AURORA, Ontario, Oct. 28 /CNW/ -- Helix BioPharma Corp. (TSX, FSE: "HBP") today announced financial results for the year ended July 31, 2008.
During the 2008 fiscal year, the Company continued to make progress with its development initiatives for its lead drug candidates, L-DOS47 and Topical Interferon Alpha-2b. The following are selected highlights during the 2008 fiscal year and subsequent to year-end.
KEY HIGHLIGHTS
-- DOS47/L-DOS47
-- Signed an agreement with a fill/finish provider to perform vial
packaging of L-DOS47 for clinical testing.
-- Signed an agreement with a company specializing in lyophilization
(freeze-drying) to develop the L-DOS47 vial packaging format
-- Signed a second, more definitive agreement with our L-DOS47 active
drug substance and bulk drug product manufacturer to further scale
up the GMP production process in preparation for clinical testing.
-- Awarded a second U.S. patent protecting the use of targeted
DOS47-based therapeutics, such as L-DOS47, in combination
therapeutic regimens with certain chemotherapeutic agents
-- Topical Interferon Alpha-2b
-- Received regulatory approval to open sites in Germany for the
ongoing Phase II clinical trial in patients with ano-genital
warts.
-- Conducted meetings with German regulators as a preliminary step
towards filing a CTA for a planned, large, randomized,
placebo-controlled, double-blind Phase III European clinical trial
in patients with low-grade cervical lesions.
-- Signed an agreement to further scale up the production of Topical
Interferon Alpha-2b in anticipation of conducting the planned
European Phase III clinical trial in patients with low-grade
cervical lesions, as well as to support the planned parallel,
confirmatory U.S. Phase IIb clinical trial for this indication.
-- Financing
-- Completed a private placement financing on December 19, 2007 for
gross proceeds of $16,867,200.
-- Completed a private placement financing on October 2, 2008 for
gross proceeds of $11,424,000.
-- Other
-- Appointed W. Thomas Hodgson to the Board of Directors.
-- Subsequent to the year-end, Lumera Corporation gave notice to its
termination of the biochip sub-license agreement, to be effective
December 19, 2008.
For fiscal 2008, the Company recorded a net loss of $6,964,000, which represents a decrease of $710,000 when compared to fiscal 2007. The net loss per common share for fiscal 2008 was $0.16 and represents a decrease of $0.06 in loss per common share when compared to fiscal 2007.
Product revenue along with license fees and royalties contributed to the increase in revenue in fiscal 2008 when compared to fiscal 2007 while research and development contract revenue were nil in fiscal 2008 and therefore lower than fiscal 2007.
Overall expenses in fiscal 2008 were lower than in fiscal 2007. Higher interest income and foreign exchange gains in fiscal 2008 offset higher research and development expenditures and operating, general and administrative expenditures and a one time write down of intangible assets in fiscal 2007.
FINANCIAL REVIEW
Total revenues in fiscal 2008 were $3,591,000 and represent an increase of $167,000 or 4.9% when compared to total revenues in fiscal 2007 of $3,424,000. Product revenue along with license fees and royalties contributed to the increase in revenue in fiscal 2008 when compared to fiscal 2007 while research and development contract revenue were nil in fiscal 2008 and therefore lower than fiscal 2007.
Product revenue in fiscal 2008 totaled $2,952,000 and represents an increase of $188,000 or 6.8% when compared to product revenue in fiscal 2007 of $2,764,000. Product sales of Klean-Prep(TM) continued to grow in fiscal 2008 and more than offset lower sales of Orthovisc(R) in Canada.
License fees and royalties in fiscal 2008 totaled $639,000 and represent an increase of $127,000 or 24.8% when compared to fiscal 2007. The increase is mainly the result of a milestone payment from the sub-licensing arrangement of the Company's biochip technology to Lumera Corporation. Lumera has now given notice of its termination of the sub-license effective December 19, 2008.
Research and development contract revenue in fiscal 2008 totaled $nil and represents a decrease of $148,000 when compared to fiscal 2007. The Company completed a research and development contract in the third quarter of fiscal 2007 and currently has no plans to contract its research and development services out to third parties, but instead is focusing its resources on the development of two product candidates: L-DOS47 and Topical Interferon Alpha-2b.
Cost of sales in fiscal 2008 and 2007 totaled $1,239,000 and $1,139,000, respectively. As a percentage of product revenues, cost of sales in fiscal 2008 and 2007 were 42.0%, 41.2%, respectively. The Canadian dollar's strength over the last three fiscal years has moderated in fiscal 2008 and was range bound, reflecting slight higher cost of sales.
Research and development expenditures in fiscal 2008 totaled $5,064,000 and represent an increase of $948,000 or 23.0% when compared to fiscal 2007. Both Topical Interferon Alpha-2b and DOS47 reflect an increase of 20.6% and 25.0%, respectively. The increase in DOS47 research and development expenditures reflect advancing preclinical costs in preparation for L-DOS47 pre-IND meetings and a Phase I IND filing to occur sometime before the end of Helix's fiscal fourth quarter ending July 31, 2009. The increase in research and development expenditures related to Topical Interferon Alpha-2b reflect additional costs in preparation to open additional sites in Germany for the AGW clinical trial and the expected Phase IIb/III IND/CTA filings for LSIL to occur before the end of the Company's fiscal fourth quarter ending July 31, 2009.
Operating, general and administration expenses in fiscal 2008 totaled $4,757,000 and represent an increase of $339,000 or 7.7% when compared to fiscal 2007. Operating, general and administration expenses reflect higher audit and consulting fees and a one time charge of $434,000 relating to the resignation of the Company's Chairman. Offsetting these cost were lower marketing promotional costs and legal fees associated with the 2008 Annual General Meeting.
Amortization of intangible assets in fiscal 2008 totaled $16,000 and represented a decrease of $143,000 when compared to fiscal 2007. Certain intangible assets were fully amortized in fiscal 2007 and prior, resulting in the lower amortization expense in fiscal 2008 and on a go forward basis. Amortization of capital assets in fiscal 2008 decreased marginally when compared to fiscal 2007.
Stock-based compensation expense in fiscal 2008 totaled $44,000 and represents a decrease of $3,000 when compared to fiscal 2007. The Company did not issue any stock options in fiscal 2008 and the stock-based compensation expense during the year represents the ongoing amortization of compensation costs of stock options granted on June 30, 2005, over their vesting period.
Interest income totaled $645,000 in fiscal 2008 and $496,000 in 2007. The increase is mainly the result of higher on hand cash balances in fiscal 2008 versus fiscal 2007.
The Company realized a foreign exchange gain of $327,000 in fiscal 2008, which compares favorably to the foreign exchange gain of $9,000 which was realized in fiscal 2007. The Canadian dollar's strength over the last three fiscal years has moderated in fiscal 2008 and was range bound while the Euro dollar appreciated against all currencies. The net assets in Europe consist mainly of cash and cash equivalents, denominated in Euro dollars and are used to fund clinical trials of the Topical Interferon Alpha-2b in Europe.
Impairment of intangible assets totaled $nil in fiscal 2008 and $1,332,000 in fiscal 2007. The Company believed future cash flows may not exceed the carrying value of its biochip technology and in fiscal 2007 recorded an impairment of its biochip technology.
Income tax expenses totaled $153,000 in fiscal 2008 and $105,000 in fiscal 2007. Income taxes are attributable to the Company's operations in Europe where royalty revenue remained flat on a year over year basis.
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, and, to a lesser extent, on interest income from funds available for investment, government grants, investment tax credits, and revenues from distribution, licensing and contract services. Since the Company does not have net earnings from its operations, the Company's long-term liquidity depends on its ability to access the capital markets, which depends substantially on the success of the Company's ongoing research and development programs.
At July 31, 2008, 2007 and 2006, the Company had cash and cash equivalents totaling $19,057,000, $11,379,000 and $4,392,000 respectively. The increase in cash and cash equivalents is the result of several rounds of private placements. In fiscal 2007, the Company completed a private placement issuing 3,650,000 units at $1.93 per unit, for gross proceeds of $7,044,500. Each unit consisted of one common share and one common share purchase warrant. The common share purchase warrants expired, unexercised on March 31, 2008. In fiscal 2008, the Company completed another private placement issuing 10,040,000 common shares at $1.68 per common share, for gross proceeds of $16,867,200.
At July 31, 2008, 2007 and 2006, the total number of common shares issued and outstanding was 46,375,335, 36,335,335 and 32,685,335, respectively, and the Company's working capital was $19,144,000, $11,468,000 and $10,900,000, respectively.
On October 2, 2008, the Company announced the completion of a private placement, issuing 6,800,000 units at $1.68 per unit, for gross proceeds of $11,424,000. Each unit consists of one common share and one-half common share purchase warrant with each whole common share purchase warrant entitling the holder to purchase one common share at a price of $2.36 until October 1, 2011.
Based on our planned expenditures and assuming no unanticipated expenses, we believe that our cash reserves and expected cash from operations will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for the next 12 months. The Company has no external sources of liquidity such as lines of credit. At present, the Company considers that it will be necessary to conclude one or more debt or equity financings in the near term to be able to continue with its existing business plan. There can be no assurance that any such financing will be available on acceptable terms or at all.
The Company's consolidated fiscal 2008, 2007 and 2006 financial statements are summarized below:
Consolidated Statements of Operations (thousand $, except for per share data) ---------------------------------------
2008 2007 2006
------------------------
Revenue:
Product revenue 2,952 2,764 3,012
License fees & royalties 639 512 773
Research and
Development contracts - 148 180
------------------------
3,591 3,424 3,965
Expenses:
Cost of sales 1,239 1,139 1,341
Research and development 5,064 4,116 3,368
Operating, general
and admin 4,757 4,418 3,722
Amortization of
intangibles 16 159 594
Amortization of
capital assets 254 287 315
Stock-based compensation 44 47 1,710
Interest income (645) (496) (270)
Foreign exchange
loss (gain) (327) (9) 16
Impairment of intangibles - 1,332 -
------------------------
10,402 10,993 10,796
Loss before income taxes (6,811) (7,569) (6,831)
Income taxes 153 105 108
------------------------
Loss for the year (6,964) (7,674) (6,939)
(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)
Loss per share:
Basic (0.16) (0.22) (0.22)
Diluted (0.16) (0.22) (0.22)
Consolidated Statements of Cash Flows (thousand $) --------------------------------------------------
2008 2007 2006
------------------------
Cash provided by (used in):
Loss for the year (6,964) (7,674) (6,939)
Items not involving cash:
Amortization of
capital assets 254 287 315
Amortization of intangibles 16 159 594
Stock-based compensation 44 47 1,710
Impairment of intangibles - 1,332 -
Foreign exchange
loss (gain) (327) (9) 16
------------------------
(6,977) (5,858) (4,304)
Change in non-cash
working capital (20) (221) 202
------------------------
Operating activities (6,997) (6,079) (4,102)
Financing activities 14,614 6,480 8,808
Investing activities (266) 6,577 (4,428)
Effect of exchange rate
changes on cash and
cash equivalents 327 9 (16)
------------------------
Cash and cash equivalents:
Increase in the year 7,678 6,987 262
Beginning of the year 11,379 4,392 4,130
------------------------
End of the year 19,057 11,379 4,392
(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)(equal sign)
Consolidated Balance Sheets (thousand $)
2008 2007
---------------
Current assets:
Cash and cash equivalents 19,057 11,379
Accounts receivable 349 902
Inventory 458 539
Prepaid and other 446 187
20,310 13,007
Non current assets 1,356 1,266
21,666 14,273
2008 2007
---------------
Current liabilities:
Accounts payable 598 565
Accrued liabilities 546 974
1,144 1,539
Shareholders' equity 20,522 12,734
21,666 14,273
The Company's complete 2008 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".
For further information contact:
Investor & Media Relations Ian Stone Russo Partners LLC Tel: (619) 814-3510 Fax: (619) 955-5318 Email: ian.stone@russopartnersllc.com
David Schull Russo Partners LLC Tel: (212) 845-4271 Email: david.schull@russopartnersllc.com
www.russopartnersllc.com
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. Reported financial information may not necessarily be indicative of future operating results or of future financial position, due to a number of risks and uncertainties, including those set forth below. This News Release contains certain forward-looking statements and information regarding anticipated developments in the Company's business and the sufficiency of the Company's cash reserves and expected cash flow from operations, which statements and information can be identified by the use of forward-looking terminology such as "to perform", "to develop", "in preparation for", "in anticipation of", "to open", "step towards", "planned", "believes", "expected", "developing", or variations thereon, 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. Helix's actual results could differ materially from those anticipated in these forward-looking statements and information as a result of numerous risks and uncertainties including without limitation, the Company's need for additional capital, which may not be available in a timely manner or at all and which, if not obtained, will have a material adverse impact on the Company and its ability to continue; uncertainty whether Topical Interferon Alpha-2b or L-DOS47 will be successfully developed and commercialized as a drug or at all; the need for additional clinical trials, the occurrence and success of which cannot be assured; uncertainty whether planned clinical trials will occur as expected or whether such trials, as well as the ongoing clinical trial in Sweden and Germany, will be successful; product liability and insurance risks; research and 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; 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, including its latest Annual Information Form, 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, except as required by law.