BELLEVILLE, Ontario, May 5 /PRNewswire-FirstCall/ -- Bioniche Life Sciences Inc. , a research-based, technology-driven Canadian biopharmaceutical company, today released results for its third quarter of fiscal 2006 (for the period ended March 31, 2006).
During the quarter, the Company closed the sale of Bioniche Pharma Group Limited to an investor group led by RoundTable Healthcare Partners and received $15.2 million Cdn. ($13.25 million U.S.). A portion of the sale proceeds was used to repay a bridge loan of $8.7 million Cdn. ($7.5 million U.S.), as well as approximately $1.2 million Cdn. in fees. The net balance of approximately $5.3 million Cdn. was used for general working capital purposes. As of March 31, 2006, a gain of $9.3 million net of certain fees in connection with the sale was recorded, creating a positive net income of $6.0 million, or $0.15 per share.
In addition, subsequent to the quarter, the Company announced that it has entered into a definitive agreement to sell its proprietary sodium hyaluronate product, Cystistat(R) (for the treatment of cystitis), to Bioniche Teoranta for $10 million Cdn. Bioniche Teoranta is part of the Bioniche Pharma Group. Final closing and transfer of funds is anticipated to take place by mid-May, 2006. The proceeds will be utilized by the Company to reduce its debt to Laurus Master Funds, acquire additional ordinary shares of Bioniche Pharma Holdings Limited (retaining 10% minority ownership), and to finance working capital and the initiation of the Company’s Phase III clinical trials with Urocidin.
“Both of these initiatives were undertaken in order to increase available resources for advancing our strategic priorities and to diminish the Company’s overall debt,” said Graeme McRae, President & CEO of Bioniche Life Sciences Inc. “As we prepare to begin enrolling patients for our Phase III clinical trials with Urocidin for bladder cancer and as we progress through the regulatory pathway with our E. coli O157:H7 cattle vaccine, it is imperative that we focus all of our available resources and energy on these major projects.”
Q3 Financial Highlights
The Company’s consolidated revenues from marketed products for the third quarter of fiscal 2006 decreased slightly to $7.4 million Cdn. from $7.6 million Cdn. reported in the same period of fiscal 2005. While the Animal Health segment was stable, the revenue decline was due to a small reduction in sales in the Human Health segment and currency fluctuations.
Animal Health sales were $6.5 million for the third quarter of fiscal 2006, unchanged from the same period last year. On the Human Health side, sales of Cystistat(R) were $0.5 million for the quarter compared to $0.6 million recorded in the third quarter of fiscal 2005.
The Company’s overall gross profit improved in the third quarter, thus maintaining its year-to-date level of 62%, up from 54% reported in the same period last year. This reflects the Company’s increased focus on branded proprietary products, which have higher margins than non-branded products. Improved margins contributed to an increase in EBITDA before research and development.
Expenses other than debt refinancing and research and development were $5.1 million for the quarter ended March 31, 2006. This represents an increase of $0.5 million, or 10%, as compared to the same period last year. Administration, marketing and selling expenses remained stable. The increase reflects additional amortization of capital assets, intangible and other assets and deferred financing fees.
Third quarter earnings before interest, taxes, depreciation and amortization (EBITDA) before Research and Development totaled $1.4 million. This compares to $0.6 million recorded in the same period last year.
Gross research and development expenses in the third quarter totaled $3.6 million as compared to $3.4 million reported in the same period last year. Certain of these expenses were incurred in the Food Safety segment due to ongoing field trials related to the E. coli O157:H7 cattle vaccine.
The Company experienced a net gain per share of $0.09 Cdn. for the third quarter, as compared to a loss of ($0.10) per share for the third quarter of fiscal 2005 on a fully diluted basis. The net gain for the quarter is primarily attributable to the one-time capital gain resulting from the sale of the Bioniche Pharma Group.
“The Company has significantly improved its balance sheet with the sale of the Bioniche Pharma Group,” said Patrick Montpetit, Chief Financial Officer at Bioniche Life Sciences Inc. “This new balance sheet carries significantly less debt and places us in a good position to consider potential future strategic financings.”
Fiscal Year-to-Date (Nine Months) Financial Results
On a fiscal year-to-date basis, consolidated revenues were $21.2 million Cdn. this year compared to $21.4 million Cdn. last year. Animal Health sales were $18.2 million for the nine months ending March 31, 2006 as compared to $18.0 million in the same period last year.
Gross profit totaled $13.2 million, or 62%, for the nine-month period ending March 31, 2006 as compared to $11.6 million, or 54%, recorded in the same period last year. This significant increase in gross margin has resulted from the Company’s increased focus on branded proprietary products, which have higher margins than non-branded products. Improved margins contributed to an increase in EBITDA before research and development.
For the nine-month period ended March 31, 2006, EBITDA increased 79% to $3.4 million, as compared to $1.9 million recorded in the same period last year. The increased gross profit margins contributed to the increase in EBITDA over last year’s level.
Expenses other than debt financing and research and development were $14.4 million for the nine-month period ended March 31, 2006, representing an increase of $1.5 million, or 12%, as compared to the same period last year.
For the nine-month period ended March 31, 2006, gross research and development expenses totaled $9.7 million, an increase of $0.5 million, or 5%, over the same period last year.
For the nine-month period ending March 31, 2006, the Company reported a total loss of $3.0 million as compared to a loss of $13.1 million recorded in the same period last year. Last year’s results included a loss of $3.3 million from discontinued operations as compared to a profit of $9.5 million this year. This year’s results include a one-time loss on debt refinancing of $2.5 million.
Quarterly Conference Call/Audio Webcast
Bioniche will host a conference call and audio webcast to discuss its third quarter fiscal 2006 results on Tuesday, May 9, 2006 at 10:00 a.m. (EST). To participate in the conference call, please phone 416-644-3433 (Toronto area) or toll-free 1-800-796-7558. A listen-only audio webcast will be available at the following locations:
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=1464540 (English) http://www.cnw.ca/fr/webcast/viewEvent.cgi?eventID=1464540 (French)
or through the link on the home page of the Bioniche website (http://www.Bioniche.com)
A replay of the conference call will be available until May 16, 2006 by calling 416-640-1917 or toll-free 1-877-289-8525 (passcode: 21186854#). The webcast will be available for replay using the above links until August 7, 2006.
About Bioniche Life Sciences
Bioniche Life Sciences Inc. is a research-based, technology-driven Canadian biopharmaceutical company focused on the discovery, development, manufacturing, and marketing of proprietary products for human and animal health markets worldwide. The fully-integrated company employs approximately 185 skilled personnel and has three principal operating divisions: Human Health, Animal Health, and Food Safety. The Company’s primary goal is to develop proprietary cancer therapies supported by revenues from marketed products in these three segments. For more information, please visit http://www.Bioniche.com.
Except for historical information, this news release may contain forward- looking statements that reflect the Company’s current expectation regarding future events. These forward-looking statements involve risk and uncertainties, which may cause but are not limited to, changing market conditions, the successful and timely completion of clinical studies, the establishment of corporate alliances, the impact of competitive products and pricing, new product development, uncertainties related to the regulatory approval process, and other risks detailed from time to time in the Company’s ongoing quarterly and annual reporting.
Bioniche Life Sciences Inc. Amalgamated under the laws of Ontario Unaudited CONSOLIDATED BALANCE SHEETS As at Mar 31 As at June 30 2006 2005 $ $ ASSETS Current Cash 2,794,246 3,527,408 Accounts receivable 6,107,335 7,281,010 Inventories 7,982,332 6,791,729 Prepaid expenses and deposits 1,218,439 778,273 Current assets -- discontinued operations 12,012,577 18,102,352 30,390,997 Long-term Capital assets 10,269,851 10,422,860 Goodwill 2,049,791 2,049,791 Intangible assets, net 9,771,166 10,403,251 Deferred financing fees, net 1,807,790 838,055 Other assets -- deferred costs 576,000 576,000 Investments 1,558,133 Long-term assets -- discontinued operations 28,868,602 44,135,083 83,549,556 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Revolving credit facility 2,849,950 -- Term bridge loan 0 -- Accounts payable and accrued liabilities 7,130,086 7,015,841 Income taxes payable 745,723 584,101 Deferred government incentives 2,986,572 3,162,577 Current portion of senior and other long-term debt 1,774,030 3,634,986 Current liabilities -- discontinued operations 0 17,276,398 15,486,361 31,673,903 Long-term Senior debt 5,907,025 2,458,946 Other long-term debt -- 10,800,000 Obligations under capital lease 1,118,779 994,457 Deferred government incentives 410,523 363,167 Long-term liabilities -- discontinued operations 0 15,926,257 22,922,688 62,216,730 Shareholders’ equity Share capital 72,510,325 70,382,951 Other paid-in capital 4,448,276 3,038,050 Deficit (55,722,827) (52,726,240) Cumulative translation amount (23,379) 638,065 21,212,395 21,332,826 44,135,083 83,549,556 Bioniche Life Sciences Inc. Unaudited CONSOLIDATED STATEMENTS OF DEFICIT For the three and nine months ended March 31 Current Last Year Current Last Year Quarter Quarter Year to Date Year to Date 2006 2005 2006 2005 $ $ $ $ Balance, beginning of period (61,730,913) (46,701,507) (52,726,240) (37,123,268) Net loss for the period 6,008,086 (3,550,965) (2,996,587) (13,129,204) Balance, end of period (55,722,827) (50,252,472) (55,722,827) (50,252,472) Bioniche Life Sciences Inc. Unaudited CONSOLIDATED STATEMENTS OF LOSS For the three and nine months ending March 31 Current Last Year Current Last Year Quarter Quarter Year to Date Year to Date 2006 2005 2006 2005 $ $ $ $ REVENUE Sales 7,444,994 7,618,014 21,181,018 21,434,466 Cost of sales 2,542,259 3,412,576 7,953,746 9,878,955 Gross profit 4,902,735 4,205,438 13,227,272 11,555,511 EXPENSES Administration 1,364,558 1,371,928 3,789,197 3,092,574 Marketing and selling 1,749,201 1,892,451 4,947,273 5,379,764 Quality assurance 239,246 243,329 757,142 686,849 Interest on long-term debt 307,487 528,951 1,306,894 1,463,295 Other interest 47,077 (15,205) 122,674 3,646 Imputed Interest on convertible debentures 79,037 -- 79,037 -- Share ownership and bonus 114,619 64,714 347,734 494,737 Amortization of capital assets 294,652 299,489 906,014 714,804 Amortization of intangible and other assets 465,766 214,130 894,026 642,389 Amortization of deferred financing fees 437,289 68,952 727,552 242,994 Debt refinancing -- -- 2,493,920 -- Foreign exchange (gain) loss (9,431) (62,669) 484,273 146,573 5,089,501 4,606,070 16,855,736 12,867,625 Loss before research and development and other items (186,766) (400,632) (3,628,464) (1,312,114) Research and development expenses, gross 3,554,341 3,373,965 9,713,897 9,221,532 Less government incentives, net (539,791) (307,495) (1,023,025) (998,172) Loss from continuing operations before income taxes (3,201,316) (3,467,102) (12,319,336) (9,535,474) Provision for income tax expense (146,199) (268,153) (181,661) (253,183) Loss from continuing operations (3,347,515) (3,735,255) (12,500,997) (9,788,657) Income (loss) from discontinued operations 9,355,601 184,290 9,504,410 (3,340,547) Net loss for the period 6,008,086 (3,550,965) (2,996,587) (13,129,204) Basic net income (loss) per share Continuing operations (0.09) (0.10) (0.32) (0.27) Discontinued operations 0.24 0.01 0.24 (0.09) Total net loss per share 0.15 (0.10) (0.25) (0.36) Fully diluted net income (loss) per share Continuing operations (0.09) (0.10) (0.32) (0.27) Discontinued operations 0.18 0.01 0.18 (0.09) Total net loss per share 0.09 (0.10) (0.25) (0.36) Bioniche Life Sciences Inc. Unaudited CONSOLIDATED STATEMENTS OF CASH FLOWS For the three and nine months ended March 31 Current Last Year Current Last Year Quarter Quarter Year to Date Year to Date 2006 2005 2006 2005 $ $ $ $ OPERATING ACTIVITIES Loss from continuing operations (3,347,515) (3,735,255) (12,500,997) (9,788,657) Add (deduct) non cash items: Amortization 1,197,707 582,571 2,527,592 1,600,187 Non cash interest expense 79,037 79,037 Foreign exchange (379,518) (18,059) (276,397) (13,958) Share, option, and warrant compensation 92,130 38,893 292,841 171,729 Share bonus -- (235,104) -- 437,896 Employee share ownership plan 137,080 148,183 415,274 428,150 Debt refinancing -- -- 1,271,454 -- (2,221,079) (3,218,771) (8,191,196) (7,164,653) Net changes in non-cash working capital balances related to operations (1,795,916) (271,765) (869,709) (1,584,237) Cash used in operating activities (4,016,995) (3,490,536) (9,060,905) (8,748,890) INVESTING ACTIVITIES Payment relating to acquisition of net assets -- (123,120) (1,019,163) Government incentives received on account of capital assets -- -- 53,730 6,458 Disposal of Capital Assets 11,888 11,888 Investment in BPG (1,558,133) (1,558,133) Purchase of capital assets (396,451) (141,075) (713,364) (888,436) Cash used in investing activities (1,942,696) (141,075) (2,328,999) (1,901,141) FINANCING ACTIVITIES Proceeds from revolving credit facility -- -- 4,051,250 -- Proceeds from term bridge loan -- -- 8,681,250 -- Preferred shares issued -- -- -- 11,674,854 Common shares issued -- -- 1,053,693 -- Proceeds from convertible term note -- -- 7,048,807 -- Financing fees -- debt 34,803 -- (1,333,986) (20,968) Proceeds on account of deferred government incentives 31,055 30,320 724,916 423,618 Repayment of revolving credit facility (965,780) (965,780) Repayment of senior and other long-term debt (8,757,169) (188,120) (25,003,900) (574,220) Cash provided by financing activities (9,657,091) (157,800) (5,743,750) 11,503,284 Net increase (decrease) in cash from continuing operations (15,616,782) (3,789,411) (17,133,654) 853,253 Net increase in cash from discontinued operations 16,115,406 409,980 16,400,491 762,385 Net increase (decrease) in cash for the period 498,625 (3,379,431) (733,162) 1,615,638 Cash, beginning of period 2,295,621 8,917,967 3,527,408 3,922,898 Cash, end of period 2,794,246 5,538,536 2,794,246 5,538,536 For further information, please contact: Patrick Montpetit, CA Vice-President and Chief Financial Officer Bioniche Life Sciences Inc. Telephone: (514) 697-6636 ext. 2245 Patrick.Montpetit@Bioniche.com Jennifer Shea Corporate Communications & Investor Relations Manager Bioniche Life Sciences Inc. Tel.: (613) 966-8058 ext. 1250 Cell: (613) 391-2097 Jennifer.Shea@Bioniche.com
Bioniche Life Sciences Inc.
CONTACT: Patrick Montpetit, CA, Vice-President and Chief FinancialOfficer, +1-514-697-6636, ext. 2245, Patrick.Montpetit@Bioniche.com, orJennifer Shea, Corporate Communications & Investor Relations Manager,+1-613-966-8058, ext. 1250, cell: +1-613-391-2097,Jennifer.Shea@Bioniche.com, both of Bioniche Life Sciences Inc.
Web site: http://www.bioniche.com/
