EDMONTON, Nov. 4 /PRNewswire-FirstCall/ - Isotechnika Inc. announced today its financial results for the third quarter ended September 30, 2005.
At September 30, 2005 cash and short-term investments totalled $59.5 million, compared to $44.8 at June 30, 2005 and $60.2 million at December 31, 2004. On July 12, 2005 the Company closed a bought deal financing for net proceeds of $18.4 million by issuing 8.9 million Common Shares at $2.25 per share. Cash used for operations in the third quarter ended September 30, 2005 was $3.2 million and for the first nine months of the year ended September 30, 2005 was $18.7 million.
The consolidated loss for the third quarter of 2005 was $6.4 million, or $0.08 per Common Share, compared to a loss of $9.1 million, or $0.12 per Common Share in the third quarter of 2004. This decrease in the consolidated loss was primarily attributable to the Company earning licensing revenue of $1.75 million from signing a licensing agreement with Atrium Medical Corporation in the third quarter ended September 30, 2005 and having a reduced foreign exchange loss in the third quarter of 2005 compared to the third quarter of 2004. For the nine months ended September 30, 2005 the loss was $22.9 million or $0.29 per Common Share, compared to a loss of $17.5 million or $0.23 per Common Share for the comparative period of 2004.
Research and development expenditures totalled $5.9 million in the third quarter of 2005, compared to $6.2 million in the third quarter of 2004. For the nine months ended September 30, 2005, these expenditures were $17.4 million, compared to $10.1 million for the comparative nine month period in 2004. The increase in research and development spending for the nine month period was attributable to the Phase III Canadian psoriasis trial for ISA247, the related psoriasis extension study, the two year rat and mouse carcinogenicity studies and preparatory work costs incurred for the Phase IIb kidney transplant trial. In addition, the second quarter of 2004 included a recovery of research and development costs of $2.2 million from the Company’s collaboration partner, Hoffmann-La Roche Inc, resulting from the amendment of the Collaboration Agreement.
Corporate, administration and marketing expenditures totalled $1.9 million for the third quarter of 2005, compared to $1.7 million for the third quarter of 2004. For the nine months ended September 30, 2005 these expenditures were $5.7 million, compared to $5.6 million for the comparative nine month period in 2004.
The Company recorded a foreign exchange loss of $294,000 for the third quarter of 2005 compared to a foreign exchange loss of $1.1 million for the third quarter of 2004. For the nine months ended September 30, 2005 the Company recorded a foreign exchange gain of $39,000 compared to a foreign exchange loss of $96,000 for the comparative nine month period in 2004.
Clinical and Corporate Highlights - The Company announced unblinded twelve week interim data from 369 patients in our Canadian Phase III psoriasis (SPIRIT) trial. In the high dose group, 48% of the patients achieved a PASI 75 score and 72% achieved a PASI 50 score. Furthermore, in the mid dose group 24% and 47% of the patients achieved PASI 75 and PASI 50 scores, respectively. Both the PASI 50 and PASI 75 scores were clinically significant (p less than 0.05) versus placebo. The mean percentage reduction in the PASI scores of the high dose group and the mid dose group were 62.5% and 44.0%, respectively. Additionally, incidences of treatment-related adverse events in patients receiving ISA247 in the SPIRIT trial were similar to those receiving placebo. Based on the mean serum creatinine levels of the four dose groups, there was no clinically significant difference in serum creatinine. Additionally, there were also no clinically significant changes noted in any of the safety parameters monitored including hypertension, cholesterol, triglycerides and infectious complications analyzed for the interim report. - Patients completing the 24 week Canadian Phase III SPIRIT trial were given the opportunity to continue therapy for an additional 36 weeks or to discontinue therapy. The goals of the extension trial are to provide continued therapeutic benefit to psoriasis patients and to gather longer term safety and efficacy data. Of the patients who completed the 24 week trial 90% chose to continue treatment. The patients who enrolled in the open label extension trial are receiving administration of oral ISA247 capsules at 0.3 mg/kg twice daily, which was the mid-dose used in the SPIRIT trial. The Company believes this data should facilitate the advancement of ISA247 through the clinical trial process. - As a result of a bought deal financing for gross proceeds of $20 million, which closed on July 12, 2005, the Company has been able to proceed with its transplantation program. A clinical research organization has been selected and the investigator meeting has been completed. Furthermore, a total of thirty-four sites have signed up to participate in the Phase IIb North American trial. Patient enrollment is expected to commence by the end of the year. - An exclusive worldwide licensing agreement with Atrium Medical Corporation for the use of TAFA93 and ISA247 specifically with drug eluting devices for the non-systemic treatment of vascular, cardiovascular disorders, target vessel and tissue disorders was signed on September 29, 2005. This agreement resulted in an upfront licensing fee of $3.5 million ($3 million USD) as well as milestone and royalty payments to Isotechnika upon approval of a medical device product which incorporates TAFA93, ISA247 or the combination of both drugs. As part of the agreement, the Company is required to complete a Phase Ib trial for TAFA93. The Phase Ib trial is expected to commence in the first quarter of 2006. The Company recorded $1.75 million as licensing revenue on the Statement of Operations for the third quarter ended September 30, 2005 and $1.74 million as deferred revenue on the Balance Sheet as at September 30, 2005.
An expanded Management’s Discussion and Analysis for the quarter is accessible on Isotechnika’s Web site at www.isotechnika.com.
About Isotechnika Inc.
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Edmonton-based Isotechnika Inc. is an international biopharmaceutical company focused on the discovery and development of novel immunosuppressive therapeutics that are safer than currently available treatments. To find out more about Isotechnika Inc. , please visit our Web site at www.isotechnika.com.
Forward-Looking Statements
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This press release may contain forward-looking statements. Forward-looking statements, including the Company’s belief as to the potential of its products, the Company’s expectations regarding the issuance of additional patents and the Company’s ability to protect its intellectual property, involve known and unknown risks and uncertainties, which could cause the Company’s actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, among others, the availability of funds and resources to pursue research and development projects, the ability to economically manufacture its products, the potential of its products, the success and timely completion of clinical studies and trials, the Company’s ability to successfully commercialize its products, the ability of the Company to defend its patents from infringement by third parties, and the risk that the Company’s patents may be subsequently shown to be invalid or infringe the patents of others. Investors should consult the Company’s quarterly and annual filings with the Canadian commissions for additional information on risks and uncertainties relating to the forward-looking statements. Investors are cautioned against placing undue reliance on forward-looking statements.
Isotechnika Inc. Consolidated Balance Sheets ------------------------------------------------------------------------- (expressed in thousands of Canadian dollars) September 30, December 31, 2005 2004 (Unaudited) $ $ Assets Current assets Cash and cash equivalents 22,476 17,889 Short-term investments 37,066 42,322 Accounts receivable 458 417 Inventories 644 725 Prepaid expenses and other 797 1,016 Equipment held for resale - 486 --------------------------- 61,441 62,855 Property and equipment 6,976 8,534 Patents 1,977 2,149 --------------------------- 70,394 73,538 --------------------------- --------------------------- Liabilities Current liabilities Accounts payable and accrued liabilities 3,819 4,553 Deferred revenue 1,744 - Current portion of long-term debt 1,717 1,687 Current portion of deferred lease inducements 91 91 --------------------------- 7,371 6,331 Long-term debt 2,737 4,169 Deferred lease inducements 219 287 --------------------------- 10,327 10,787 --------------------------- Shareholders’ Equity Share capital 158,890 140,009 Contributed surplus 2,821 1,529 Deficit (101,644) (78,787) --------------------------- 60,067 62,751 --------------------------- 70,394 73,538 --------------------------- --------------------------- Isotechnika Inc. Consolidated Statements of Operations Unaudited ------------------------------------------------------------------------- (expressed in thousands of Canadian dollars, except per share amounts) Three Months Ended Nine Months Ended September September September September 30, 30, 30, 30, 2005 2004 2005 2004 $ $ $ $ Revenue Licensing revenue 1,745 - 1,745 - Product sales and contract analysis 305 331 939 1,284 ------------------------------------------- 2,050 331 2,684 1,284 ------------------------------------------- Expenses Research and development 5,906 6,210 17,350 10,127 Corporate, administration and marketing 1,890 1,656 5,719 5,609 Stock based compensation 67 26 1,330 794 Amortization of property and equipment 448 466 1,357 1,454 Product sales and contract analysis 205 203 636 882 Interest on long-term debt 106 70 346 92 Amortization and writedown of patent costs 351 120 377 548 Loss (gain) on sale of property and equipment (333) - (326) 142 Provision for loss on equipment held for resale - - - 268 ------------------------------------------- 8,640 8,751 26,789 19,916 ------------------------------------------- Loss before the undernoted (6,590) (8,420) (24,105) (18,632) ------------------------------------------- Other income Investment income 443 409 1,209 1,261 Foreign exchange translation gain (loss) (294) (1,107) 39 (96) ------------------------------------------- 149 (698) 1,248 1,165 ------------------------------------------- Net loss for the period (6,441) (9,118) (22,857) (17,467) ------------------------------------------- ------------------------------------------- Basic and diluted loss per share (0.08) (0.12) (0.29) (0.23) ------------------------------------------- ------------------------------------------- Consolidated Statements of Deficit Unaudited ------------------------------------------------------------------------- (expressed in thousands of Canadian dollars) Three Months Ended Nine Months Ended September September September September 30, 30, 30, 30, 2005 2004 2005 2004 $ $ $ $ Balance - Beginning of period 95,203 60,016 78,787 51,667 Net loss for the period 6,441 9,118 22,857 17,467 ------------------------------------------- Balance - End of Period 101,644 69,134 101,644 69,134 ------------------------------------------- ------------------------------------------- Isotechnika Inc. Consolidated Statements of Cash Flows Unaudited ------------------------------------------------------------------------- (expressed in thousands of Canadian dollars) Three Months Ended Nine Months Ended September September September September 30, 30, 30, 30, 2005 2004 2005 2004 $ $ $ $ Cash provided by (used in) Operating activities Net loss for the period (6,441) (9,118) (22,857) (17,467) Items not affecting cash Amortization of property and equipment 448 466 1,357 1,454 Amortization and write down of patent costs 351 120 377 548 Stock based compensation 67 26 1,330 794 Loss (gain) on sale of property and equipment (333) - (326) 142 Provision for loss on equipment held for resale - - - 268 Amortization of deferred lease inducements (23) (22) (68) (68) Unrealized foreign exchange translation gain (loss) related to non-operating activities 347 1,298 236 622 ------------------------------------------- (5,584) (7,230) (19,951) (13,707) Net change in other operating assets and liabilities 2,361 815 1,268 (2,576) ------------------------------------------- (3,223) (6,415) (18,683) (16,283) ------------------------------------------- Investing activities Decrease (increase) in short- term investments (4,130) (4,544) 4,916 3,657 Proceeds on sale of equipment held for resale - 539 486 539 Purchase of property and equipment (9) (621) (136) (945) Proceeds on sale of property and equipment 663 2 663 9 Patent costs (106) (287) (205) (642) ------------------------------------------- (3,582) (4,911) 5,724 2,618 ------------------------------------------- Financing activities Proceeds from long term debt - 5,239 - 5,239 Repayment of long-term debt (425) (205) (1,279) (324) Issuance of share capital 18,431 26 18,844 91 ------------------------------------------- 18,006 5,060 17,565 5,006 ------------------------------------------- Effect of foreign exchange rate fluctuation on cash and cash equivalents (31) (150) (19) (107) ------------------------------------------- Increase (decrease) in cash and cash equivalents 11,170 (6,416) 4,587 (8,766) Cash and cash equivalents - Beginning of period 11,306 33,472 17,889 35,822 ------------------------------------------- Cash and cash equivalents - End of period 22,476 27,056 22,476 27,056 ------------------------------------------- ------------------------------------------- Cash and cash equivalents are comprised of Cash on deposit 5,717 3,978 5,717 3,978 Money market securities and investment deposits 16,759 23,078 16,759 23,078 ------------------------------------------- 22,476 27,056 22,476 27,056 ------------------------------------------- -------------------------------------------
Isotechnika Inc.
CONTACT: Dennis Bourgeault, Chief Financial Officer, Isotechnika Inc.,Isotechnika Inc., Phone: (780) 487-1600 extension 226, Fax: (780) 484-4105,Email: dbourgeault@isotechnika.com; Dr. Robert Foster, Executive Chairman,Phone: (780) 487-1600 extension 246, Fax: (780) 484-4104, Email:rfoster@isotechnika.com; Archived images on this organization aresearchable through CNW Photo Archive website at http://photos.newswire.ca.Images are free to accredited members of the media. To request a free copyof this organization’s annual report, please go to http://www.newswire.caand click on Tools for Investors.
