CALGARY, March 31- SemBioSys Genetics Inc. (TSX:SBS) a development stage biotechnology company that utilizes its patented plant seed oilbody expression technology platform to develop biosimilar drug candidates and high value proteins, today announced its 2010 year-end financial and operational results.
2010 Operational Highlights
- Recapitalized the business with $4 million financing, subsequent to year-end, extending the Company's operational runway to more effectively negotiate partnerships for it's core products and platform
- Recruited and promoted a new management team with a focus on commercialization, including the appointment of Ms. Enman Ma as its Chief Financial Officer subsequent to the end of the period
- Advanced partnering discussions for its biosimilar insulin and Apo AIMilano programs with a very focused emphasis on China and companies with synergies for it's technology platform and products
- Generated successful reverse cholesterol transport data in a preclinical study of our Apo AIMilano, at a well recognized North American cardiac institute and also presented and published preclinical data at The American College of Cardiology's Annual Scientific Session
- Harvested additional field grow outs in North America and Chile of key safflower lines expressing both Apo AIMilano and insulin which ensure adequate active material to further prepare both products for critical upcoming development activity
- Commercialization partner successfully completed FDA registration of GLA (Omega-6) produced using SemBioSys' plant based technology and initiated commercial launch of the product
- Raised $2.3 million, including a non-dilutive investment of $500,000 from AVAC Ltd.
"The last two years have been a challenging period for the Company from a financial perspective. It demanded both creativity and tenacity to ensure that the Company survived and realized the potential of our transformative technology platform. We were faced with, and made, tough decisions in 2010 and early 2011 including the further downsizing of the organization. With these changes in place we have built a leaner and more commercially focused management team and with the recent completion of our $4 million financing, we can now clearly focus on the business development opportunities for our biosilmilar human insulin and Apo AIMilano programs and our technology platform," said James Szarko, President and CEO of SemBioSys.
SemBioSys has historically operated in two reportable segments: (i) Biopharmaceuticals and Bioproducts and (ii) Specialty Ingredients. Effective July 29, 2009, the Company divested its majority interest in Botaneco Specialty Ingredients Inc. and Botaneco Inc. (collectively referred to as "Botaneco"), and, therefore, it no longer has control nor significant influence over these entities. As a result, the Specialty Ingredients segment is no longer being consolidated and its operating results are included in discontinued operations. On November 20, 2009 the Company disposed of its remaining investment in Botaneco.
Net loss for the year ended December 31, 2010, compared to the same period last year:
- $8,260,239 or $0.17 per share from continuing operations compared to $6,492,390 or $0.19 per share;
- $nil from discontinued operations compared to $96,492 or $nil per share; and
- $8,260,239 or $0.17 per share in total net loss compared to $6,588,882 or $0.19 per share.
Our net loss in 2009 was offset by a one time gain on the exchange of shares as part of the corporate reorganization and a gain on the disposal of our remaining shares of Botaneco. Consequently our net loss increased in 2010 as there was no gain on exchange of shares or on the disposal of Botaneco to offset a portion of the net loss. Furthermore, a one time non-cash expense of $735,000 was recorded in intellectual property as a result of the renegotiation of certain terms in an existing technology license agreement.
Revenue for the year ended December 31, 2010, compared to the same period last year:
- $479,516 in revenue from continuing operations compared to $1,571,114;
- $nil in revenue from discontinued operations compared to $378,970; and
- $479,516 in total revenue compared to $1,950,084.
The decrease in revenue in 2010 for continuing operations is due mainly to the recognition of licensing option fees in 2009 from a one time option agreement entered related to the Company's Biosimilar Insulin program; offset by licensing fees recorded 2010 related to the Company's GLA program.
Expenditures (net of cost recoveries and scientific research & experimental development tax credits in each case) for the year ended December 31, 2010, compared to the same period last year:
- $8,309,214 in expenditures from continuing operations compared to $11,270,330;
- $nil in expenditures from discontinued operations compared to $2,774,345; and
- $8,309,214 in total expenditures compared to $14,044,675.
The overall decrease in expenditures is primarily due to the cost reductions implemented in the third quarters of both 2009 and 2010, in addition to decreased post-clinical costs as the majority of the post-clinical work for the insulin clinical trial was completed in early 2009. Costs were further offset by the receipt of the SR&ED refundable tax credits in the third quarter of this year.
At December 31, 2010, the Company had cash and cash equivalents of $267,436 as compared to $3,687,548 at December 31, 2009. The decrease in cash during the period resulted primarily from net cash burn offset by the proceeds received relating to the private placement completed in March 2010 and the proceeds received from our SR&ED claim in August 2010.
The current portion of long-term debt and convertible debentures were $2,665,176 at December 31, 2010 compared to $1,534,535 at December 31, 2009. The increase in debt relates mainly to the $730,000 of convertible debentures issued in June 2010 to UTI Limited Partnerships as part of the consideration paid to renegotiate certain terms of our existing technology license agreement and the accrued interest recorded on the AVAC funding.
At December 31, 2010, the Company had a net working capital balance of ($2,180,556) as compared to $1,595,217 at December 31, 2009. The decrease in working capital is primarily due to the increase in the current of long-term debt resulting from the accrued interest on the $1,350,000 of funding SemBioSys received from AVAC in 2009. Also contributing to the decrease is the reduction in cash balance and sale of our investment.
Prior to year-end negotiations were initiated with AVAC regarding the repayment of the outstanding investment and accrued royalties of $1,848,329. An amending agreement comprising repayment of the outstanding investment through royalties earned from the commercialization of certain non-pharma product revenue streams is being concluded between the Company and AVAC. In addition, the Company estimates as of December 31, 2010, it has accumulated an additional $231,000 of refundable credits SR&ED which would further enhance its working capital had the Company accrued for these.
Subsequent to year-end the Company received the final tranche of $250,000 from AVAC under the $500,000 in non-dilutive funding previously announced in the fourth quarter of 2010. Furthermore, the Company closed a $4 million financing. The financing consists of bonds with an aggregate face value of $4 million (the "Bonds") and detachable warrants (the "Warrants") to purchase common shares of the Company. These activities further enhanced our working capital and extended our cash runway.
As at March 30, 2010, the Company had 51,374,536 common shares outstanding, 79,524,024 warrants, 4,560,481 options, 1,423,840 broker warrants, 1,065,467 deferred share units, and debentures which are convertible into 8,993,611 common shares.
Calgary, Alberta-based SemBioSys is a development stage biotechnology Company that utilizes its patented plant seed oilbody expression technology platforms to develop biosimilar drug candidates and high value proteins. SemBioSys' seed-based protein expression system can enable exceptionally low cost of production with unprecedented scalability and reliability. SemBioSys is focusing the platform selectivity to develop biosimilar product candidates with tremendous commercial value. The Company's current pharmaceutical development programs include insulin (SBS-1000, regulated as a biosimilar in Europe) and Apo AIMilano, a new chemical entity and next-generation cardiovascular therapy with blockbuster revenue potential if it reaches market for treatment of atherosclerosis. SemBioSys' Apo AIMilano is a des-1,2- variant of Apo AIMilano as previously described in scientific literature. SemBioSys is listed on the Toronto Stock Exchange under the ticker SBS. More information is available at www.sembiosys.com.