CALGARY, Aug. 4 /PRNewswire-FirstCall/ - SemBioSys Genetics Inc. , a biotechnology company developing a broad pipeline of protein-based pharmaceuticals and non-pharmaceutical products, today announced its 2006 second quarter operational and financial results.
Second Quarter Highlights - Achieved its commercial target levels of human insulin accumulation in safflower with 1.2 percent of total seed protein, exceeding its target of one percent total seed protein by 20 percent, subsequent to the end of the quarter. - Announced the completion of key milestones in its GLA rich safflower oil project with Arcadia Biosciences, Inc. with the delivery of safflower seeds from plant lines containing gamma linolenic acid (GLA), transformed utilizing Arcadia’s proprietary genes. - Announced an agreement with Syngenta Crop Protection AG to acquire technology assets and in-license intellectual property related to the manufacture of biopharmaceuticals in safflower, which allow SemBioSys to further increase its efficiency in the development of transgenic safflower. - Successfully planted safflower in the United States as part of the commercial scale-up of ImmunoSphere(TM) Feed Additive.
“Achieving commercial levels of insulin accumulation in safflower is the most significant milestone for the Company to date. We expect to have results from bioequivalence studies in animals comparing safflower-produced insulin to commercially available insulin in the fourth quarter of this year,” said Andrew Baum, President and CEO of SemBioSys Genetics Inc. “We believe safflower-produced insulin can dramatically impact the economics of insulin manufacturing and act as an enabling technology in two ways. Safflower-produced insulin has the potential to be a cost-effective method to meet the increased demand for insulin required by new delivery methods, such as inhalation, which requires five to ten times the insulin as injectable methods. Safflower-produced insulin also has the potential to provide insulin to people in the developing world, who otherwise would not have access to it because there is not enough supply or they cannot afford it.”
Financials
Total revenues for the three-month and six-month periods ended June 30, 2006 were $167,445 and $267,531 respectively, compared with $561,697 and $1,048,414 for the corresponding periods in 2005. In 2006 there were no license fees earned compared with $248,126 and $375,304 generated during the three-month and six-month periods ended June 30, 2005 as a result of the agreements with Lonza Inc. and Arcadia Biosciences, Inc. moving from a research and development stage to a commercialization stage. In addition, the difference related to contract research is a result of the completion of collaboration agreements with Dow AgroSciences LLC and Arcadia since 2005, such that the contract research revenue from the second quarter of 2006 relates primarily to only the ongoing collaboration agreement with Martek Biosciences Corporation.
Total expenditures for the three-month and six-month periods ended June 30, 2006 were $5,007,483 and $7,756,437 respectively, compared with $2,233,213 and $4,225,619 for the corresponding periods last year.
Research and development expenses for the three-month and six-month periods ended June 30, 2006 were $1,375,635 and $2,483,161, compared with $1,202,242 and $2,079,568 for the corresponding periods last year. The difference is primarily related to the continued development of a stronger preclinical and clinical team to allow the Company to further advance the insulin program, and prospective future pipeline candidates. The Company also expanded the plant growth team and infrastructure both indoors and in the field.
General and administrative expenses for the three-month and six-month periods ended June 30, 2006 were $819,659 and $1,791,919 respectively, compared with $857,973 and $1,698,388 for the corresponding periods last year.
Intellectual property costs for the three-month and six-month periods ended June 30, 2006 were $2,081,258 and $2,344,295 respectively, compared with $240,160 and $448,760 for the corresponding periods last year. This difference is primarily attributable to the acquisition of technology assets and in-licensing of intellectual property from Syngenta. In exchange for these assets the Company issued warrants that allow Syngenta to purchase an aggregate of 550,000 common shares of SemBioSys at an exercise price of $13.21 per share. This resulted in a charge to intellectual property expense of $1.52 million during the second quarter, which is consistent with the Company’s accounting policy of expensing these costs as incurred. The term of the warrants is five years. The warrants are not listed on the Toronto Stock Exchange.
Business development costs for the three-month and six-month periods ended June 30, 2006 were $267,292 and $452,097 respectively, compared with $181,191 and $238,490 for the corresponding periods last year. The difference is primarily related to accelerated activities related to the commercialization of the Company’s products and a further assessment of new product candidates.
Net loss for the 2006 second quarter was $4,608,182 or ($0.28) per share, compared to a net loss of $1,558,076 or ($0.12) per share for the same period last year. Net loss for the six-month period ended June 30, 2006 was $7,112,521 or ($0.43) per share compared with $2,953,934 or ($0.23) for the same six-month period last year.
As at June 30, 2006 the Company had cash and cash equivalents totaling $22,874,534 compared to $28,513,095 at December 31, 2005.
Outlook
The Company’s priorities for 2006 are to complete bioequivalence studies of safflower-produced insulin and to advance the development of its non-pharmaceutical products, including ImmunoSphere(TM) and docosahexaenoic acid (DHA) rich safflower oil. With the experience gained from the successful completion of insulin accumulation in safflower the Company now expects commercial levels of expression results in safflower of apolipoprotein AI (Apo AI) in late 2006 or early 2007. The upcoming milestone events expected in 2006 include:
- Bioequivalence results comparing safflower-produced insulin to commercially available insulin products - Initiation of a new pharmaceutical product development program - Scale-up of ImmunoSphere(TM) product in the United States and Chile for commercial launch in late 2007 - Achievement of key DHA proof-of-concept milestone
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 focused on the development, commercialization and production of biopharmaceuticals and non-pharmaceutical products based on its plant genetic engineering skills and proprietary oilbody-oleosin technology platform - the Stratosome(TM) Biologics System. Its two lead pharmaceutical product candidates are insulin and a developmental cardiovascular drug called Apo AI. It also has a series of non-pharmaceutical products addressing animal and aquaculture health, nutritional oils and human topical markets. SemBioSys currently has funded partnership agreements with Martek Biosciences Corporation, Lonza Inc. and Arcadia Biosciences, Inc.
This press release contains 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, which 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.
Financials results included below: SemBioSys Genetics Inc. Consolidated Balance Sheets (Unaudited) As at June 30, 2006 and December 31, 2005 ------------------------------------------------------------------------- (expressed in Canadian dollars) June 30, December 31, 2006 2005 $ $ ------------ ------------ Assets Current assets Cash and cash equivalents 22,874,534 28,513,095 Accounts receivable 881,822 1,363,541 Prepaid expenses, deposits and other 272,033 265,062 ------------ ------------ 24,028,389 30,141,698 Property and equipment 4,486,589 4,497,190 ------------ ------------ 28,514,978 34,638,888 ------------ ------------ ------------ ------------ Liabilities Current liabilities Accounts payable and accrued liabilities 793,955 1,368,276 Repayable advances 85,640 85,640 Short-term portion of long-term debt 558,532 590,243 ------------ ------------ 1,438,127 2,044,159 Deferred cost recoveries 80,017 76,535 Deferred revenue 65,083 195,259 Long-term debt 977,160 1,287,087 ------------ ------------ 2,560,387 3,603,040 ------------ ------------ Shareholders’ Equity Capital stock 48,271,624 48,103,709 Contributed surplus 477,827 131,384 Warrants 10,931,061 9,414,155 Deficit (33,725,921) (26,613,400) ------------ ------------ 25,954,591 31,035,848 ------------ ------------ 28,514,978 34,638,888 ------------ ------------ ------------ ------------ SemBioSys Genetics Inc. Consolidated Statements of Operations and Deficit (Unaudited) ------------------------------------------------------------------------- (expressed in Three month period Six month period Canadian dollars) ended June 30, ended June 30, ------------------------- ------------------------- 2006 2005 2006 2005 ------------ ------------ ------------ ------------ $ $ $ $ Revenue Licensing fees - 248,126 - 375,304 Contract research 167,445 313,571 267,531 673,110 ------------ ------------ ------------ ------------ 167,445 561,697 267,531 1,048,414 ------------ ------------ ------------ ------------ Expenses Research and development 1,375,635 1,202,242 2,483,161 2,079,568 General and administration 819,659 857,973 1,791,919 1,698,388 Intellectual property costs 2,081,258 240,160 2,344,295 448,760 Business development 267,292 181,191 452,097 238,490 Stock based compensation 294,731 17,455 346,443 23,076 Amortization 201,908 104,936 400,522 223,154 Cost recoveries (33,000) (370,744) (62,000) (485,817) ------------ ------------ ------------ ------------ 5,007,483 2,233,213 7,756,437 4,225,619 ------------ ------------ ------------ ------------ Loss before the undernoted (4,840,038) (1,671,516) (7,488,906) (3,177,205) ------------ ------------ ------------ ------------ Interest expense (45,505) (6,329) (94,353) (13,073) Interest income 230,525 102,265 450,605 214,911 Gain (loss) on sale of property and equipment (16,802) - (16,802) 8,464 Foreign exchange gain 63,638 17,504 36,935 12,969 ------------ ------------ ------------ ------------ 231,856 113,440 376,385 223,271 ------------ ------------ ------------ ------------ Net loss for the period (4,608,182) (1,558,076) (7,112,521) (2,953,934) Deficit - Beginning of period (29,117,739) (21,184,713) (26,613,400) (19,788,855) ------------ ------------ ------------ ------------ Deficit - End of period (33,725,921) (22,742,789) (33,725,921) (22,742,789) ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Loss per share - basic and diluted (0.28) (0.12) (0.43) (0.23) ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ SemBioSys Genetics Inc. Consolidated Statements of Cash Flows (Unaudited) ------------------------------------------------------------------------- (expressed in Three month period Six month period Canadian dollars) ended June 30, ended June 30, ------------------------- ------------------------- 2006 2005 2006 2005 ------------ ------------ ------------ ------------ $ $ $ $ Cash provided by (used in) Operating activities Net loss for the period (4,608,182) (1,558,076) (7,112,521) (2,953,934) Add: Amortization 201,908 104,936 400,522 223,154 Acquisition of intellectual property for warrants 1,516,906 - 1,516,906 - (Gain) loss on sale of property and equipment 16,802 - 16,802 (8,464) Stock-based compensation 294,731 17,455 346,443 23,076 Unrealized foreign exchange gain (65,819) - (50,830) - ------------ ------------ ------------ ------------ (2,643,654) (1,435,685) (4,882,678) (2,716,168) Change in non-cash working capital and other balances related to operations (145,061) (194,822) (242,028) (972,320) ------------ ------------ ------------ ------------ Cash used in operating activities (2,788,715) (1,630,507) (5,124,706) (3,688,488) ------------ ------------ ------------ ------------ Financing activities Issuance of capital stock - 5,937 - 2,645,986 Share issue costs - (8,617) - (195,614) Exercise of stock options 162,813 - 167,915 - Repayment of long-term debt (146,964) (42,861) (290,808) (85,296) ------------ ------------- ----------- ------------ Cash provided by (used in) financing activities 15,849 (45,541) (122,893) 2,365,076 ------------ ------------- ----------- ------------ Investing activities Proceeds on sale of property and equipment - - - 12,000 Acquisition of property and equipment (249,861) (296,096) (390,962) (462,558) ------------ ------------ ------------ ------------ Cash used in investing activities (249,861) (296,096) (390,962) (450,558) ------------ ------------ ------------ ------------ Decrease in cash and cash equivalents (3,022,727) (1,972,144) (5,638,561) (1,773,970) Cash and cash equivalents - Beginning of period 25,897,261 19,034,570 28,513,095 18,836,396 ------------ ------------ ------------ ------------ Cash and cash equivalents - End of period 22,874,534 17,062,426 22,874,534 17,062,426 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Supplemental Information Cash interest received 45,600 102,265 247,383 214,911 Cash interest paid 41,651 6,171 86,646 12,915 Non-cash transactions Capital items included in accounts payable 117,017 121,464 117,017 121,464 Capital items included in accounts receivable 7,000 - 7,000 -
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
