AURORA, ON, Oct. 26 /CNW/ - Helix BioPharma Corp. (TSX, FSE: "HBP") today
announced financial results for the year ended July 31, 2006.
During the 2006 fiscal year, the Company continued to make progress with
both its clinical (Topical Interferon Alpha-2b) and pre-clinical (L-DOS47)
programs, and strengthened its financial position by successfully raising
additional capital, via private placements.
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HIGHLIGHTS
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- Topical Interferon Alpha-2b
- Continued its Phase II clinical study in Germany, with
completion and data analysis expected by the end of the 2006
calendar year, followed by reporting.
- Received approval in Sweden to conduct a Phase 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") and contracted Remedium Sverige AB to manage the
trial. The Company expects the trial to be completed during
the 2008 calendar year, followed by reporting.
- L-DOS47
- Advanced pre-clinical development program with efficacy and
toxicology studies.
- Progressed towards establishing a cGMP manufacturing process
for L-DOS47.
- Signed an agreement with the National Research Council of
Canada to assist in the ongoing characterization of the lung
specific antibody, previously licensed to Helix.
- Participated in a poster presentation session at the 5th
Annual Congress on Recombinant Antobodies Conference in
Zurich, Switzerland.
- Published a DOS47 scientific paper in the Journal of
Experimental Therapeutics and Oncology.
- Revenues
- Received additional milestone payments from the exclusive
license agreement of Helix's Biochip technology with Lumera
Corporation (NASDAQ:LMRA).
- Rivex Pharma Inc., a wholly-owned subsidiary of the Company,
continued to generate profitable revenue growth.
- Financing
- Completed private placement financings during the year and
subsequent to the year-end, for gross proceeds of
$16,568,000.
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For the year ended July 31, 2006, the Company recorded a net loss of
$6,939,000 or $0.22 per common share and represents a decrease of $686,000
when compared to the fiscal year ended July 31, 2005, when the Company
recorded a net loss $7,625,000 or $0.28 per common share.
Overall revenues increased in fiscal 2006 and were mainly the result of
higher product revenues of Orthovisc(R) sales in Canada and increased research
and development contract services for Apotex Inc. ("Apotex"). Higher product
revenues and research and development contract revenue were offset by lower
royalty revenues from the rate reduction for Klean-Prep(TM) sales in Europe
and lower revenues from the Company's sub-licensing arrangement of its Biochip
technology to Lumera Corporation ("Lumera"). Product cost of sales benefited
from the continuously improving Canadian dollar in fiscal 2006, resulting in
improved product margins.
Overall expenses in fiscal 2006, were marginally higher than those in
fiscal 2005, with higher research and development, operating expenses and
stock based compensation being offset by reductions in income taxes,
amortization for intangible and capital assets and a write-down of intangibles
in the previous year versus nil in fiscal 2006.
FINANCIAL REVIEW
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Revenues for the year ended July 31, 2006 totalled $3,965,000 and
represent an increase of $233,000 or 6.2% when compared to total revenues for
the previous year ended July 31, 2005 of $3,732,000.
Product revenues totalled $3,012,000 in fiscal 2006 and represent 76.0%
(2005 - 65.8%) of revenues. When compared to fiscal 2005, product revenues
increased by $556,000 or 22.6% in fiscal 2006. As in the previous year, the
increase in product revenues in fiscal 2006 is mainly the result of increased
Orthovisc(R) revenues. Cost of sales totalled $1,341,000 in fiscal 2006 (2005
- $1,190,000) and were higher in the year by $151,000. Cost of sales as a
percentage of product revenue was 44.5% (2005 - 48.5%). Product cost of sales
benefited from the continuously improving Canadian dollar in fiscal 2006,
resulting in improved product margins.
License fees and royalties totalled $773,000 in fiscal 2006 and represent
19.5% (2005 - 33.1%) of revenues. When compared to fiscal 2005, license fees
and royalties decreased by $461,000 or 37.4%. These license fees and royalties
were comprised of royalties related to sales of Klean-Prep(TM), by
Helsinn-Birex, and license fees under the Company's license of its Biochip
technology to Lumera. The majority of the lower license fee and royalty
revenue in fiscal 2006 is attributable to the reduced royalty rate on sales of
Klean-Prep(TM).
Research and development contract revenues totalled $180,000 in fiscal
2006 (2005 - $42,000) and represent only 4.5% (2005 - 1.1%) of revenues. As at
July 31, 2006, one last milestone remains to complete the project with Apotex.
Management believes this milestone will be completed by the Company's second
quarter of fiscal 2007.
Research and development costs in fiscal 2006 totalled $3,224,000 (2005 -
$2,853,000). Included in this amount was a cash credit of $163,000 resulting
from Scientific Research and Experimental Development ("SR&ED") tax claims
(2005 - $135,000). Excluding the SR&ED tax claims, research and development
costs for fiscal 2006 totalled $3,387,000 (2005 - $2,988,000) and represents
an increase of $399,000 when compared to fiscal 2005. 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 2006 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 2006 totalled
$3,866,000 (2005 - $3,710,000) and represent an increase of $156,000 when
compared to fiscal 2005. This increase is mainly attributable to higher
employee wages, agent commissions and insurance which were offset by lower
consulting, legal and audit fees.
Amortization of intangible assets in fiscal 2006 totalled $594,000 (2005
- $1,244,000). A certain intangible asset was fully amortized in the
fiscal 2006, resulting in the lower amortization expense both in the fiscal
year and on a go forward basis. Intangible assets are amortized on a straight
line basis.
Amortization of capital assets in fiscal 2006 totalled $315,000 (2005 -
$330,000) and represents a decrease of $15,000 when compared to fiscal 2005.
The lower amortization expense of capital assets is the result of lower
capital asset purchases during the 2006 fiscal year.
Stock-based compensation expense in fiscal 2006 totalled $1,710,000 (2005
- $1,470,000) and represents an increase of $240,000. During the 2006 fiscal
year, the Company granted options totalling 931,000 (2005 - 1,151,500), with a
fair value of $1,658,000 (2005 - $1,647,000). The unvested stock options as at
July 31, 2006 of 63,889 (July 31, 2005 - 100,000) will be expensed equally
over the remaining vesting period of approximately two years.
Interest income in fiscal 2006 totalled $270,000 (2005 - $137,000) and
represents an increase of $133,000. Higher cash balances invested in
short-term investments attributed to the higher interest income in fiscal
2006.
Foreign exchange losses in fiscal 2006 totalled $16,000 (2005 - $78,000)
and represent a reduction of $62,000 when compared to the foreign exchange
losses in fiscal 2005. Foreign exchange gains were realized from Euro and
US dollar denominated purchases of product sold in Canada. These exchange
gains were 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 2006 totalled $108,000 (2005 - $191,000) and
represents a decrease of $83,000 when compared to the income tax expense in
fiscal 2005. Income taxes are attributable to the Company's operations in
Europe. Lower royalty revenue from the reduced royalty rate on sales of
Klean-Prep(TM), resulted in lower income and therefore lower income tax
expense in fiscal 2006.
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, 2006, the Company had cash and cash equivalents, comprised
of short-term investments totalling $11,032,000 (2005 - $6,600,000) and
represents an increase of $4,432,000 when compared to cash and cash
equivalents on hand at July 31, 2005.
The total number of common shares issued and outstanding at July 31, 2006
was 32,685,335 (2005 - 27,183,726). In November and October of 2005, the
Company completed two separate financings, resulting in the total issuance of
5,495,609 units, with each unit consisting of one common share and one common
share purchase warrants, for total gross proceeds of $9,523,000. The 2,339,181
and 3,156,428 share purchase warrants issued on October 4, 2005 and
November 7, 2005 can be exercised on or before March 31, 2008 for one common
share, at a share price of $2.39 and $2.45, respectively. Subsequent to the
Company's fiscal 2006 year-end, on October 11, 2006, the Company completed
another private placement financing, resulting in the issuance of 3,650,000
units for gross proceeds of $7,044,500. Each unit consists of one common share
and one common share purchase warrant. The common share purchase warrants can
be exercised on or before March 31, 2008 for one common share, at a share
price of $2.70.
As at October 11, 2006, the Company had outstanding 36,335,335 common
shares, warrants to purchase up to 11,335,609 common shares, and incentive
stock options to purchase up to 3,282,500 common shares.
After taking into consideration the improved working capital resulting
from the successful completion of the October 11, 2006 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 July 2008.
The Company's consolidated fiscal 2006 and 2005 financial statements are
summarized below:
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Consolidated Statements of Operations
(thousand $, except for per share data)
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2006 2005
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Revenue:
Product revenue 3,012 2,456
License fees and royalties 773 1,234
Research and development contracts 180 42
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3,965 3,732
Expenses:
Cost of sales 1,341 1,190
Research and development 3,224 2,853
Operating, general and admin 3,866 3,710
Amortization of intangibles 594 1,244
Amortization of capital assets 315 330
Stock-based compensation 1,710 1,470
Interest income (270) (137)
Foreign exchange loss 16 78
Write down of intangibles - 428
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10,796 11,166
Loss before income taxes (6,831) (7,434)
Income taxes 108 191
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Loss for the year (6,939) (7,625)
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Loss per share:
Basic (0.22) (0.28)
Diluted (0.22) (0.28)
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Consolidated Statements of Cash Flows (thousand $)
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2006 2005
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Cash provided by (used in):
Loss for the year (6,939) (7,625)
Items not involving cash:
Amortization of capital assets 315 330
Amortization of intangibles 594 1,244
Stock-based compensation 1,710 1,470
Write down of intangibles - 428
Foreign exchange loss (gain) 16 78
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(4,304) (4,075)
Change in non-cash working capital 224 (639)
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Operating activities (4,080) (4,714)
Financing activities 8,786 5,214
Investing activities (4,428) 111
Effect of exchange rate changes on
cash and cash equivalents (16) (78)
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Cash and cash equivalents:
Increase in the year 262 533
Beginning of the year 4,130 3,597
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End of the year 4,392 4,130
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Consolidated Balance Sheets (thousand $)
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2006 2005
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Current assets:
Cash and cash equivalents 4,392 4,130
Short-term investments 6,640 2,470
Accounts receivable 878 461
Inventory 418 474
Prepaid and other 160 283
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12,488 7,818
Non current assets 2,981 3,632
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15,469 11,450
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2006 2005
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Current liabilities:
Accounts payable & accruals 1,572 1,060
Deferred revenue - 50
Long-term debt -current portion 16 20
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1,588 1,130
Long term debt - 18
Shareholders' equity 13,881 10,302
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15,469 11,450
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The Company's complete 2006 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.
