CALGARY, March 15 /PRNewswire-FirstCall/ - SemBioSys Genetics Inc. , a biotechnology company developing insulin and other metabolic and cardiovascular protein-based pharmaceuticals and a series of non-pharmaceutical products, today announced its operational and financial results for the fiscal year which ended on December 31, 2006.
2006 Highlights Pharmaceutical Products - Commercial viability achieved by exceeding the Company’s commercial target levels of human insulin (insulin) accumulation in safflower by 20% with 1.2 percent of total seed protein. - Functional equivalence results demonstrated the Company’s proprietary safflower-produced insulin is functionally equivalent to U.S. pharma grade human insulin in animal models, subsequent to the end of the fiscal year. The Company also announced in vitro and in vivo assay results that demonstrate the Company’s safflower-produced insulin is chemically, structurally and physiologically indistinguishable from U.S. pharma grade human insulin. - Regulatory path confirmed as the Company is eligible to pursue a Section 505(b)(2) regulatory path for safflower-produced insulin after meeting with the U.S. Food and Drug Administration (FDA), subsequent to the end of the fiscal year. - Preclinical and clinical material processing secured through a Technology Transfer and Manufacturing Agreement with Cangene Corporation to prepare batches of the Company’s safflower-produced insulin in preparation for the preclinical and early stage clinical development. - Increased levels of Apo AI expression in Arabidopsis, the Company’s model plant system, and continued development progress in safflower, the commercial plant system. Non-Pharmaceutical Products - Continued the commercial scale-up of the Company’s proprietary transgenic safflower-produced ImmunoSphere(TM) Feed Additive in the U.S. and Chile in preparation for product launch expected in late 2007 or early 2008. - Announced the completion of key milestones in its gamma linolenic acid (GLA)-rich safflower oil project with Arcadia Biosciences, Inc. with the delivery of safflower seeds from plant lines containing GLA transformed utilizing Arcadia’s proprietary genes. - Announced an agreement to acquire technology assets and in-license intellectual property from Syngenta Crop Protection AG related to the manufacture of biopharmaceuticals in safflower, which allows SemBioSys to further increase its efficiency in the development of transgenic safflower. - Announced the Company will continue to manufacture and supply DermaSphere(R) to its customers in the personal care market after reaching an agreement to conclude the distribution relationship with Lonza Inc. - Amended the collaboration agreement with Martek Biosciences Corporation, subsequent to the end of the fiscal year. SemBioSys has received a one-time license fee payment in relation to the amended agreement and agreed to a potential additional license fee and royalty payments from Martek, which in return is entitled to select an alternative seed oil production system to meet its future docosahexaenoic acid (DHA) supply.
“Over the course of 2006 and into 2007 we have delivered on four critical scientific, operational and regulatory milestones within our insulin program. In our view the insulin expression and the insulin equivalence results represent an important achievement and position us to address a large and growing market for insulin. While other projects have produced pharmaceutical proteins in plant systems, no one, to our knowledge, has been able to develop plant-produced insulin at commercially viable levels,” said Andrew Baum, President and CEO of SemBioSys Genetics Inc. “We believe that with these scientific results in hand and the outcome of our meeting with the FDA that clarified the regulatory path for our plant-produced insulin, the risks associated with our insulin program have decreased significantly. Our team is now scaling-up our insulin production and completing the preclinical work necessary to file an Investigational New Drug Application (IND) later this year. We intend to initiate a Phase II trial for our safflower-produced insulin in late 2007 or early 2008 with pharmacokinetics and pharmacodynamics as the primary endpoints.”
Financials
Total revenue for the fiscal year ended December 31, 2006 was $523,258 compared to $2,459,202 for the corresponding period in 2005.
The $523,258 of revenue for the fiscal year period ended December 31, 2006 consisted entirely of contract research revenue compared with contract research revenue of $1,696,171 in 2005. The difference in contract research is a result of the completion of collaboration agreements with Arcadia Biosciences Inc. and Dow AgroSciences LLC in late 2006, such that the contract research revenue from the 2006 fiscal year relates solely to the ongoing collaboration agreement with Martek Biosciences Corporation. In 2006 there were no license fees earned, as a result of the agreements with Lonza Inc. and Arcadia moving from a research and development stage to a commercialization stage, compared with license fees of $763,031 generated during the 2005 fiscal year.
Total expenditures for the year ended December 31, 2006 were $15,082,560 compared with $9,734,220 for the year ended December 31, 2005.
Research and development expenses for the fiscal year ended December 31, 2006 were $5,480,972, an increase of $1,060,086 from $4,420,886 for the 2005 fiscal year. This difference is primarily from increased personnel and the related support costs in all areas of research and development with an expanded focus on insulin. This included an enhanced quality control and assurance program and further development of a stronger preclinical and clinical team.
General and administrative expenses for the year ended December 31, 2006 were $4,013,653 compared with $3,516,871 for the 2005 fiscal year. The difference is due mainly to the expansion of the Company’s indoor plant growth facilities resulting in increased operating costs such as utilities. Increases also resulted from increased staff costs, including additional support costs.
Intellectual property costs for the year ended December 31, 2006 were $3,467,045 compared with $1,586,788 for the year ended December 31, 2005. The difference is primarily due to the $1,516,906 non-cash expense in the second quarter of 2006 for the acquisition of intellectual property from Syngenta Crop Protection AG in exchange for warrants to purchase 550,000 common shares of the Company, and the US$500,000 payment to re-acquire the rights to the DermaSphere(R) Oleosome Technology from Lonza at the end of the fourth quarter of 2006. Excluding these one-time items, intellectual property costs decreased modestly.
Net loss for the year ended December 31, 2006 was $14,127,086 or ($0.85) per share, compared to a net loss of $6,824,545 or ($0.54) per share for 2005.
As at December 31, 2006 the Company had cash and cash equivalents totaling $16,328,459 compared to $28,513,095 at December 31, 2005. Total long-term debt at December 31, 2006 was $2,084,103 compared with $1,877,330 at December 31, 2005.
As at December 31, 2006 the Company had 16,781,890 common shares outstanding, 3,102,796 warrants, and 1,056,144 options.
Subsequent to the end of the year, on February 20, 2007 the Company completed an underwritten public offering of 4,251,496 common shares at a price of $3.00 per share, for total gross proceeds to SemBioSys of approximately $12,750,000. Concurrent with the public offering, certain shareholders of the Company sold 2,748,504 previously issued common shares of the Company at a price of $3.00 per share by way of a secondary offering. On March 7, 2007, the underwriters of the public offering exercised the entire over-allotment option and purchased an additional 1,050,000 common shares from treasury at $3.00 per common share, resulting in an additional $3,150,000 in gross proceeds to SemBioSys, raising the total gross proceeds to the Company from the transaction to $15,900,000.
Outlook
The Company has completed the major scientific milestones necessary to proceed into first-in-man clinical trials of safflower-produced insulin in late 2007 or early 2008. Upcoming milestone events expected in 2007 include:
- Complete scale-up and preclinical work of safflower-produced insulin - Complete the technology transfer and production of clinical grade material for early stage human trials - Initiate business development activities toward an insulin partnership - Submit insulin IND to FDA and initiate Phase II trial - Achieve commercial levels of Apo AI expression in safflower - Increase production capacity of personal care topical oilbody products and establish distribution channels for commercialization - Complete scale-up of ImmunoSphere(TM) product for commercial launch - Achieve key DHA proof-of-concept milestone - Initiate a new pharmaceutical product development program
Additional information about the Company, including the MD&A and financial results may be found on SEDAR at www.sedar.com.
About SemBioSys Genetics Inc. (www.sembiosys.com)
Calgary, Alberta-based SemBioSys Genetics Inc. is a biotechnology company developing insulin and other protein-based pharmaceuticals for metabolic and cardiovascular diseases. The Company’s lead candidate is recombinant human insulin derived from genetically engineered safflower to serve the expanding diabetes market in the developed and developing world and to facilitate the commercialization of inhalation and other alternative insulin delivery technologies. The Company’s other protein-based pharmaceutical candidate is a cardiovascular drug called Apo AI. SemBioSys is also developing a series of non-pharmaceutical products addressing animal and aquaculture health, nutritional oils and human topical markets.
This press release contains certain forward-looking statements, including, without limitation, statements containing the words “believe”, “may”, “plan”, “will”, “estimate”, “continue”, “anticipate”, “intend”, “expect” and other similar expressions which constitute “forward-looking information” within the meaning of applicable Canadian securities laws. Forward-looking statements reflect the Company’s current expectation and assumptions, and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. These forward-looking statements involve risks and uncertainties including, but 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 filings with the Canadian securities regulatory authorities which filings can be found at www.sedar.com. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements either as a result of new information, future events or otherwise, except as required by applicable Canadian securities laws.
Financial results included below: SemBioSys Genetics Inc. Consolidated Balance Sheets As at December 31, 2006 and 2005 (expressed in Canadian dollars) 2006 2005 $ $ Assets Current assets Cash and cash equivalents 16,328,459 28,513,095 Accounts receivable 526,002 1,272,523 Interest receivable 504,551 91,018 Prepaid expenses, deposits and other 405,459 265,062 -------------------------- 17,764,471 30,141,698 Property and equipment 5,157,163 4,497,190 -------------------------- 22,921,634 34,638,888 -------------------------- -------------------------- Liabilities Current liabilities Accounts payable and accrued liabilities 1,356,018 1,368,276 Repayable advances 85,640 85,640 Current portion of long-term debt 746,658 590,243 -------------------------- 2,188,316 2,044,159 Deferred cost recoveries 84,203 76,535 Deferred revenue - 195,259 Long-term debt 1,337,445 1,287,087 -------------------------- 3,609,964 3,603,040 -------------------------- Shareholders’ Equity Capital Stock 48,302,036 48,103,709 Warrants 6,274,716 9,414,155 Contributed surplus 5,475,404 131,384 Deficit (40,740,486) (26,613,400) -------------------------- 19,311,670 31,035,848 -------------------------- 22,921,634 34,638,888 -------------------------- -------------------------- Contingencies and commitments SemBioSys Genetics Inc. Consolidated Statements of Operations and Deficit For the years ended December 31, 2006 and 2005 (expressed in Canadian dollars) 2006 2005 $ $ Revenue Contract research 523,258 1,696,171 Licensing fees - 763,031 -------------------------- 523,258 2,459,202 -------------------------- Expenses Research and development 5,480,972 4,420,886 General and administration 4,013,653 3,516,871 Intellectual property 3,467,045 1,586,788 Business development 745,964 480,022 Stock-based compensation 713,902 131,384 Amortization 832,845 568,595 Cost recoveries (171,821) (899,018) Investment tax credits - (71,308) -------------------------- 15,082,560 9,734,220 -------------------------- Loss before the undernoted (14,559,302) (7,275,018) -------------------------- Interest income 857,595 421,091 Interest expense (182,440) (31,410) Foreign exchange gain (loss) (64,405) 52,028 Write-down of property and equipment (161,732) - Gain (loss) on sale of property and equipment (16,802) 8,764 -------------------------- 432,216 450,473 -------------------------- Net loss for the year (14,127,086) (6,824,545) Deficit - Beginning of year (26,613,400) (19,788,855) -------------------------- Deficit - End of year (40,740,486) (26,613,400) -------------------------- -------------------------- Loss per share - basic and diluted (0.85) (0.54) -------------------------- -------------------------- SemBioSys Genetics Inc. Consolidated Statements of Cash Flows For the years ended December 31, 2006 and 2005 (expressed in Canadian dollars) 2006 2005 $ $ Cash provided by (used in) Operating activities Net loss for the year (14,127,086) (6,824,545) Add items not affecting cash Amortization 832,845 568,595 Acquisition of intellectual property for warrants 1,516,906 - Write-down of property and equipment 161,732 - (Gain) loss on sale of property and equipment 16,802 (8,764) Stock-based compensation 713,902 131,384 Unrealized foreign exchange (gain) loss 41,900 (36,975) -------------------------- (10,842,999) (6,170,305) Change in non-cash working capital and other balances related to operations (251,140) (1,147,959) -------------------------- (11,094,139) (7,318,264) -------------------------- Financing activities Issuance of units - 18,081,000 Share issue costs (20,284) (1,193,031) Exercise of stock options 167,914 63,361 Proceeds from long-term debt 777,811 1,658,122 Repayment of long-term debt (612,938) (173,826) -------------------------- 312,503 18,435,626 -------------------------- Investing activities Proceeds on sale of property and equipment 7,000 12,300 Acquisition of property and equipment (1,410,000) (1,452,963) -------------------------- (1,403,000) (1,440,663) -------------------------- Increase (decrease) increase in cash and cash equivalents (12,184,636) 9,676,699 Cash and cash equivalents - Beginning of year 28,513,095 18,836,396 -------------------------- Cash and cash equivalents - End of year 16,328,459 28,513,095 -------------------------- -------------------------- Supplemental information Cash interest received 444,063 341,510 Cash interest paid 167,026 16,802 Non-cash transactions Share issue costs included in accounts payable - 20,284 Capital items included in accounts payable 362,608 94,256 Proceeds from issuance of common shares included in accounts receivable 4,186 -
SemBioSys Genetics Inc.
CONTACT: SemBioSys Genetics Inc., Mr. Andrew Baum, President and ChiefExecutive Officer, Phone: (403) 717-8767, Fax: (403) 250-3886, E-mail:bauma@sembiosys.com, Internet: www.sembiosys.com; Investor Relations, RossMarshall, The Equicom Group Inc., Phone: (416) 815-0700 (Ext. 238), Fax:(416) 815-0080, E-mail: rmarshall@equicomgroup.com
