MONTREAL, Nov. 14 /PRNewswire-FirstCall/ - Procyon Biopharma Inc. , a biotechnology company developing innovative therapeutics in the fields of cancer and HIV/AIDS, announced today financial and operational results for the third quarter ended September 30, 2005. The Company decreased its net loss to $3,156,878 or $0.03 per common share for the third quarter of 2005, compared with a net loss of $3,365,623 or $0.04 per common share for the same quarter last year.
THIRD QUARTER HIGHLIGHTS PCK3145 : Final results of the U.K. Phase IIa study amendment
Final results of the U.K. Phase IIa study amendment for PCK3145, which objective was to assess the feasibility of a once weekly administration of the drug in patients with metastatic hormone resistant prostate cancer, confirmed that PCK3145 is as effective when administered once a week versus three times a week. The U.S. dose-finding study for PCK3145, Procyon’s non-toxic peptide for the treatment of advanced metastatic prostate cancer, presently being conducted at the Memorial Sloan Kettering Cancer Center, New York., is expected to be completed by year-end. In addition, the mechanism of action for PCK3145 is to be published in three peer-reviewed scientific journals, namely the “International Journal of Cancer”, the “Clinical and Experimental Metastasis” and the “Anticancer Drugs”.
TVT-Dox : anti-cancer technology presented at the RSC/KAST 3rd bilateral
symposium
Procyon presented the results of the anti-neoplastic effect in several human tumor animal models of its anti-cancer technology, TVT-Dox (Tumor Vasculature Targeting technology), at the Royal Society of Canada/Korean Academy of Science and Technology 3rd bilateral symposium: Drug Delivery Systems, held in Vancouver, last July. Procyon plans to initiate preclinical studies with the intent to file an Investigational New Drug application within the next 12 months. TVT-Dox was acquired through the acquisition of Bioxalis Medica Inc. in June 2005.
PPL-100 : development program on track
PPL-100, Procyon’s lead HIV protease inhibitor for the treatment of drug- resistant HIV/AIDS, development program continues as planned and the Company expects to begin a first-in-man Phase I clinical trial by the end of this year. Pharmacokinetics results for PPL-100 are expected to be available to Procyon by the second half of 2006.
“We are pleased with the final results of the U.K. study for PCK3145 which confirmed the once weekly administration effectiveness of the drug in reducing the metastatic enzyme MMP-9 levels, and we expect to complete the U.S. dose finding study by year-end”, said Hans J. Mader, president and chief executive officer of Procyon Biopharma. “The progress made so far in the PCK3145 development program as well as the increased interest among the scientific community for the mechanism of action of this non-toxic peptide strengthen our confidence in the potential of PCK3145 for the treatment of advanced metastatic prostate cancer,” he added. “Also, I am very encouraged with the advancement made this quarter in our PPL-100 and TVT-DOX development programs for which we will be initiating, respectively, first-in-man Phase I and preclinical studies by year-end,” he concluded.
FINANCIAL RESULTS Quarter ended September 30, 2005 compared with the Quarter ended September 30, 2004
The Company incurred a net loss of $3,156,878 or $0.03 per common share for the third quarter of 2005, compared with a net loss of $3,365,623 or $0.04 per common share for the same quarter last year.
Revenues for the third quarter of 2005 were $46,611, compared with $82,231 in the corresponding quarter last year. The lower revenues resulted from a decrease in interest income, due to the reduced level of cash and short- term investments on hand, partially offset by an increase in interest rates in the current quarter compared to the third quarter of 2004.
Research and development expenses amounted to $1,788,168 in the third quarter of 2005, compared with $2,695,881 in the same quarter last year. The corporate restructuring plan successfully implemented in January 2005 resulted in the refocusing of the Company’s research spending and generated cost savings. These were only partially offset by increased expenditures on PCK3145. Tax credits decreased to $120,000 in the current quarter from $385,000 in the corresponding quarter last year, due to the lower level of expenses in the current quarter, together with a lower proportion of Quebec- based contract spending qualifying for the tax credit. Research and development expenses represented 53% of total expenses before tax credits in the current quarter, compared with 70% in the corresponding quarter last year, reflecting the significant reduction in research and development expenses, together with the increase in interest on long-term debt and accretion expense on the convertible debentures.
General and administrative expenses amounted to $965,389 in the third quarter of 2005, an increase of $179,765 or 23% over the total of $785,624 for the third quarter last year. Increases in non-cash expenses resulting from stock options and in consulting fees were the principal reasons for the higher expenses.
Amortization expense increased to $278,656 in the current quarter from $269,949 in the third quarter of 2004. The increase resulted primarily from the added amortization arising from the acquisition of Bioxalis Medica Inc. on June 29, 2005, for the most part offset by the reduction resulting from the write-off in December 2004 of the carrying value of the Anti-Nucleosome Antibodies (ANsA) technology.
Interest on long-term debt was $242,558 in the third quarter of 2005, compared to $89,127 in the same quarter last year. The interest expense on the Biolevier loan increased to $179,462 from $89,127 in the same quarter last year. The increase was due to the additional interest resulting from the drawdown of an additional $4,000,000 under the loan facility in December 2004. The interest on the Biolevier loan is being capitalized and added to the outstanding balance of the loan. Interest on the convertible debentures issued on June 29, 2005 amounted to $63,096 in the third quarter. This amount is payable semi-annually either in cash or common shares, at the Company’s option. Accretion expense on the convertible debentures amounted to $56,947 in the third quarter of 2005. This ongoing non-cash accounting charge for imputed interest will increase the carrying value of the convertible debentures to their face value of $3,500,000 by their June 29, 2010 maturity date.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents and short-term investments totaled $9,027,739 at September 30, 2005, compared with $15,720,424 at December 31, 2004. The decrease of $6,692,685 resulted from the utilization of $9,471,484 to finance operating activities for the first nine months of 2005, including an increase of $1,843,180 in non-cash working capital. In addition, a net amount of $177,205 was used in the period for additional property, plant and equipment and intellectual property. In addition, expenses of $179,131 were incurred in connection with the acquisition of Bioxalis Medica Inc. on June 29, 2005 on a share exchange basis, while the concurrent convertible debenture financing generated $3,500,000, before cash expenses of $337,601. Cash of $253,311 was obtained with the acquisition, with $275,000 being used to pay down a Bioxalis loan.
The Biolevier loan does not adversely impact the Company’s liquidity at this time, as no capital or interest is repayable prior to November 19, 2006. In addition, the semi-annual interest expense on the $3,500,000 of convertible debentures issued in June 2005 is payable either in cash or common shares, at the option of the Company.
Including the balance of $1 million still available from the Biolevier loan facility referred to above and the 2004 investment tax credits expected to be received in the fourth quarter of 2005, the Company has approximately $11 million to support its future activities. Management believes that these funds will be sufficient to support the Company’s ongoing activities for at least the next 12 months.
<< PROCYON BIOPHARMA INC. CONSOLIDATED BALANCE SHEETS (unaudited) As at September 30, December 31, 2005 2004 $ $ ------------------------------------------------------------------------- ASSETS Current assets Cash and cash equivalents 6,054,649 319,382 Short-term investments 2,973,090 15,401,042 Accounts receivable 634,674 271,973 Investment tax credits recoverable 2,018,487 685,000 Prepaid expenses 162,723 110,320 ------------------------------------------------------------------------- 11,843,623 16,787,717 Property, plant and equipment 669,772 808,504 Intellectual property 8,264,753 5,180,795 Deferred financing fees 1,029,658 909,500 ------------------------------------------------------------------------- 21,807,806 23,686,516 ------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities Accounts payable and accrued liabilities 912,796 1,066,787 ------------------------------------------------------------------------- 912,796 1,066,787 Biolevier loan facility 9,940,541 9,417,393 Convertible debentures 2,098,447 50,000 Preferred shares 4,000,000 4,000,000 ------------------------------------------------------------------------- 16,951,784 14,534,180 ------------------------------------------------------------------------- Shareholders’ equity Share capital 64,881,900 61,461,900 Warrants 2,952,462 2,904,038 Contributed surplus 4,766,124 3,995,794 Equity component of convertible debentures 1,920,914 1,005,000 Deficit (69,665,378) (60,214,396) ------------------------------------------------------------------------- 4,856,022 9,152,336 ------------------------------------------------------------------------- 21,807,806 23,686,516 ------------------------------------------------------------------------- PROCYON BIOPHARMA INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT (unaudited) Three months ended Nine months ended September 30, September 30, 2005 2004 2005 2004 $ $ $ $ ------------------------------------------------------------------------- REVENUES License revenue - - - 9,617 Interest and other income 46,611 82,231 221,347 238,094 ------------------------------------------------------------------------- 46,611 82,231 221,347 247,711 ------------------------------------------------------------------------- EXPENSES Research and development 1,788,168 2,695,881 6,095,817 8,630,898 Research and development tax credits (120,000) (385,000) (696,000) (1,080,000) ------------------------------------------------------------------------- Net research and development 1,668,168 2,310,881 5,399,817 7,550,898 General and administrative 965,389 785,624 2,587,450 2,746,605 Amortization of property, plant and equipment 62,189 80,144 184,322 233,926 Amortization of intellectual property 181,181 173,212 429,377 519,483 Amortization of deferred financing fees 35,286 16,593 86,553 49,778 Accretion on convertible debentures 56,947 - 56,947 - Interest on long- term debt 242,558 89,127 586,244 269,190 Restructuring charges - - 172,279 - Financial charges 8,828 854 12,920 3,583 Foreign exchange gains (17,057) (8,581) (23,278) (31,595) ------------------------------------------------------------------------- 3,203,489 3,447,854 9,492,631 11,341,868 ------------------------------------------------------------------------- Loss before write- down of intellectual property (3,156,878) (3,365,623) (9,271,284) (11,094,157) Write-down of carrying value of intellectual property - - 179,698 - ------------------------------------------------------------------------- Net loss (3,156,878) (3,365,623) (9,450,982) (11,094,157) Deficit, beginning of period (66,508,500) (49,919,874) (60,214,396) 42,191,340) ------------------------------------------------------------------------- Deficit, end of period (69,665,378) (53,285,497) (69,665,378) (53,285,497) ------------------------------------------------------------------------- Basic and diluted loss per share (0.03) (0.04) (0.11) (0.14) ------------------------------------------------------------------------- Weighted average number of common shares outstanding 94,077,563 84,600,063 88,176,464 78,476,946 -------------------------------------------------------------------------- PROCYON BIOPHARMA INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Three months ended Nine months ended September 30, September 30, 2005 2004 2005 2004 $ $ $ $ ------------------------------------------------------------------------- OPERATING ACTIVITIES Net loss for the period (3,156,878) (3,365,623) (9,450,982) (11,094,157) Items not affecting cash Amortization of property, plant and equipment 62,189 80,144 184,322 233,926 Amortization of intellectual property 181,181 173,212 429,377 519,483 Amortization of deferred financing fees 35,286 16,593 86,553 49,778 Write-down of carrying value of intellectual property - - 179,698 - Write-down of investment - - - 7,001 Accretion on convertible debentures 56,947 - 56,947 - Loan interest capitalized 179,462 89,127 523,148 269,190 Non-cash license revenues - - - (4,417) Services paid by issuance of stock options 108,576 60,753 362,633 422,362 ------------------------------------------------------------------------- (2,533,237) (2,945,794) (7,628,304) (9,596,834) Net change in non-cash balances relating to operations (919,332) (951,919) (1,843,180) (2,088,192) ------------------------------------------------------------------------- Cash flows related to operating activities (3,452,569) (3,897,713) (9,471,484) (11,685,026) ------------------------------------------------------------------------- INVESTING ACTIVITIES Acquisition of intellectual property (50,039) (81,041) (173,580) (89,284) Acquisition of property, plant and equipment (4,145) (16,399) (14,778) (79,914) Proceeds on disposal of property, plant and equipment - - 11,153 - Cash and cash equivalents obtained on acquisition of business - - 253,311 - Business acquisition expenses (159,131) - (179,131) - Purchase of short-term investments (1,490,265) (5,743,474) (4,960,270) (10,143,474) Maturities of short- term investments 1,987,180 - 17,388,222 9,440,494 ------------------------------------------------------------------------- Cash flows related to investing activities 283,600 (5,840,914) 12,324,927 (872,178) ------------------------------------------------------------------------- FINANCING ACTIVITIES Issuance of units - - - 17,250,000 Unit issue expenses - (14,211) - (1,607,365) Issuance of common shares - 44,850 - 128,160 Debt financing costs (299,120) - (343,176) - Repayment of debt assumed in an acquisition (137,500) (383) (275,000) (4,207) Issuance of convertible debentures - - 3,500,000 330,000 ------------------------------------------------------------------------- Cash flows related to financing activities (436,620) 30,256 2,881,824 16,096,588 ------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents (3,605,589) (9,708,371) 5,735,267 3,539,384 Cash and cash equivalents, beginning of period 9,660,238 13,724,428 319,382 476,673 ------------------------------------------------------------------------- Cash and cash equivalents, end of period 6,054,649 4,016,057 6,054,649 4,016,057 ------------------------------------------------------------------------- Supplemental cash flow information Cash paid during the period for interest 8,956 16 9,303 2,853 ------------------------------------------------------------------------- >> ABOUT PROCYON BIOPHARMA INC.
Procyon Biopharma Inc. is a biotechnology company actively engaged in the discovery and development of innovative therapeutics in the fields of cancer and HIV/AIDS. The Company leverages its strengths in research and clinical development, bringing products through late-stage clinical trials and then evaluating the best options for further development, such as co-development and licensing. Procyon’s pipeline includes: PCK3145, a non-toxic peptide soon to enter a Phase II North American trial for the treatment of advanced metastatic prostate cancer; TVT-Dox, a tumor vasculature targeting technology for the treatment of solid tumors for which an IND filing is expected within 12 months; and, PPL-100, a protease inhibitor for the treatment of drug- resistant HIV/AIDS soon to enter the clinic. Procyon has won the 2005 Frost & Sullivan Award for Excellence in Technology for its overall scientific and technological contributions towards the advancement of cancer therapy. Headquartered in Montreal, Procyon shares are listed on the Toronto Stock Exchange (TSX) under the ticker symbol PBP. For more information, visit www.procyonbiopharma.com.
This release contains forward-looking statements that reflect the company’s current expectation regarding future events. The forward-looking statements involve risks and uncertainties. Actual events could differ materially from those projected herein and depend on a number of factors including, but not limited to, changing market conditions, successful and timely completion of clinical studies, uncertainties related to the regulatory approval process, establishment of corporate alliances and other risks detailed from time to time in the company’s filings.
PROCYON BIOPHARMA INC.
CONTACT: Procyon Biopharma Inc., Julie M. Thibodeau, Director,Communications, (514) 685 2000 ext 118, jthibodeau@procyonbiopharma.com,ir@procyonbiopharma.com