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Helix Biopharma (CC:HBP) Announces Q2 Fiscal 2013 Results


3/12/2013 8:44:19 AM

AURORA, ON--(Marketwire - March 11, 2013) - Helix BioPharma Corp. (TSX: HBP) (FRANKFURT: HBP), a biopharmaceutical company developing drug candidates for the prevention and treatment of cancer, today announced its financial results and research and development update for the three and six month periods ended January 31, 2013 and 2012.

HIGHLIGHTS DURING THE FISCAL QUARTER ENDED JANUARY 31, 2013

  • On December 14, 2012 the Company announced that it had agreed with Merck to terminate the collaboration under the material transfer and licence option agreement, originally entered into between the Company and a Merck subsidiary in December, 2000, for the development of pharmaceutical products containing topical interferon alpha-2b;

  • Effective December 14, 2012, Mr. Jack Kay and Mr. Tom Hodgson resigned from the Company's Board of Directors;

  • Effective December 18, 2012, Mr. John A. Rogers was appointed to the Company's Board of Directors.

  • On December 20, 2012 the Company announced that it had opened patient screening for the second dose-level cohort in its continuing phase I/II clinical safety, tolerability and preliminary efficacy study of L-DOS47 in Poland;

  • At the Annual General and Special Meeting of shareholders on January 24, 2013 (the "2013 AGM"), shareholders of the Company approved the sale of the Company's distribution business, which closed on January 25, 2013, for gross proceeds of approximately $8.2 million;

  • Also at the 2013 AGM;

    • Shareholders elected of William White, Robert Verhagen, Mario Gobbo, Marek Orlowski, Slawomir Majewski, John A. Rogers and Slawomir Ludwikowski as directors of the Company;

    • Shareholders approved a special resolution approving an amendment to Helix's articles moving Helix's registered office to Ontario.

    • KPMG LLP, Chartered Accountants, were appointed as auditors of the Company. However, a significant percentage of proxies received prior to the shareholder meeting withheld from voting on the appointment of an auditor. The board of directors expects to meet with shareholders in the near future to better understand the reasons for this action, and the board will take appropriate action based on these discussions with shareholders.

  • Mr. Mario Gobbo was appointed as Chairman of the board following the 2013 AGM;

  • The Company's had cash and cash equivalents of $8,478,000 as at January 31, 2012.

HIGHLIGHTS SUBSEQUENT TO THE FISCAL QUARTER ENDED JANUARY 31, 2013

  • Effective February 8, 2013, Mr. John A. Rogers voluntarily resigned from the Company's Board of Directors;

  • Effective February 21, 2013, Mr. Andrew J. MacDougall was appointed to the Company's Board of Directors in order to satisfy the statutory requirement for resident Canadians to comprise at least 25 percent of the Board of Directors pending completion of the Board's director nomination process;

  • On February 21, 2013 the Company announced the application to the Toronto Stock Exchange to extend the expiry date of warrants issued on September 8, 2009 pursuant to a private placement, by an additional six months, from March 7, 2013 to September 7, 2013. The Company subsequently announced that its proposal had been approved by the Toronto Stock Exchange, and that the warrant extension had become effective, on March 7, 2013.

  • Effective February 22, 2013, Mr. Bill White voluntarily resigned from the Company's Board of Directors.

RESULTS FROM OPERATIONS

Net income (loss) for the period
The Company recorded net income of $4,699,000 and $2,592,000, respectively for the three and six month periods ended January 31, 2013 for earning per common share of $0.07 and $0.04, respectively. For the comparative three and six month periods ended January 31, 2012, the Company recorded a net loss of $9,456,000 and $12,700,000, respectively for a loss per common share of $0.14 and $0.19.

Included in net income for the three and six month periods ended January 31, 2013 is a gain on sale from discontinued operations of $6,083,000. On January 25, 2013, the Company announced the sale of its distribution business in Canada. The sale was for all of the Company's right, title, and interest in and to the products, assets, property and rights (other than certain excluded assets) used and usable primarily in the business of marketing, distributing and selling certain products and the manufacturing or having manufactured, certain products, as applicable, as carried on through the Rivex Pharma division. Following the sale of the Company's distribution business, the Company's ongoing operations will represent its continued focus on research and development of pharmaceutical product candidates. The research and development of pharmaceutical products requires the expenditure of significant amounts of cash over a relatively long time period. The Company therefore expects to continue to incur losses from continuing operations, for the foreseeable future. These research and development activities have no source of revenues, positive operating cash flow or operating earnings.

In addition, the Company incurred special committee and settlement agreement expenditures of $6,159,000 and $6,405,000 in the three and six month periods ended January 31, 2012, respectively. No such costs were incurred in the three and six month periods ended January 31, 2013.

The Company recorded net loss from continuing operations of $1,726,000 and $4,126,000, respectively for the three and six month periods ended January 31, 2013 for a loss per common share of $0.03 and $0.06, respectively. For the comparative three and six month periods ended January 31, 2012, the Company recorded a net loss from continuing operations of $4,126,000 and $13,377,000, respectively for a loss per common share on continuing operations of $0.15 and $0.20.

Research & development
Research and development costs totalled $1,049,000 and $2,657,000, respectively for the three and six month periods ended January 31, 2013. For the three and six month periods ended January 31, 2012, research and development costs totalled $2,231,000 and $4,342,000, respectively.

L-DOS47 research and development expenses for the three and six month periods ended January 31, 2013 totalled $639,000 and $1,512,000, respectively ($995,000 and $1,989,000 respectively for the three and six month periods ended January 31, 2012). L-DOS47 research and development expenditures reflect expenditures associated with the preparation for commencement of a Polish Phase I/II clinical study and a U.S. Phase I clinical study with L-DOS47. Given the Company's limited cash resources, the Company has prioritized the commencement of the European Phase I/II clinical study with L-DOS47 in Poland while deferring the previously planned commencement of the U.S. Phase I clinical study with L-DOS47. On May 14, 2012 the Company announced the commencement of clinical site initiations and patient recruitment activities of its Polish Phase I/II clinical study in Poland. On October 23, 2012, the Company announced that the first patient has been enrolled and first dose administered in its Polish Phase I/II clinical safety, tolerability and preliminary efficacy study of L-DOS47 in Poland.

Topical Interferon Alpha-2b research and development expenses for the three and six month periods ended January 31, 2013 totalled $134,000 and $585,000, respectively ($689,000 and $1,341,000 respectively for the three and six month periods ended January 31, 2012). Beginning in Q4 of fiscal 2012, the Company initiated a downsizing of the staff in the Saskatoon laboratory. The Company proceeded with additional staff downsizing at its Saskatoon laboratory in October 2012, including a decision to close the Saskatoon laboratory by the end of November 2012. Costs associated with the downsizing were charged in Q1 of fiscal 2013. The Company has now limited ongoing activities to sourcing and qualifying alternative interferon alpha-2b raw material samples, and finding suitable strategic partner(s) who would be willing to license or acquire the product and support the remaining development costs through to commercial launch.

The Company also incurred corporate research and development expenses for the three and six month periods ended January 31, 2013 of $276,000 and $560,000 respectively ($547,000 and $1,012,000 respectively for the three and six month periods ended January 31, 2012). The lower expenses can be attributed to a reduction in payroll expense associated with headcount reductions of corporate research and development employees in addition to a reduction in travel and consulting expenses.

Operating, general & administration
Operating, general and administration expenses for the three and six month periods ended January 31, 2013 totalled $704,000 and $1,468,000 respectively and represents a decrease of $664,000 (48.5%) and $1,175,000 (44.5%) when compared to the three and six month periods ended January 31, 2012. Lower operating, general and administration expenses are the result of ongoing cost cutting measures by the Company, with the most significant reductions related to lower legal and audit fees as a result of the Company having voluntarily surrendered its listing on the NYSE-MKT exchange in the United States, lower stock-based compensation expenses, reduced headcount and investor relations activities.

2012 AGM, Special Committee and Settlement
Expenses relating to the special committee of independent directors (the "Special Committee") formed in connection with the Company's contested annual general meeting of shareholders held on January 30, 2012 (the "2012 AGM") and the subsequent settlement agreement entered into with certain of the concerned shareholders (the "Settlement"). All of these expenses were incurred during fiscal 2012.

CASH FLOW

Operating activities from continuing operations
Cash used in operating activities from continuing operations for the three and six month periods ended January 31, 2013 totalled $1,954,000 and $4,089,000 respectively and includes net loss from continuing operations of $1,726,000 and $4,126,000 respectively. Significant adjustments for the three and six month periods ended January 31, 2013 include depreciation of property, plant and equipment of $103,000 and $206,000 respectively, deferred lease credits of $(7,000) and $(13,000), stock-based compensation of $76,000 and $172,000 respectively, foreign exchange gain of $7,000 and a foreign exchange loss of $(27,000) respectively and changes in non-cash working capital balances related to continuing operations of $375,000 and $337,000.

Financing activities from continuing operations
Cash provided from financing activities for the three and six month periods ended January 31, 2013 totalled $nil and $nil respectively.

Investing activities from continuing operations
Cash provided by (used in) investing activities for the three and six month periods ended January 31, 2013 totalled $17,000 and $4,000 respectively.

Cash flows from discontinued operations
The impact of discontinued operations on the condensed consolidated statement of cash flows for the three and six months ended January 31, 2013 and 2012 are as follows:

                                                                            
                                                                            
                                     For the three month  For the six month 
                                        periods ended       periods ended   
                                          January 31          January 31    
In thousands                            2013      2012      2013      2012  
                                     --------- --------- --------- ---------
                                                                            
Cash provided by operating                                                  
 activities                          $   1,012 $     438 $   1,645 $     713
Cash provided by investing                                                  
 activities (net)                        6,083         -     6,083         -
                                     --------- --------- --------- ---------
Net increase in cash from                                                   
 discontinued operations             $   7,095 $     438 $   7,728 $     713
                                                                            
                                                                            

Cash provided by investing activities includes all costs associated with closing the sale of the distribution business against the gross proceeds received.

LIQUIDITY AND CAPITAL RESOURCES

Since inception, the Company has financed its operations from public and private sales of equity, proceeds received upon the exercise of warrants and stock options, and, to a lesser extent, from 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 economic conditions relating to the state of the capital markets generally.

At January 31, 2013, the Company had cash and cash equivalents of $8,478,000 (July 31, 2012 - $4,862,000). The total number of common shares issued as at January 31, 2013 was 67,226,337 (July 31, 2012 - 67,226,337).

The Company's cash resources have been severely strained by the costs incurred in connection with the Company's 2012 AGM, Special Committee and Settlement. On January 24, 2013 the Company's shareholders approved the Rivex Transaction. Even after the closing of the Rivex Transaction on January 25, 2013, the Company does not have sufficient cash reserves to meet anticipated cash needs for working capital and capital expenditures through the next twelve months. Since the Company's cash and cash equivalents as at January 31, 2013 of $8,478,000 are not sufficient to see the current research and development initiates through to completion, the Company will require additional financing in the near term. The Company has taken various cost cutting measures and cost-deferral initiatives and will continue to do so, where necessary, but any future cost cutting measures and cost-deferral initiatives will be limited and will not obviate the need for additional financing.

Securing additional financing continues to be of utmost importance to the Company.

Equity financing has historically been the Company's primary source of funding. However, the market for equity financings for companies such as Helix is challenging, especially in the current economic environment. While the Company has been able to raise equity financing in recent years, there can be no assurance that additional funding by way of equity financing will continue to be available. Any additional equity financing, if secured, would result in dilution to the existing shareholders, which may be significant. The Company may also seek additional funding from or through other sources, including grants, technology licensing, co-development collaborations, mergers and acquisitions, joint ventures, and other strategic alliances, which, if obtained, may reduce the Company's interest in its projects or products or result in significant dilution to existing shareholders. There can be no assurance, however, that any alternative sources of funding will be available. The failure of the Company to obtain additional financing on a timely basis may result in the Company reducing, delaying or cancelling one or more of its planned research, development and/or marketing programs, including clinical trials, further reducing overhead, or monetizing non-core assets, any of which could impair the current and future value of the business or cause the Company to consider ceasing operations and undergoing liquidation.

Given the Company's conclusion about the insufficiency of its cash reserves, significant doubt may be cast about the Company's ability to continue operating as a going concern. The continuation of the Company as a going concern for the foreseeable future depends mainly on raising sufficient capital, and in the interim, reducing, where possible, operating expenses (including making changes to the Company's research and development plans), including the delay of one or more of the Company's research and development programs, and further reducing overhead expenses.

The following table depicts the Company's condensed unaudited interim consolidated statement of financial position as at January 31, 2013 and July 31, 2012:

                                                                            
                                                                            
In thousands                               January 31, 2013   July 31, 2012 
                                           ---------------- ----------------
                                                                            
ASSETS                                                                      
                                                                            
Non-current assets                                    1,301            1,493
Current assets                                        8,964            6,123
                                           ---------------- ----------------
Total assets                               $         10,265 $          7,616
                                                                            
SHAREHOLDERS' EQUITY AND LIABILITIES                                        
                                                                            
Shareholders' Equity                                  8,988            6,224
                                                                            
Non-current liabilities                                  10               23
                                                                            
Current liabilities                                   1,267            1,369
                                                                            
                                           ---------------- ----------------
Total liabilities and shareholders' equity $         10,265 $          7,616
                                                                            
                                                                            

The following table depicts the Company's condensed unaudited interim consolidated statement of net loss and comprehensive loss for the three and six month periods ending January 31, 2013 and 2012:

                                                                            
                                                                            
                                  For the three month    For the six month  
                                     periods ended         periods ended    
                                      January 31            January 31      
In thousands                        2013       2012       2013       2012   
                                 ---------  ---------  ---------  --------- 
                                                                            
Expenses                                                                    
  Research and development       $   1,049  $   2,231  $   2,657  $   4,342 
  Operating, general and                                                    
   administration                      704      1,368      1,468      2,643 
  Special committee and                                                     
   settlement agreement                  -      6,159          -      6,405 
  (Gain) on disposal of                                                     
   property, plant and equipment       (18)         -        (18)         - 
                                 ---------  ---------  ---------  --------- 
Income (loss) before finance                                                
 items                              (1,735)    (9,758)    (4,107)   (13,390)
                                                                            
Finance items                                                               
  Finance income                         6         38         16         87 
  Finance expense                       (4)        (3)        (8)        (8)
  Foreign exchange gain (loss)           7        (41)       (27)       (66)
                                 ---------  ---------  ---------  --------- 
                                         9         (6)       (19)        13 
                                                                            
Net income (loss) and total                                                 
 comprehensive income (loss)                                                
 from continuing operations         (1,726)    (9,764)    (4,126)   (13,377)
Net income (loss) and total                                                 
 comprehensive income (loss)                                                
 from discontinued operations          312        308        635        677 
Gain from sale of discontinued                                              
 operations (net)                    6,083          -      6,083          - 
                                 ---------  ---------  ---------  --------- 
Net income (loss) and total                                                 
 comprehensive income (loss)     $   4,669  $  (9,456) $   2,592  $ (12,700)
                                                                            
                                                                            

The following table depicts the Company's condensed unaudited interim consolidated statement of cash flows for the three and six month periods ending January 31, 2013 and 2012:

                                                                            
                                                                            
                                   For the three month   For the six month  
                                      periods ended        periods ended    
                                       January 31            January 31     
In thousands                         2013       2012       2013      2012   
                                  ---------  ---------  ---------  -------- 
                                                                            
Net income (loss) and total                                                 
 comprehensive income (loss) from                                           
 continuing operations            $  (1,726) $  (9,764) $  (4,126) $(13,377)
                                                                            
Items not involving cash                147      1,018        374     1,616 
                                                                            
Change in non-cash working                                                  
 capital                               (375)     2,615       (337)    3,964 
                                  ---------  ---------  ---------  -------- 
                                                                            
Net cash provided by (used in)                                              
 operating activities                (1,954)    (6,131)    (4,089)   (7,797)
                                                                            
Net cash provided by (used in)                                              
 financing activities                     -          -          -        43 
                                                                            
Net cash provided by (used in)                                              
 investing activities                    17         (1)         4       (18)
                                                                            
Exchange gain (loss) on cash and                                            
 cash equivalents                         7        (41)       (27)      (66)
                                  ---------  ---------  ---------  -------- 
                                                                            
Net increase (decrease) in cash                                             
 and cash equivalents from                                                  
 continuing operations               (1,930)    (6,173)    (4,112)   (7,838)
                                                                            
Net increase (decrease) in cash                                             
 and cash equivalents from                                                  
 discontinued operations              7,095        438      7,728       713 
                                                                            
Cash and cash equivalents,                                                  
 beginning of period                  3,313     17,654      4,862    19,044 
                                  ---------  ---------  ---------  -------- 
                                                                            
Cash and cash equivalents, end of                                           
 period                           $   8,478  $  11,919  $   8,478  $ 11,919 
                                                                            
                                                                            

The Company's condensed unaudited interim consolidated financial statements and management's discussion and analysis are being filed with the Canadian Securities Administrators and will be available under the Company's profile on SEDAR at www.sedar.com as well as on the Company's website at www.helixbiopharma.com. Shareholders have the ability to receive a hard copy of the Company's unaudited condensed interim consolidated financial statements free of charge upon request at the address below.

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 currently listed on the TSX and FSE under the symbol "HBP".

Forward-Looking Statements and Risks and Uncertainties

This news release contains forward-looking statements and information (collectively, "forward-looking statements") within the meaning of applicable Canadian securities laws. Forward-looking statements are statements and information that are not historical facts but instead include financial projections and estimates; statements regarding plans, goals, objectives, intentions and expectations with respect to the Company's future business, operations, research and development, including the focus of the Company on its two drug candidates, L-DOS47 and Topical Interferon Alpha-2b (cervical lesions indication); and other information in future periods.

Forward-looking statements include, without limitation, statements concerning (i) the Company's ability to operate on a going concern being dependent mainly on obtaining additional financing; (ii) the Company's growth and future prospects being dependent on the success of one or both of L-DOS47 and Topical Interferon Alpha-2b; (iii) the Company's priority continuing to be L-DOS47; (iv) the Company's development programs for Topical Interferon Alpha-2b, DOS47 and L-DOS47; (v) future expenditures, insufficiency of the Company's current cash resources and the need for financing and cost-cutting and/or cost-deferral measures; and (vi) future financing requirements, the seeking of additional funding and anticipated future revenue and operating losses. Forward-looking statements can further be identified by the use of forward-looking terminology such as "expects", "plans", "designed to", "potential", "is developing", "believe", "intended", "continues", "opportunities", "anticipated", "2013", "2014", "next", ongoing", "pursue", "to seek", "proceed", "objective", "estimate", "future", "wish", or the negative thereof or any other variations thereon or comparable terminology referring to future events or results, or that events or conditions "will", "may", "could", "would", or "should" occur or be achieved, or comparable terminology referring to future events or results.

Forward-looking statements are statements about the future and are inherently uncertain, and are necessarily based upon a number of estimates and assumptions that are also uncertain. Although the Company 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. 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. Certain material factors, estimates or assumptions have been applied in making forward-looking statements in this news release, including, but not limited to, the safety and efficacy of L-DOS47 and Topical Interferon Alpha-2b (low-grade cervical lesions); that sufficient financing will be obtained in a timely manner to allow the Company to continue operations; that sufficient cost-deferral and/or cost-cutting measures will be taken; the timely provision of services and supplies, including Interferon alpha-2b raw materials, or other performance of contracts by third parties; future revenue and costs; the absence of any material changes in business strategy or plans, other than the implementation of cost-deferral and/or cost-cutting measures; the timely receipt of required regulatory approvals, and strategic partner support; and that there will be no changes in market, economic, industry or regulatory conditions.

The Company's actual results could differ materially from those anticipated in the forward-looking statements contained in this news release as a result of numerous known and unknown risks and uncertainties, including without limitation, the risk that the Company's assumptions may prove to be incorrect; the risk that additional financing may not be obtainable in a timely manner, or at all, and that the Company may be unsuccessful in its cost-cutting and cost-deferral initiatives; clinical trials may not commence or complete within anticipated timelines or may fail; third party suppliers of necessary services or of drug product and other materials may fail to perform or be unwilling or unable to supply the Company, which could cause delay or cancellation of the Company's research and development or distribution activities; necessary regulatory approvals may not be granted or may be withdrawn; the Company may not be able to secure necessary strategic partner support; general economic conditions, intellectual property and insurance risks; changes in business strategy or plans; and other risks and uncertainties referred to elsewhere in this news release, any of which could cause actual re


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