same level as in the third quarter of
fiscal 2006.
Amortization of capital assets in both the three and nine month ended
April 30, 2006 remained relatively unchanged when compared to the three and
nine month periods ended April 30, 2005.
Stock-based compensation expense in the three and nine month periods
ended April 30, 2006 totalled $12,000 and $68,000, respectively. Stock-based
compensation expense for the comparative three and nine month periods ended
April 30, 2005 were $nil, respectively. The stock-based compensation expense
in the quarter and year-to-date is the result of certain stock options issued
on June 30, 2005, which are being amortized over their vesting period.
Interest income totalled $77,000 and $176,000 respectively for the three
and nine month periods ended April 30, 2006 for an increase of $44,000 and
$65,000 respectively, when compared to the three and nine month periods ended
April 30, 2005. The increase in interest income is mainly the result of higher
cash balances and interest bearing short-term investments during the first
nine months of fiscal 2006 versus 2005.
The Company realized foreign exchange gains in the three months ended
April 30, 2006 of $45,000, while on a year-to-date basis foreign exchange
losses totalled $99,000. In the comparative three and nine month periods ended
April 30, 2005, the Company realized foreign exchange gains of $51,000 and
$105,000, respectively. The foreign exchange gain in the third quarter of
fiscal 2006 is mainly the result of the Canadian dollar's depreciation against
the Euro. The net assets of the Company's integrated foreign operation in
Europe consist mainly of cash, denominated in Euros, which are used to fund
its Phase II Topical Interferon Alpha-2b clinical program in Europe. US dollar
denominated purchases of product sold in Canada and the continuous
appreciation of the Canadian dollar's vis-Ga-vis the US dollar, further
contributed to the foreign exchange gain in the third quarter of fiscal 2006.
Income tax expense totalled $16,000 and $76,000 respectively for the
three and nine month periods ended April 30, 2006. In the comparative three
and nine month periods ended April 30, 2005, the Company recorded income tax
expense of $25,000 and $163,000, 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 April 30, 2006 totalled
$1,360,000 for an increase of $185,000 when compared to the three month period
ended April 30, 2005 of $1,175,000. Adjusting for non-cash and working capital
items, the cash used in operating activities in the three month period ended
April 30, 2006 totalled $894,000 and is a decrease of $267,000 when compared
to the cash used in operating activities in the three month period ended
April 30, 2005, which totalled $1,161,000.
Loss for the nine month period ended April 30, 2006 totalled $4,122,000
for a slight increase of $81,000 when compared to the nine month period ended
April 30, 2005 of $4,041,000. Adjusting for non-cash and working capital
items, the cash used in operating activities in the nine month period ended
April 30, 2006 totalled $2,871,000 and is a decrease of $725,000 when compared
to the cash used in operating activities in the nine month period ended
April 30, 2005, which totalled $3,596,000.
Proceeds from the exercise of stock options offset long-term debt
repayment in the three month period ended April 30, 2006 for a net source of
finance activities of $4,000. For the nine month periods ended April 30, 2006
and 2005, respectively, private placements were the main sources of financing
activities and represented net proceeds of $8,795,000 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 had
net purchases of short-term investments totalling $6,579,000 and $2,495,000
respectively, for the three month periods ended April 30, 2006 and 2005. For
the nine month period ended April 30, 2006 the Company had net purchases of
short-term investments totaling $4,109,000 while in the comparative nine month
period ended April 30, 2005, the Company had net redemptions of $491,000.
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.
As at April 30, 2006, the Company had cash and short-term investments
totalling $12,326,000, compared with $6,600,000 at July 31, 2005. The total
number of common shares issued and outstanding at April 30, 2006 was
32,685,335 (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 nine month periods ended April 30, 2006 and 2005 are summarized
below:
<<
Consolidated Statements of Operations
for the three and nine month periods ended April 30, 2006 and 2005
(thousand $, except for per share data)
Three months Nine months
ended April 30, ended April 30,
2006 2005 2006 2005
-------------------------------------------
Revenue:
Product revenue 665 624 2,309 1,885
License fees and royalties 333 285 621 884
Research and development
contracts 101 93 180 93
-------------------------------------------
1,099 1,002 3,110 2,862
Expenses:
Cost of sales 284 283 1,039 895
Research and development 1,025 582 2,380 2,128
Operating, general and admin 1,126 977 2,954 2,755
Amortization of intangibles 40 314 555 936
Amortization of capital
assets 78 80 237 242
Stock-based compensation 12 - 68 -
Interest income, net (77) (33) (176) (111)
Foreign exchange
loss/(gain) (45) (51) 99 (105)
-------------------------------------------
2,443 2,152 7,156 6,740
Loss before income taxes (1,344) (1,150) (4,046) (3,878)
Income taxes 16 25 76 163
-------------------------------------------
Loss for the period (1,360) (1,175) (4,122) (4,041)
-------------------------------------------
-------------------------------------------
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Loss per share:
Basic (0.04) (0.04) (0.13) (0.15)
Diluted (0.04) (0.04) (0.13) (0.15)
-------------------------------------------------------------------------
Consolidated Statements of Cash Flows
for the three and nine month periods ended April 30, 2006 and 2005
(thousand $)
Three months Nine months
ended April 30, ended April 30,
2006 2005 2006 2005
-------------------------------------------
Cash provided by (used in):
Loss for the period (1,360) (1,175) (4,122) (4,041)
Items not involving cash:
Amortization of capital
assets 78 80 237 242
Amortization of intangibles 40 311 555 933
Stock-based compensation 12 - 68 -
Foreign exchange
loss/(gain) (45) (51) 99 (105)
-------------------------------------------
(1,275) (835) (3,163) (2,971)
Change in non-cash
working capital 381 (326) 292 (625)
-------------------------------------------
Operating activities (894) (1,161) (2,871) (3,596)
Financing activities 4 (5) 8,795 5,216
Investing activities (6,634) (2,655) (4,208) 141
Effect of exchange rate
changes on cash 45 51 (99) 105
-------------------------------------------
Increase in cash (7,479) (3,770) 1,617 1,866
Cash:
Beginning of the period 13,226 9,233 4,130 3,597
-------------------------------------------
End of the period 5,747 5,463 5,747 5,463
-------------------------------------------
-------------------------------------------
Consolidated Balance Sheets as at
($ thousands)
April 30 July 31
2006 2005
----------------------
Current assets:
Cash 5,747 4,130
Short-term investments 6,579 2,470
Accounts receivable 769 461
Inventory 257 474
Prepaid and other 126 283
----------------------
13,478 7,818
Non current assets 2,939 3,632
----------------------
16,417 11,450
----------------------
----------------------
April 30 July 31
2006 2005
----------------------
Current liabilities:
Accounts payable & accruals 1,336 1,060
Deferred revenue - 50
Long-term debt -current portion 18 20
----------------------
1,354 1,130
Long term debt 7 18
Shareholders' equity 15,056 10,302
----------------------
16,417 11,450
----------------------
----------------------
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 "expects",
"developing", "may", 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 regarding the completion or
success of the Company's Phase II clinical program in Europe for Topical
Interferon Alpha-2b; 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
Company's dependence on its licensees for performance; the Company's
dependence on a few customers and a few suppliers; 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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