AURORA, ON, March 10 /PRNewswire-FirstCall/ - Helix BioPharma Corp. today reported its highlights and financial results for the three and six months ended January 31, 2008.
“We have a solid base on which we can continue the advancement of our lead clinical compounds,” said John Docherty, President of Helix BioPharma. “Recent developments include our receipt of positive Phase II data for our Topical Interferon Alpha-2b, the preparation of a format of L-DOS47 that is suitable for clinical testing, and the strengthening of our balance sheet. We are currently developing plans for Topical Interferon in an expanded patient population and we are anticipating L-DOS47 entering the clinic in a Phase I study.”
Total revenue was negatively impacted by lower sales of Orthovisc(R) in Canada for both the three and six month periods ended January 31, 2008. Overall expenditures were lower in the second quarter ended January 31, 2008 and is mainly attributable to higher costs in the same period a year ago, associated with the Company’s annual shareholder meeting. On a year-to-date basis, overall expenditures were marginally lower, with the one-time charge in the first quarter of fiscal 2008 related to the resignation of the Company’s Chairman being more than offset by the previous fiscal year’s cost associated with the Company’s annual shareholder meeting.
Loss for the period
The Company recorded a loss of $1,526,000 and $3,170,000, respectively, for the three and six month periods ended January 31, 2008, for a loss per common share of $0.04 and $0.08, respectively. In the comparative three and six month periods ended January 31, 2007, the Company recorded a loss $1,900,000 and $3,242,000, respectively, for a loss per common share of $0.05 and $0.09, respectively.
Revenues
Total revenues for the three month period ended January 31, 2008 was $791,000, compared to revenues of $892,000 for the same period last year. This represents a decrease of $101,000, or 11.3%. Total revenues for the six month period ended January 31, 2008, was $1,676,000, compared to $1,718,000 a year ago. This represents a decrease of $42,000, or 2.4%.
Product Revenue
Product revenue totaled $652,000 and $1,406,000, respectively, for the three and six month periods ended January 31, 2008 and represent a decrease of $105,000 (13.9%) and $47,000 (3.2%), respectively, when compared to same periods last year. Higher revenues from the sale of Klean-Prep(TM) in Canada were not sufficient to offset lower revenues from the sale of Orthovisc(R) in the three and six month periods ended January 31, 2008.
License Fees and Royalty Revenue
License fees and royalties totaled $139,000 and $270,000, respectively, for the three and six month periods ended January 31, 2008, and represent a slight increase of $4,000 (3.0%) and $5,000 (1.9%), respectively, when compared to same periods a year ago. The license fees and royalties for both the three and six month periods ended January 31, 2008, and 2007 are comprised solely of royalties related to sales of Klean-Prep(TM) outside of Canada.
Cost of sales and margins
Cost of sales totaled $269,000 and $582,000, respectively, for the three and six month periods ended January 31, 2008, compared to $310,000 and $600,000, respectively, for the same periods last year. Margins, on percentage basis, have remained relatively stable in both the three and six month periods ended January 31, 2008, when compared to 2007.
Research & development
Research & development costs for the three and six month periods ended January 31, 2008, totaled $1,029,000 and $1,811,000, respectively, compared to $1,065,000 and $1,973,000, respectively, a year ago. In the three and six month periods ended January 31, 2008, research & development expenditures for both L-DOS47 and Topical Interferon Alpha2-b were less than in the same periods a year ago, with the majority of the lower research and development expenditures related to L-DOS47.
The reduction in research and development expenditures for L-DOS47 in the period were related to the various stages of completion associated with the multiple projects within the L-DOS47 program. Helix intends to seek approval in 2008 from the U.S. Food and Drug Administration (“FDA”) for a Phase I clinical study in lung adenocarcinoma patients and, therefore, is currently advancing its L-DOS47 scale-up manufacturing program in anticipation of furnishing product for the clinical trial.
Research and development expenditures related to the Phase II trial in Sweden for ano-genital warts (“AGW”) were more than offset by the reduction in costs associated with the Phase II study in Germany for women with precancerous, HPV induced low-grade cervical lesions.
The late-stage Phase II study in Germany was completed during the six month period ended January 31, 2007. Based on the positive findings, the Company is currently developing plans for a large, randomized, placebo-controlled double-blind study to evaluate the product in an expanded patient population in addition to preparatory work in anticipation of Investigational New Drug (“IND”) and Clinical Trial Application (“CTA”) filings in the U.S. and Europe, respectively, in 2008.
Research and development expenditures related to the Phase II trial in Sweden are below the Company’s original projections. This is attributable to a lower patient enrollment rate. Helix is currently in discussion with the regulatory authorities in Sweden as it relates to a protocol amendment put forth by the Company to restore the recruitment rate to the original projections that forecasted patient enrollment to be completed by the end of the 2008 calendar year. In order to achieve the enrollment completion timeline previously projected, the Company will have to expand the trial to other jurisdictions and multiple sites and, therefore, incur additional costs.
With the recent private placement, the Company is now in a better position to expedite the commercialization of its new drug candidates and expects research and development expenditures to increase in the latter half of fiscal 2008 and into fiscal 2009.
Operating, general & administration
Operating, general & administration expenses totaled $1,245,000 and $2,558,000, respectively, for the three and six month periods ended January 31, 2008, compared to $1,578,000 and $2,447,000, respectively for the same periods a year ago. Lower operating, general and administration expenses for the three month period ended January 31, 2008, were mainly the result of lower costs associated with the Company’s annual shareholder meeting held on January 29, 2008. These costs were offset by additional costs incurred for wages, audit and consultancy services in the quarter.
For the six month period ended January 31, 2008, operating, general and administration expenses were marginally higher, with higher wages, audit and consultancy services along with a one-time charge in the first quarter of fiscal 2008 related to the resignation of the Company’s then Chairman being partially offset by lower costs for the Company’s annual shareholder meeting.
Amortization of intangible and capital assets
Amortization of capital assets in the three and six month period ended January 31, 2008, totaled $63,000 and $129,000, respectively, compared to $73,000 and $150,000, respectively, a year ago. Capital asset purchases were minimal in the six month period ended January 31, 2008.
Amortization of intangible assets in the three and six month periods ended January 31, 2008, totaled $3,000 and $10,000, respectively, compared to $39,000 and $79,000, respectively, a year ago. The variance is due to certain intangible assets that have now been fully amortized.
Stock-based compensation
Stock-based compensation expense in the three and six month periods ended January 31, 2008, totaled $12,000 and $24,000, respectively, compared to $12,000 and $24,000, respectively, a year ago. 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 three and six months ended January 31, 2008, totaled $181,000 and $285,000, respectively, compared to $142,000 and $244,000, respectively, a year ago.
Foreign exchange loss
The Company realized foreign exchange gains in the three and six month periods ended January 31, 2008, of $153,000 and $45,000, respectively, compared to $172,000 and $127,000, respectively, last year. The net assets in Europe consist mainly of cash and cash equivalents that are denominated in Euros and used to fund clinical trials in Europe.
Income taxes
Income tax expense in the three and six months ended January 31, 2008 totaled $30,000 and $62,000, respectively, compared to $29,000 and $58,000, respectively, a year ago. All income taxes are attributable to the Company’s operations in Europe.
For the three month periods ended January 31, 2008 and 2007, cash used in operating activities totaled $1,073 and $1,330, respectively. The decrease in cash used in operating activities was mainly the result of lower costs associated with the Company’s annual shareholder meeting held on January 29, 2008.
For the six month period ended January 31, 2008, cash used in operations was relatively unchanged compared to the six months ended January 31, 2007.
Financing activities
Financing activities in each of the three and six month periods ended January 31, 2008 were $14,614,000, compared to nil and $6,480,000, respectively, a year ago. All financing activities related to separate private placements in the given periods.
Investing activities
Use of cash in investing activities for the three and six month periods ended January 31, 2008, as well as the three month period ended a year ago, totaled $9,000, $59,000 and $11,000, respectively. For the six month period last year, investing activities were a source of cash totaling $6,614,000 of which $6,640,000 represented a redemption of short-term investments. Excluding the redemption of short-term investments, all use of funds in investing activities represented capital acquisitions in the particular period. When appropriate, the Company maintains excess funds in short-term investments and redeems these funds as required for its daily operating requirements.
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. Because 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 January 31, 2008, the Company had cash and cash equivalents totaling $23,263,000, compared to $11,379,000 at July 31, 2007. The increase in cash and cash equivalents is the result of a private placement completed on December 19, 2007, when the Company issued 10,040,000 common shares for gross proceeds totaling $16,867,200. The total number of common shares issued as of January 31, 2008, was 46,375,335, compared to 36,335,335 in the same period last year. At January 31, 2008, the Company’s working capital was $23,016,000, compared to $11,468,000 at July 31, 2007. After taking into consideration the Company’s anticipated revenue, planned research and development expenditures and the assumption that there will not be unanticipated expenses, the Company expects that its current working capital will be sufficient to finance operations beyond the 2010 fiscal year.
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 balance sheet as at January 31, 2008, and audited consolidated balance sheet as at July 31, 2007, are summarized below:
The Company’s unaudited interim Consolidated Statements of Operations and Cash Flows for the three and six month periods ended January 31, 2008 and 2007 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”, “anticipation”, “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: 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
