AURORA, ON, Dec. 17 /PRNewswire-FirstCall/ - Helix BioPharma Corp. today announced financial results for the first quarter of fiscal 2008, ended October 31, 2007.
Revenues were higher in the first quarter of fiscal 2008 when compared to the first quarter of 2007 with margins remaining relatively flat. Overall expenses in the first quarter of fiscal 2008 were higher when compared to fiscal 2007 and are mainly attributable to a one time charge related to the resignation of the Company’s Chairman which is reflective of the higher loss for the period. The Company adopted four new accounting standards in the first quarter of fiscal 2008, of which one impacted the Company resulting in a net unrealized gain on an available-for-sale investment.
Loss for the period
During the first quarter of fiscal 2008, the Company recorded a loss of $1,644,000 or $0.05 per common share, resulting in an increase of $302,000 when compared to the first quarter of fiscal 2007. The Company recorded a loss of $1,342,000, or $0.04 per common share in the first quarter of fiscal 2007.
Revenues
Total revenues in the first quarter of fiscal 2008 totaled $885,000 (2007 - $826,000), resulting in an increase of $59,000 or 7.1%.
Product Revenue
Product revenues totaled $754,000 in the first quarter of fiscal 2008 and represent 85.2% of total revenues. When compared to the first quarter of fiscal 2007, product revenues increased by $58,000 or 8.3% and are primarily driven by Klean-Prep(TM) product sales.
License fees and royalty revenue
License fees and royalties totaled $131,000 in the first quarter of fiscal 2008 and represent 14.8% of revenues. When compared to the first quarter of fiscal 2007, license fees and royalties were higher by $1,000 or 1.0%. The license fees and royalties in the first quarter of fiscal 2008 and 2007 were comprised solely of royalties related to sales of Klean-Prep(TM) outside of Canada.
Research and development contract revenue
The Company had no research and development contract revenue in both the first quarters of fiscal 2008 and 2007.
Cost of sales and margins
Cost of sales totaled $313,000 in the first quarter of fiscal 2008 (2007 - $290,000) with margins remaining relatively flat. Margins, on a percentage basis, in the first quarter of fiscal 2008 were 58.5% (2007 - 58.3%).
Research & development
Research and development costs in the first quarter of fiscal 2007 totaled $782,000 (2007 - $871,000) for a decrease of $89,000. Lower research and development costs in the first quarter of fiscal 2008 mainly reflect timing of expenditures associated with the Company’s L-DOS47 program.
Research and development expenditures related to Topical Interferon Alpha-2b remained relatively flat, with expenditures from the late stage phase II German study during the first quarter of fiscal 2007 being offset by expenditures in the first quarter of fiscal 2008 relating to patient enrollment in the phase II trial in Sweden along with costs associated with patent filings and consulting services.
The Company expects to increase its R&D spending through the remainder of fiscal 2008, as its Topical Interferon Alpha-2b and L-DOS47 product candidates continue to be developed.
Operating, general & administration
Operating, general and administration expenses in the first quarter of fiscal 2008 totaled $1,313,000 (2007 - $906,000), for an increase of $407,000. The increase is mainly attributable to a one time charge of $434,000 relating to the resignation of the Company’s Chairman.
Amortization of intangible and capital assets
Amortization of intangible assets in the first quarter of fiscal 2008 totaled $7,000 (2007 - $40,000). The variance is due to certain intangible assets which have now been fully amortized. Amortization of capital assets in first quarter of fiscal 2008 totaled $66,000 (2007 - $77,000).
Stock-based compensation
Stock-based compensation expense in the first quarter of fiscal 2008 totalled $12,000 (2007 - $12,000). The stock-based compensation expense relates to the ongoing amortization of compensation costs of stock options granted on June 30, 2005, over their vesting period.
Interest income
Interest income in the first quarter of fiscal 2008 totaled $104,000 and remained flat when compared to the first quarter of fiscal 2007 which totaled $102,000.
Foreign exchange loss
Foreign exchange losses in the first quarter of fiscal 2008 totaled $108,000 (2007 - $45,000). Foreign exchange losses resulting from the foreign currency translation of the Company’s integrated foreign operation in Ireland were offset by foreign exchange gains related to the Canadian dollar appreciation versus the U.S. dollar. The Company’s net assets in Europe consist mainly of cash and cash equivalents, denominated in Euro currency and are used to fund clinical trials of Topical Interferon Alpha-2b in Europe.
Income taxes
Income tax expense in the first quarter of fiscal 2008 totaled $32,000 (2007 - $29,000). All income taxes are attributable to the Company’s operations in Europe.
Other comprehensive income
In the first quarter of fiscal 2008, the Company recorded comprehensive income of $16,000 and accumulated other comprehensive income totaling $148,000. The total amount of $164,000 represents an adjustment to fair value of available-for-sale financial instruments, which in this case, represent shares in Orchid Cellmark Inc., a Nasdaq listed company.
Net loss from operations totaled $1,644,000 in the first quarter of fiscal 2008 (2007 - $1,342,000) for an increase of $302,000. Excluding non-cash and working capital items, the cash used in the first quarter of fiscal 2008 totaled $1,836,000 (2007 - $1,602,000) and represents an increase of $234,000.
Financing activities
Financing activities in the first quarter of fiscal 2008 were nil (2007 - $6,480,000). In the first quarter of fiscal 2007, the Company completed a private placement with net proceeds of $6,480,000.
Investing activities
Investing activities in the first quarter of fiscal 2008 used cash of $50,000 while in the first quarter of fiscal 2007 investing activities provided a source of cash totaling $6,625,000. The majority of the reduction in investing activities reflects the redemption of $6,640,000 in short term investments in the first quarter of fiscal 2007. Capital purchases were negligible in both the first quarters of fiscal 2008 and 2007 totaling $50,000 and $15,000, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has financed its operations from public and private sales of equity, the exercise of warrants and stock options, interest income on 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 Company’s ongoing research and development programs.
At October 31, 2007, the Company had cash and cash equivalents totaling $9,578,000 (July 31, 2007 - $11,379,000), a decrease of $1,801,000 and working capital of $9,859,000 (July 31, 2007 - $11,468,000).
After taking into consideration the Company’s anticipated revenue, planned research and development expenditures and assuming no unanticipated expenses, the Company expects that its working capital will be sufficient to finance operations through to September 2008. On the assumption that the private placement referred to below closes as planned, and then based on the same factors, the Company expects that it will have sufficient working capital to finance operations beyond the 2009 fiscal year.
Subsequent to the first quarter of fiscal 2008, the Company received subscriptions for the purchase, by way of private placement, of a total of 10,040,000 common shares at $1.68 per share, for gross proceeds totalling CDN$16,867,200. The Company anticipates closing the private placement before the end of December 2007.
The Company will continue to seek additional funding, primarily by way of equity offerings, to carry out its business plan and to minimize risks to its operations. The market, however, for equity financings for companies such as Helix is challenging, and there can be no assurance that additional funding by way of equity financing will be available. The failure of the Company to obtain additional funding on a timely basis may result in the Company reducing or delaying 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. 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 Company’s unaudited interim consolidated first quarter fiscal 2007 and 2006 financial statements are summarized below:
The Company’s unaudited interim consolidated financial statements and management’s discussion and analysis of financial condition and results of operations have been 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 Topical Interferon Alpha-2b and its novel L-DOS47 new drug candidate. Helix is listed on the TSX under the symbol “HBP”.
The Toronto and Frankfurt Stock Exchanges have not reviewed and do not accept responsibility for the adequacy or accuracy of the content of this News Release. Reported financial information may not necessarily be indicative of future operating results or of future financial position, due to a number of risks and uncertainties, including those set forth below. This News Release contains certain forward-looking statements and information regarding the Company’s activities and finances, which statements and information can be identified by the use of forward-looking terminology such as “future”, “anticipated”, “planned”, “expects”, “continue”, “developing”, or variations thereon, or comparable terminology referring to future events or results. Forward-looking statements and information are statements and information about the future and are inherently uncertain. Helix’s actual results could differ materially from those anticipated in these forward-looking statements and information as a result of numerous risks and uncertainties including without limitation, the risk that the $16.9 million private placement may not close, either wholly or in part, which would result in the Company continuing to need financing in the near term, which may not be available in a timely manner or at all and which, if not obtained, will have a material adverse impact on the Company and its ability to continue; uncertainty whether Topical Interferon Alpha-2b or L-DOS47 will be successfully developed and commercialized as a drug or at all; the need for additional clinical trials, the occurrence and success of which cannot be assured; product liability and insurance risks; research and development risks, the risk of technical obsolescence; the need for further regulatory approvals, which may not be obtained in a timely matter or at all; intellectual property risks; marketing/manufacturing and partnership/strategic alliance risks; the effect of competition; uncertainty of the size and existence of a market opportunity for Helix’s products; as well as a description of other risks and uncertainties affecting Helix and its business, as contained in news releases and filings with the Canadian Securities Regulatory Authorities, including its latest Annual Information Form, at www.sedar.com, any of which could cause actual results to vary materially from current results or Helix’s anticipated future results. Forward-looking statements and information are based on the beliefs, opinions 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, opinions or expectations, or other circumstances change, except as required by law.
CONTACT: Investor Relations: Christina Bessant, The Equicom Group Inc.,
Tel: (416) 815-0700 ext. 269, (800) 385-5451, Fax: (416) 815-0080, Email:
cbessant@equicomgroup.com; Media Relations: David Schull, Russo Partners
LLC, Tel: (212) 845-4271, Fax: (212) 845-4260, Email:
david.schull@russopartnersllc.com, www.russopartnersllc.com
