Helix Biopharma Announces Fiscal Q3 2011 Results
AURORA, ON--(Marketwire - June 07, 2011) - Helix BioPharma Corp. (TSX: HBP) (NYSE Amex: HBP) (FRANKFURT: HBP) today announced financial results for the quarter ended April 30, 2011.
RESEARCH AND DEVELOPMENT HIGHLIGHTS
L-DOS47
- The Company continues to work towards Clinical Trial Application
("CTA") approval for its planned L-DOS47 Phase I/II study with the Central
Register of Clinical Trials at the Polish Ministry of Health. The Company
has gathered all the required third-party service provider costing
proposals to execute its planned Polish Phase I/II study, and is committed
to prioritizing the commencement of this study as soon as possible once
regulatory approval is received.
- The Company recently received Investigational New Drug ("IND") application approval to conduct a US Phase I clinical study of L-DOS47 and is currently in the process of gathering the necessary third-party service provider costing proposals to execute this study.
Topical Interferon Alpha-2b
- The Company continues to progress in its ongoing work program to
address the issues raised by the U.S. FDA pursuant to its review of Helix's
Phase II/III IND application for Topical Interferon Alpha-2b. The Company
estimates that it will file its full "clinical hold" response to the FDA in
or around summer 2011.
- The Company continues to work towards a European Phase III trial CTA filing which it currently estimates will occur at about the same time as the Company's filing of the full "clinical hold" response to the FDA.
OTHER HIGHLIGHTS
- Helix BioPharma completed two separate private placements in the month
of March for total net proceeds of $5,936,000.
- Helix BioPharma retained U.S.-based Vista Partners LLC as its new investor relations representative. Vista also provides analyst coverage on Helix as part of its services.
RESULTS FROM OPERATIONS
Three and nine month periods ended April 30, 2011 compared to the same period in the previous year
Loss for the period
The Company recorded a loss of $2,939,000 and $8,733,000, respectively for the three and nine month periods ended April 30, 2011 for a loss per common share of $0.05 and $0.14, respectively. In the comparative three and nine month periods ended April 30, 2010, the Company recorded a loss of $4,200,000 and $11,348,000, respectively for the three and nine month periods ended April 30, 2010 for a loss per common share of $0.07 and $0.19, respectively.
Revenues
Revenues totaled $1,089,000 and $3,482,000 respectively for the three and nine month periods ended April 30, 2011 and represent a decrease of $25,000 (2.2%) and an increase of $227,000 (7.0%) when compared to the three and nine month periods ended April 30, 2010.
Product revenue totaled $1,089,000 and $3,356,000 respectively for the three and nine month periods ended April 30, 2011 and represents an increase of $156,000 (16.7%) and $508,000 (17.8%) when compared to the three and nine month periods ended April 30, 2010. For the three month period ended April 30, 2011, product revenue was higher for all products. For the nine month period ended April 30, 2011, with the exception of Normacol®, product revenue for all products was higher when compared to the nine months ended April 30, 2010.
License fees and royalties totaled $nil and $126,000 respectively for the three and nine month periods ended April 30, 2011 and represent a decrease of $181,000 (100%) and $281,000 (69.0%) when compared to the three and nine month periods ended April 30, 2010. Due to the December 1, 2010 sale and license to Helsinn of certain international Klean-Prep™ rights, license fees and royalties were down over the same periods in the previous year as the sale occurred prior to the end of the second quarter of Fiscal 2011 and Helix no longer earns royalty revenue associated with Klean-Prep™. Until December 1, 2010, the Company received royalty payments from Helsinn relating to its license of the Company's Klean-Prep™ technology. On December 1, 2010 the Company entered into an agreement to assign certain international Klean-Prep™ rights to Helsinn.
Cost of sales and margins
Cost of sales totaled $436,000 and $1,226,000 respectively for the three and nine month periods ended April 30, 2011 (three and nine month periods ended April 30, 2010 were $400,000 and $1,279,000 respectively). As a percentage of product revenues, cost of sales were 40.0% and 36.5% for the three and nine month periods ended April 30, 2011 (three and nine month periods ended April 30, 2010 were 42.9% and 44.9% respectively). Products for sale are purchased in U.S. dollars and Euros. The decrease in cost of sales reflects the appreciation of the Canadian dollar versus both the U.S. dollar and Euro and for the first two quarters of Fiscal 2011, goods sold with a cost base of zero.
Research and development
Research and development costs for the three and nine month periods ended April 30, 2011 totaled $1,734,000 and $6,346,000 respectively (three and nine month periods ended April 30, 2010 were $3,142,000 and $8,402,000 respectively).
Topical Interferon Alpha-2b research and development costs for the three and nine month periods ended April 30, 2011 totaled $641,000 and $2,457,000 respectively (three and nine month periods ended April 30, 2010 were $1,544,000 and $4,431,000 respectively). Lower research and development expenditures are associated with both of the Company's Topical Interferon Alpha-2b clinical programs having been completed and the Company concentrating its efforts on resolving the FDA clinical hold associated with its application to conduct a U.S. Phase II/III IND trial for low-grade cervical lesions.
DOS47 research and development costs for the three and nine month periods ended April 30, 2011 totaled $1,093,000 and $3,889,000 respectively (three and nine month periods ended April 30, 2010 were $1,598,000 and $3,971,000 respectively). The L-DOS47 research and development expenditures reflect collaborative scientific research and clinical research expenditures associated with the applications for a Phase I IND in the U.S. and a Polish Phase I/II CTA filing. In the quarter, the Company received approval for its IND application from the FDA and filed its application with Polish authorities.
Operating, general and administration
Operating, general and administration expenses for the three and nine month periods ended April 30, 2011 totaled $1,188,000 and $3,305,000 respectively (three and nine month periods ended April 30, 2010 were $779,000 and $2,225,000 respectively). The increase in operating, general and administration expenditures is the result of higher investor relation fees and associated costs to increase the Company's visibility and awareness in the U.S. capital markets, higher accounting and legal fees and additional stock exchange listing fees for both the Toronto and NYSE Amex stock exchanges.
Sales and marketing
Sales and marketing expenses for the three and nine month periods ended April 30, 2011 totaled $254,000 and $801,000 respectively (three and nine month periods ended April 30, 2010 were $303,000 and $862,000 respectively). The Company incurred lower marketing and promotion activities associated with the Canadian product launch of Monovisc™, which occurred during the first quarter of fiscal 2010.
Amortization of capital assets
Amortization of capital assets for the three and nine month periods ended April 30, 2011 totaled $103,000 and $315,000 respectively (three and nine month periods ended April 30, 2010 were $112,000 and $317,000 respectively).
Stock-based compensation
Stock-based compensation expense for the three and nine month periods ended April 30, 2011 totaled $321,000 and $1,351,000 respectively (three and nine month periods ended April 30, 2010 were $251,000 and $1,016,000 respectively). The stock-based compensation expense in fiscal 2011 relates to the ongoing amortization of compensation costs of stock options granted on August 17, 2010, December 14, 2009 and December 17, 2008, over their vesting period.
Interest income
Interest income for the three and nine month periods ended April 30, 2011 totaled $45,000 and $139,000 respectively (three and nine month periods ended April 30, 2010 were $13,000 and $37,000 respectively). The increase in interest income in fiscal 2011 reflects higher cash balances and higher interest rates earned on deposits.
Foreign exchange gain/loss
Foreign exchange for the three and nine month periods ended April 30, 2011 reflects losses of $37,000 and $10,000 respectively (three and nine month periods ended April 30, 2010 reflect losses of $326,000 and $514,000, respectively). Foreign exchange gains and losses are mainly the result of the foreign currency translation of the Company's integrated foreign operation in Ireland and any excess net assets/liabilities denominated in either Euros or US Dollars.
Gain on sale of license
Effective December 1, 2010, the Company sold to Helsinn certain world-wide rights to Klean-Prep™ excluding the U.S. and Canada, for 1 million Euros, and realized a gain of $1,336,000 in the second quarter of fiscal 2011.
Income taxes
Income tax expense for the three and nine month periods ended April 30, 2011 totaled $nil and $336,000 respectively (three and nine month periods ended April 30, 2010 were $14,000 and $25,000 respectively). The increase is attributable to the taxes payable as a result of the sale of certain international Klean-Prep™ rights to Helsinn. All income taxes are attributable to the Company's operations in Ireland.
CASH FLOW
Operating activities
Cash used in operating activities for the three and nine month periods ended April 30, 2011 totaled $2,658,000 and $6,615,000 respectively, including a net loss of $2,939,000 and $8,733,000 respectively. Cash used in operating activities for the three and nine month periods ended April 30, 2010 totaled $3,702,000 and $9,148,000 respectively, including a net loss of $4,200,000 and $11,348,000 respectively.
Significant adjustments for the three and nine month periods ended April 30, 2011 include amortization of capital assets of $103,000 and $315,000 respectively (2010 - $112,000 and $317,000), deferred lease credits of $(6,000) and $(18,000) (2010 - $(6,000) and $(19,000)), stock-based compensation related to earlier stock option grants of $321,000 and $1,351,000 respectively (2010 - $251,000 and $1,016,000), foreign exchange losses of $37,000 and $10,000 respectively (2010 - foreign exchange losses of $326,000 and $514,000) and changes in non-cash working capital balances related to operations of $(174,000) and $460,000 (2010 - $(185,000) and $372,000).
Financing activities
Financing activities for the three and nine month periods ended April 30, 2011 totaled $5,962,000 and $15,423,000 respectively (three and nine month periods ended April 30, 2010 were $140,000 and $11,737,000 respectively). For fiscal 2011, financing activities mainly reflect the net proceeds from three private placements. In addition, proceeds from the exercise of stocks for the three and nine months ended April 30, 2011 totaled $26,000 and $30,000, respectively (three and nine month periods ended April 30, 2010 were $140,000 for both periods).
Investing activities
Use of cash in investing activities for the three and nine month periods ended April 30, 2011 totaled $33,000 and $113,000 respectively (three and nine month periods ended April 30, 2010 were $104,000 and $588,000 respectively) and represents capital acquisitions in both fiscal periods. An additional amount of up to $400,000 in capital acquisitions will be committed by the Company over the subsequent two quarters in support of the Company's DOS47 program.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has financed its operations from proceeds received upon the sale of equity securities and, to a lesser extent, the exercise of warrants and stock options, 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, as well as capital market conditions and availability.
At April 30, 2011, the Company had cash and cash equivalents totaling $21,810,000 (July 31, 2010 - $13,125,000). The increase in cash and cash equivalents in fiscal 2011 is the result of three private placements in fiscal 2011.
The first private placement was completed on August 6, 2010 where the Company issued 4,530,000 units at $2.43 per unit, for net proceeds of $9,457,000. Each unit consists of one common share and one common share purchase warrant with each whole common share purchase warrant entitling the holder to purchase, subject to adjustment, one common share at a price of $3.40 until 5pm (Toronto time) on August 5, 2013.
The second private placement was completed on March 28, 2011, where the Company issued 1,652,719 units at $2.39 per unit, for gross proceeds of $3,949,998. Each unit consists of one common share and one common share purchase warrant with each whole common share purchase warrant entitling the holder to purchase, subject to adjustment, one common share at a price of $3.35 until March 27, 2016.
The third private placement was completed March 30, 2011, where the Company issued 918,365 units at $2.39 per unit, for gross proceeds of $2,194,892. Each unit consists of one common share and one common share purchase warrant with each whole common share purchase warrant entitling the holder to purchase, subject to adjustment, one common share at a price of $3.35 until March 29, 2016.
The total number of common shares issued and outstanding as at April 30, 2011 was 67,094,335 (July 31, 2010 - 59,975,335).
The Company estimates it has sufficient capital and liquidity to finance future operations through at least the next twelve months. During that time, the Company plans to initiate clinical studies for L-DOS47, pending regulatory approval, however, the Company does not have sufficient capital to complete the planned clinical studies. The Company is also planning initiatives to remove the clinical hold status placed by the FDA on the Company's U.S. Phase II/III IND filing for Topical Interferon Alpha2-b and activities associated with filing a European Phase III trial CTA for Topical Interferon Alpha2-b.
Based on the Company's currently planned expenditures, expected revenue and assuming no unanticipated expenses, the Company estimates that its cash reserves will be sufficient to meet anticipated cash needs for working capital and capital expenditures through at least the next twelve months. However, the Company does not have enough cash to complete the clinical trials. The Company will therefore continue to seek additional funding to carry out its business plan and to minimize, to the best of its ability the risks to its operations. Equity financing has historically been Helix's primary source of funding, however, the market for equity financings for companies such as Helix is challenging, and the global economic downturn and credit crisis have added further challenges. There can be no assurance that additional funding by way of equity financing will be available. 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 failure of the Company to obtain additional funding on a timely basis may result in the Company reducing, delaying or cancelling 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. It may also have a material adverse effect on the Company's ability to continue as a going concern.
The Company's unaudited interim consolidated balance sheet as at April 30, 2011 and audited consolidated balance sheet as at July 31, 2010 are summarized below:
Consolidated Balance Sheets as at
(thousand $)
30-Apr 2011 31-Jul 2010
------------- -------------
Current assets:
Cash and cash equivalents 21,810 13,125
Accounts receivable 797 1,365
Inventory 535 780
Prepaid and other 255 398
------------- -------------
23,397 15,668
Non current assets 2,244 2,446
------------- -------------
Total assets 25,641 18,114
============= =============
Current liabilities:
Accounts payable 893 1,392
Accrued liabilities 514 821
Income tax payable 353 43
Deferred lease credit 25 25
------------- -------------
1,785 2,281
Non current liabilities 54 72
------------- -------------
Total liabilities 1,839 2,353
Shareholders' equity 23,802 15,761
------------- -------------
Total liabilities & Shareholders' Equity 25,641 18,114
============= =============
The Company's unaudited interim consolidated Statements of Operations and Cash Flows for the three and nine month periods ended April 30, 2011 and 2010 are summarized below:
Consolidated Statements of Operations
for the three and nine month periods ended April 30, 2011 and 2010
($ thousands, except for per share data)
Three months Nine months
April 30 ended April 30
2011 2010 2011 2010
------- ------- ------- -------
Revenue:
Product revenue 1,089 933 3,356 2,848
License fees & royalties - 181 126 407
------- ------- ------- -------
1,089 1,114 3,482 3,255
Expenses:
Cost of sales 436 400 1,226 1,279
Research and development 1,734 3,142 6,346 8,402
Operating, general and admin 1,188 779 3,305 2,225
Sales and marketing 254 303 801 862
Amortization of capital assets 103 112 315 317
Stock-based compensation 321 251 1,351 1,016
Interest income, net (45) (13) (139) (37)
Foreign exchange loss/(gain) 37 326 10 514
Gain on sale of license - - (1,336) -
------- ------- ------- -------
4,028 5,300 11,879 14,578
Loss before income taxes (2,939) (4,186) (8,397) (11,323)
Income taxes - 14 336 25
------- ------- ------- -------
Loss for the period (2,939) (4,200) (8,733) (11,348)
======= ======= ======= =======
------- ------- ------- -------
Loss per share:
Basic & diluted (0.05) (0.07) (0.14) (0.19)
Consolidated Statements of Cash Flows
for the three and nine month periods ended April 30, 2011 and 2010
($thousands)
Three months Nine months
April 30 ended April 30
2011 2010 2011 2010
------- ------- ------- -------
Cash provided by (used in):
Loss for the period (2,939) (4,200) (8,733) (11,348)
Items not involving cash:
Amortization of capital assets 103 112 315 317
Deferred lease credit (6) (6) (18) (19)
Stock-based compensation 321 251 1,351 1,016
Foreign exchange loss/(gain) 37 326 10 514
------- ------- ------- -------
(2,484) (3,517) (7,075) (9,520)
Change in non-cash working capital (174) (185) 460 372
------- ------- ------- -------
Operating activities (2,658) (3,702) (6,615) (9,148)
Financing activities 5,962 140 15,423 11,737
Investing activities (33) (104) (113) (588)
Effect of exchange rate changes
on cash and cash equivalents (37) (326) (10) (514)
------- ------- ------- -------
Increase in cash 3,234 (3,992) 8,685 1,487
Cash:
Beginning of the period 18,576 19,973 13,125 14,494
------- ------- ------- -------
End of the period 21,810 15,981 21,810 15,981
======= ======= ======= =======
The Company's unaudited interim consolidated financial statements and management's discussion and analysis of financial condition and results of operations 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 novel L-DOS47 new drug candidate and its Topical Interferon Alpha-2b. Helix is listed on the TSX, NYSE Amex and FSE under the symbol "HBP."
Forward-Looking Statements and Risks and Uncertainties
This News Release contains certain forward-looking statements and
information (collectively, "forward-looking statements") within the meaning
of applicable securities laws, regarding the development of products by
Helix for the prevention and treatment of cancer based on its proprietary
technologies; sufficiency of the Company's cash reserves and expected cash
flow from operations; need for additional financing; the Company's plans to
initiate clinical studies for L-DOS47; its estimated time of filing the
Company's "clinical hold" response to the FDA for Topical Interferon Alpha
2-b; its estimated time of filing a European Phase III trial CTA for
Topical Interferon Alpha-2b; and other information in future periods.
Forward-looking statements, including financial outlooks, are intended to
provide information about management's current plans and expectations
regarding future operations, including without limitation, future financing
requirements, and may not be appropriate for other purposes. Although
Helix believes that the expectations reflected in such forward-looking
statements are reasonable, such statements involve risks and uncertainties,
and undue reliance should not be placed on such statements. Certain
material factors or assumptions are applied in making forward-looking
statements, including, but not limited to, receipt of necessary additional
funding, strategic partner support and regulatory approvals; the timely
receipt of additional data regarding Topical Interferon Alpha-2b; GMP
manufacturing and other activities; the timely provision of services and
performance of contracts by third parties; and future revenue, costs and
expenditures. Helix's actual results could differ materially from those
anticipated in these forward-looking statements as a result of numerous
risks and uncertainties including without limitation, Helix's need for
additional capital, which may not be available; uncertainty whether the
Company's products under development, including L-DOS47 and Topical
Interferon Alpha-2b, will be successfully developed and commercialized;
uncertainty whether the Company's CTA filings will be approved; the risk
that the Company's expected timelines for meeting certain objectives may
not be met; uncertainty whether clinical trials will proceed as planned or
at all, and the risk that clinical trial results may be negative; the risk
that the additional information to be provided to the FDA may not be able
to be provided in a timely manner or at all, or may not be satisfactory to
the FDA; the risk that the FDA may not remove the hold on the IND
application, either at all or in a timely manner; insurance and
intellectual property risks; research and development risks; the need for
further regulatory approvals, which may not be obtained; the Company's
dependence on its third-party service providers; upscaling and
manufacturing risks; partnership / strategic alliance risks; the effect of
competition; the risk of technical obsolescence; uncertainty of the size
and existence of a market opportunity for Helix's products; uncertainty
whether the Company will be able to obtain an appropriate pharmaceutical or
strategic partner for the drug candidates, which are not assured; changes
in business strategy or plans; and the risk factors that are discussed
under Item 3.D. - "Risk Factors" in the Company's latest Form 20-F Annual
Report or identified in the Company's other public filings with the
Canadian securities administrators at www.sedar.com or with the SEC at
www.sec.gov. Forward-looking statements and information are based on the
beliefs, assumptions 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, assumptions
or expectations, or other circumstances change, except as required by law.