TORONTO, Dec. 15 /CNW/ - Microbix Biosystems Inc. (MBX:TSX) today announced financial results for the year ended September 30, 2006.
Microbix announced previously that 2006 would be a transition year as management continues to seek partnering opportunities for the Urokinase and Vaccine technologies. Significant investment was made in the Company's pipeline development and manufacturing capacity in anticipation of utilization of these core assets.
The Company also continues to expand development of the Semen Sexing Technology, has acquired the Urokinase manufacturing facility from Merck KgaA, and laid additional groundwork for building value in the Vaccine Technology. Net loss for fiscal 2006 was $2,092,022 or $0.06 per share, compared to $125,526 or $0.00 per share in fiscal 2005.
The Microbix Virology business enjoyed a record performance in sales growth with a 40% increase compared to the same period a year earlier. Total revenues, however, declined 17% on the year due to a decrease in development contract revenue and the absence of one-time license fees for technology licenses. The Company raised approximately $1.0 million and funds were directed largely towards investment in the key projects in the company.
The year and quarter results were as follows:
Quarter Ended Sept. 30 Year Ended Sept. 30
2006 2005 2006 2005
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Revenue $ 675,406 $ 964,326 $ 3,644,142 $ 4,376,579
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Net Profit (loss) $ (700,274) $ (118,193) $(2,092,022) $ 125,566
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Net Profit (loss)
Per Share $ (0.02) $ (0.00) $ (0.06) $ 0.00
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Cash flow $ (664,453) $ (16,961) $ (853,288) $ (17,636)
Sperm Sexing Technology
In 2005, the Company acquired the worldwide rights to a new biologicals-based technology for sexing semen (SST) targeting the domestic animal food production industry. With an existing artificial insemination industry network serving in excess of US$3 billion market, this opportunity is seen as a potential blockbuster-sized product.
In anticipation of the need for field trials and technical transfer of the technology, Microbix signed agreements with a number of artificial insemination companies in Europe, North America and Australasia in 2006. These companies represent 13% of the total semen supply for dairy, beef and swine production worldwide. Microbix will receive a 15% royalty, or minimum unit price (whichever is higher), on sales of all semen treated with SST.
The SST development is expected to reach a major milestone that will signal the start of the next phase of the work - in vitro fertilization and animal field trials. Market launch for SST is expected in 2008.
Urokinase
Microbix recovered the commercial rights to its lead biotherapeutic Urokinase, from Genpharm Inc., a subsidiary of Merck KgaA and signed an Exclusive Collaboration Agreement with Angiogen, LLC (Illinois, USA) for the development of Urokinase for cancer therapy. Angiogen holds the intellectual property patents for use of Urokinase in oncology. The companies are seeking financing to complete key clinical trials in this area.
Microbix is the only source of Low Molecular Weight Urokinase. Both Angiogen and Microbix believe their new proprietary cancer treatment will greatly improve the standard of care in solid tumour therapy. Positive clinical data have already been developed and Reuter's Health has recently reported the potential of this therapeutic approach. The Companies are currently in licensing discussions for the commercial rights to the technology.
Microbix expects to secure financing for an Enhanced Phase 1 trial in the treatment of colorectal cancer.
Influenza Virus
An independent non-commercial laboratory with expertise in influenza virus was asked to evaluate Microbix' Vaccine Technology in 2006 and confirmed its performance.
"It was important that we established a clear and unequivocal validation of our technology," said William J. Gastle President and CEO. The Company is waiting for the first U.S. patent to be granted, and is exploring other opportunities to establish the proprietary process in a commercial plant.
"With this independent confirmation and the granting of a patent for this technology, we expect to be able to attract a suitable partner for manufacturing influenza vaccine," said Mr. Gastle. He went on to say that "the world's public health authorities cannot ignore the threat of a pandemic and will need this technology to expand vaccine production capacity at an early date."
Patent review of Microbix' Vaccine Technology should also be concluded in 2007.
The first quarter of 2007 will be down from the previous period due to timing issues; however subsequent quarters are projected to be stronger. The Virology business is expected to continue growing in 2007 as customer products are launched and sales of recently launched products expand market share.
The 2005 financial statements and a portion of the Management Discussion & Analysis have been restated in the 2006 filing to reflect an expanded disclosure of segmented information.
Also in January 2006, Microbix acquired its new Urokinase production facility. During the second and third quarters of 2006, the Company completed a six-month process of start-up of the facility. Under generally accepted accounting principles the Company had the option to defer the incremental start-up costs. With completion of the start-up at the end of the third quarter of fiscal 2006, the Company deferred incurred costs during the second and third quarters.
At the end of fiscal 2006, management came to understand that proposed accounting changes will likely be implemented shortly and will eliminate the option for deferral of pre-operating expenditures. Furthermore, implementation will require retroactive restatement. As a result, management made the decision at the end of fiscal 2006 to expense start-up costs incurred during the second and third quarters. As the total deferred expenditures are material to the Company's financial results, the change of accounting policy required restatement of the second and third quarters of fiscal 2006 and this is being done in the 2006 year-end filing.
About Microbix
Microbix specializes in developing proprietary biological technologies and then commercializing those technologies through global partners. Its products include biotherapeutic drugs, vaccines, and infectious disease diagnostics. Its objective during the next decade is to develop a pipeline of products and technologies for what is expected to be a multi-billion dollar biologics market worldwide. Established in 1988, Microbix is headquartered in Toronto.
This press release contains forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements including risks associated with commercializing products and developing commercially viable technologies, product development and field trials may proceed slowly or not at all and may not result in products that can be commercialized, sales may not reach sales targets or be made at all, there is no guarantee that the Company will complete development of any technology and if it does that it will perform to commercially exploitable levels, other technologies may emerge before any technology developed by the Company enters the market, royalty rates may not be achievable, markets may not sustain demand for any product should world economies shift significantly, market utilization rates may not be reached, market value of products may vary, patents may not provide adequate protection of the Company's intellectual property, may not be successfully prosecuted and may be subject to challenge, product launch dates and market utilization timetables may not be met.
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