AURORA, ON, Oct. 31 /CNW/ - Helix BioPharma Corp. (TSX, FSE: "HBP")
today announced financial results for the year ended July 31, 2005.
During the 2005 fiscal year, the Company strengthened its management team
and Board of Directors while making progress with both clinical (Topical
Interferon Alpha-2b) and pre-clinical (L-DOS47) programs. To further support
both programs, the Company successfully raised additional capital from private
placements.
HIGHLIGHTS
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- Topical Interferon Alpha-2b
- Initiated a controlled phase II clinical study in Germany, to
assess the efficacy and safety of Topical Interferon Alpha-2b in
patients with HPV-induced pre-cancerous cervical lesions,
otherwise known as low-grade squamous intraepithelial lesions
(LSIL);
- Expanded Phase II LSIL study by opening two additional clinical
trial sites in Germany;
- Received approval in Sweden to conduct Phase a II clinical trial
of Topical Interferon Alpha-2b for an additional disease
indication, ano-genital warts, in patients who are positive for
infection with the human papilloma virus (HPV);
- L-DOS47
- Identified L-DOS47 (for the treatment of lung cancer) as the
Company's leading product candidate from the DOS47 program;
- DOS47 scientific paper published in Journal of Experimental
Therapeutics and Oncology;
- Entered into an exclusive license agreement of Helix's Biochip
technology with Lumera Corporation (NASDAQ:LMRA), in return for
upfront and milestone payments in addition to future royalty payments;
- PharmaDerm Laboratories Ltd., a wholly-owned subsidiary of the Company
entered into a contract services agreement to identify and
characterize a lead formulation for Apotex Inc.'s ("Apotex") topical
therapeutic product line;
- Rivex Pharma Inc., another wholly-owned subsidiary of the Company,
continued to generate profitable revenue growth;
- Completed private placement financings during the year and subsequent
to the year-end, for net proceeds of $8,938,000;
- Announced new Chief Financial Officer, Frank Michalargias;
- Elected Jack Kay, President and Chief Operating Officer of Apotex, as
additional director.
For the year ended July 31, 2005, the Company recorded a net loss of
$7,625,000 or $0.28 per common share which represents an increase of
$1,823,000 over the fiscal year ended July 31, 2004, when the Company recorded
a net loss of $5,802,000 or $0.24 per common share. Of this increase,
$1,218,000 is attributable to non cash items related to stock based
compensation expense and $428,000 is attributable to the discontinuance by the
Company of certain non-core research and related write down of the associated
intellectual properties in the fourth quarter of 2005.
Higher product revenues from the sale of Orthovisc(R) and Klean-Prep(TM)
in Canada, a licensing arrangement of the Company's Biochip technology to
Lumera Corporation ("Lumera") and research development work for Apotex more
than offset lower royalty revenues resulting from the previously scheduled
royalty rate reduction for Klean-Prep(TM) sales in Europe. The royalty rate
from Helsinn-Birex was, as previously scheduled, reduced in half effective
January 1, 2005. Fiscal 2006 will be the first year to reflect the reduced
rate for the entire fiscal period. On a percentage basis, product cost of
sales increased proportionately with the increase in product revenues.
Offsetting this was increased investment in research and development, product
marketing in support of volume growth, non-cash stock-based compensation and
the write down of intangibles.
FINANCIAL REVIEW
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Revenues for the year ended July 31, 2005 totalled $3,732,000 which
represents an increase of $761,000 or 25.6% over revenues for the previous
year ended July 31, 2004 of $2,971,000.
Product revenues in fiscal 2005 totalled $2,456,000 and represent and
increase of $601,000 or 32.4% when compared to fiscal 2004. The increase in
product revenues is mainly the result of increased marketing efforts in
Canada, with Orthovisc(R) accounting for $560,000 of the overall increase. In
fiscal 2005, product cost of sales increased proportionately with the increase
in product revenues and overall margin percentages have remained in line with
those of fiscal 2004.
License fees and royalties totalled $1,234,000 in fiscal 2005 and
represent an increase of $118,000 or 10.6% when compared to fiscal 2004. These
license fees and royalties were comprised of royalties related to sales of
Klean-Prep(TM), by Helsinn-Birex, and upfront license and signing fees under
the Company's license of its Biochip technology to Lumera. The royalty rate
from Helsinn-Birex was, as previously scheduled, reduced in half effective
January 1, 2005. Fiscal 2006 will be the first year to reflect the reduced
rate for the entire fiscal period.
Research and development contracts comprised an agreement with Apotex to
identify and characterize a lead formulation for Apotex's line of topical
therapeutic products, which resulted in $42,000 of research and development
contract revenue.
Research and development costs in fiscal 2005 totalled $2,853,000.
Included in this amount was a cash credit of $135,000 resulting from the
re-filing of a previous years' Scientific Research and Experimental
Development tax claim. Excluding the $135,000 cash credit, research and
development costs for fiscal 2005 totalled $2,988,000 and represent an
increase of $377,000 when compared to fiscal 2004, when research and
development costs totalled $2,611,000. This increase reflects the Company's
increased scientific and patent activity surrounding L-DOS47 as well as the
ongoing costs of conducting clinical trials of the Topical Interferon Alpha-2b
trials in Europe. Also filed today on SEDAR at www.sedar.com was the Company's
2005 Annual Information Form which contains an updated discussion of the
Company's activities associated with its research and development programs.
Operating, general and administration expenses in fiscal 2005 totalled
$3,710,000 and represent an increase of $350,000 when compared to fiscal 2004
when operating, general and administration expenses totalled $3,360,000. This
increase is the result of higher marketing expenditures in support of sales
growth, wage increases and higher audit fees associated with the Company's
quarterly reporting requirements.
Amortization of intangible assets in fiscal 2005 totalled $1,244,000 and
remains unchanged when compared to fiscal 2004. Intangible asset write downs
in fiscal 2005 totalled $428,000 resulting from the discontinuance by the
Company of certain non-core research and the related write down of the
associated intellectual property. There were no write downs in fiscal 2004.
Amortization of capital assets in fiscal 2005 totalled $330,000 and
represents an increase of $39,000 when compared to fiscal 2004 when
amortization of capital assets totalled $291,000. The increased amortization
expense is the result of higher capital asset purchases during the year.
Stock-based compensation expense in fiscal 2005 totalled $1,470,000 and
represents an increase of $1,218,000 when compared to fiscal 2004 when stock-
based compensation expense totalled $252,000. During the year, the Company
granted options totalling 1,151,500, with a fair value of $1,647,000. Of this
amount 25,000 options were forfeited and another 100,000 remain unvested as at
July 31, 2005. The fair value of the forfeited and unvested options is $34,000
and $143,000 respectively. The 100,000 unvested stock options with a fair
value of $143,000 will be expensed over a three year period as the options
become vested. In addition, 1,353,500 stock options expired unexercised during
the year.
Interest income in fiscal 2005 totalled $137,000 and represents a $1,000
increase when compared to fiscal 2004. Cash balances and interest rates have
remained relatively constant during fiscal 2005 and 2004.
Foreign exchange losses in fiscal 2005 totalled $78,000 and represent a
$68,000 increase when compared to the foreign exchange losses of $10,000 in
fiscal 2004. Foreign exchange gains were realized from Euro and US dollar
denominated purchases of product sold in Canada. These exchange gains were
more than offset by the foreign currency translation of the Company's
integrated foreign operation in Europe. The net assets of the Company's
integrated foreign operation in Europe consists mainly of cash and cash
equivalents, denominated in Euro currency and are used to fund clinical trials
of the Topical Interferon Alpha-2b trials in Europe.
Income tax expense in fiscal 2005 totalled $191,000 and represents a
decrease of $55,000 when compared to the income tax expense in fiscal 2004.
All income taxes are attributable to the Company's operation in Europe.
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 and investment tax
credits.
As at July 31, 2005, the Company had cash and cash equivalents, including
short-term investments of $6,600,000. This represents a slight increase of
$17,000 when compared to cash and cash equivalents on hand at July 31, 2004 of
$6,583,000.
The total number of common shares issued and outstanding at July 31, 2005
was 27,183,725 (2004 - 24,768,725). In September 2004, the Company completed
two financings, resulting in the issuance of 2,415,000 common shares and
2,415,000 common share purchase warrants, for total gross proceeds of
$5,283,000. Of this amount, $193,000 was allocated to the value of the common
share purchase warrants. Share issue costs totalled $45,000.
The first private placement financing resulted in the Company issuing a
total of 2,190,000 common shares and 2,190,000 common share purchase warrants
for gross proceeds of $4,664,000. Each common share purchase warrant entitles
the holder to purchase one common share at a price of $3.00 until March 1,
2007. The second private placement financing resulted in the Company issuing
an additional 225,000 common shares and 225,000 common share purchase warrants
for gross proceeds of $619,000. Each common share purchase warrant, in the
second financing, entitles the holder to purchase one common share at a price
of $4.50 until September 22, 2006.
On October 4, 2005 following the Company's year end, the Company further
strengthened its cash and cash equivalents position by raising net proceeds of
$3,700,000 (after finder's fees) through a private placement of 2,339,181
common shares and warrants to purchase an additional 2,339,181 common shares.
The purchase price of each common share is $1.71 and the warrants are
exercisable until they expire on March 31, 2008 at a price of $2.39.
As at October 4, 2005 the Company had outstanding 29,522,906 common
shares, warrants to purchase up to 4,754,181 common shares, and incentive
stock options to purchase up to 3,380,500 common shares.
After taking into consideration the improved working capital resulting
from the successful completion of the October 4, 2005 private placement, the
decrease in royalty rate 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 marketing expenditures relating
primarily to Orthovisc(R), the Company expects its working capital will be
sufficient to finance operations through to February 2007.
The Company's consolidated fiscal 2005 and 2004 financial statements are
summarized below:
<<
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Consolidated Statements of Operations
(thousand $, except for per share data)
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2005 2004
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Revenue:
Product revenue 2,456 1,855
License fees and royalties 1,234 1,116
Research and development contracts 42 -
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3,732 2,971
Expenses:
Cost of sales 1,190 895
Research and development 2,853 2,611
Operating, general and admin 3,710 3,360
Amortization of intangibles 1,244 1,244
Amortization of capital assets 330 291
Stock-based compensation 1,470 252
Interest income (137) (136)
Foreign exchange loss 78 10
Write down of intangibles 428 -
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11,166 8,527
Loss before income taxes (7,434) (5,556)
Income taxes 191 246
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Loss for the year (7,625) (5,802)
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Loss per share:
Basic (0.28) (0.24)
Diluted (0.28) (0.24)
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Consolidated Statements of Cash Flows (thousand $)
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2005 2004
-----------------------
Cash provided by (used in):
Loss for the year (7,625) (5,802)
Items not involving cash:
Amortization of capital assets 330 291
Amortization of intangibles 1,244 1,244
Stock-based compensation 1,470 252
Write down of intangibles 428 -
Foreign exchange loss (gain) 78 10
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(4,075) (4,005)
Change in non-cash working capital (639) 870
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Operating activities (4,714) (3,135)
Financing activities 5,214 1,307
Investing activities 111 3,550
Effect of exchange rate changes on cash
and cash equivalents (78) (10)
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Cash and cash equivalents:
Increase in the year 533 1,712
Beginning of the year 3,597 1,885
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End of the year 4,130 3,597
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Consolidated Balance Sheets (thousand $)
2005 2004
Current assets:
Cash and cash equivalents 4,130 3,597
Short-term investments 2,470 2,986
Accounts receivable 461 338
Inventory 474 179
Prepaid and other 283 181
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7,818 7,281
Non current assets 3,632 5,229
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11,450 12,510
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2005 2004
Current liabilities:
Accounts payable & accruals 1,060 1,229
Deferred revenue 50 -
Long-term debt -current portion 20 25
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1,130 1,254
Long term debt 18 37
Shareholders' equity 10,302 11,219
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11,450 12,510
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The Company's complete 2005 Consolidated Financial Statements,
Management's Discussion and Analysis and Annual Information Form are being
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".
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", 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 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 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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