Canadian Biotechnology Company hits key insulin and Apo AI(Milano)
milestones
TSX symbol: SBS
CALGARY, Aug. 5 /PRNewswire-FirstCall/ - SemBioSys Genetics Inc. (TSX:SBS), a biotechnology company developing a portfolio of therapeutic proteins for metabolic and cardiovascular diseases, today announced its 2008 second quarter financial and operational results.
Highlights
Insulin Program
- Submitted an Investigational New Drug Application (IND) for
safflower-produced insulin to the U.S. Food and Drug Administration
(FDA), subsequent to the end of the quarter.
- Met with the European Medicines Agency (EMEA) to agree upon a
clinical development strategy designed to allow simultaneous European
and U.S. submissions for safflower-produced insulin.
Apo AI Program
- Demonstrated that safflower-produced Apo AI(Milano) is functional, by
measuring increased cholesterol mobilization, in a widely accepted
animal model.
Botaneco
- Received $4 million in funding from Avrio Ventures Limited
Partnership in the form of a convertible debenture to accelerate the
commercialization of Hydresia(TM) products from Botaneco Specialty
Ingredients Inc., a SemBioSys subsidiary.
Outlook
SemBioSys intends to follow its recent IND application with the submission of a Clinical Trial Application (CTA) to the appropriate European authorities later in the third quarter of this year. In order to meet both FDA and EMEA requirements, the Company plans to conduct a Phase I/II clinical trial wherein safflower-produced insulin is compared to both U.S. and European-sourced reference insulin. The upcoming insulin milestone events include:
- Complete production of clinical grade insulin supply for use in Phase
I/II human clinical trials.
- Upon CTA approval, initiation of a single-dose Phase I/II clinical
trial of safflower-produced insulin in the United Kingdom in the
fourth quarter of 2008.
- Continuation of business development activities toward an insulin
partnership.
In 2007, SemBioSys successfully achieved commercial levels of both Apo AI and Apo AI(Milano) accumulation in safflower. With positive results demonstrating safflower-produced Apo AI(Milano) increased cholesterol mobilization in animals earlier this year, SemBioSys is continuing testing in animals to establish that safflower-produced Apo AI(Milano) is equivalent to microbial-produced Apo AI(Milano) with respect to plaque-remodeling and plaque regression. The upcoming milestone events include:
- Completion of in vivo efficacy studies of plaque remodeling with
safflower-produced Apo AI(Milano) followed by studies of plaque
regression using a mouse model.
- Continuation of the formal partnering process for safflower-produced
Apo AI(Milano). The Company has already initiated confidential
discussions with several potential large pharmaceutical partners.
In addition to its pharmaceutical milestones, SemBioSys also expects to collect milestone payments from Arcadia Biosciences, Inc., upon their successful commercial scale-up and market launch of High GLA Safflower Oil in late 2008 or early 2009.
Meanwhile, Botaneco is also advancing the development of its personal care ingredient products with the expansion of the commercial distribution of Hydresia(TM) and Hydresia(TM) G2. With the completion of the recent funding transaction with Avrio, along with the previously committed $2.4 million from AVAC Ltd., SemBioSys expects Botaneco to be self-financing moving forward.
'The progress we have made with our two lead pharmaceutical programs, insulin and Apo AI(Milano), over the past few months has transformed SemBioSys. We are now poised to have insulin enter the clinic later this year as the first recombinant human protein produced from safflower to advance into human trials, which addresses a component of the largest volume drug protein market in the world. The animal results we received demonstrating safflower-produced Apo AI(Milano) successfully increased cholesterol mobilization were a critical milestone for the Company. With these data in hand, we are now able to intensify our formal partnering process for Apo AI(Milano) in parallel to the execution of additional animal studies designed to show plaque remodeling and plaque regression. We are already engaged in discussions with several major pharmaceutical companies concerning this program,' said Andrew Baum, president and chief executive officer of SemBioSys. 'As we advanced each of our pharmaceutical programs we also made important operational progress with our subsidiary, Botaneco. The funding from AVAC and Avrio provides Botaneco with the financial independence to pursue commercial opportunities on its own, while SemBioSys focuses its resources on advancing the insulin and Apo AI(Milano) programs.'
Financials
Prior to the third quarter of 2007, SemBioSys operated under one segment. During the third quarter of 2007, Botaneco completed construction of its manufacturing facility and SemBioSys began to operate in two reportable segments: (i) the Biopharmaceutical, Animal Health and Nutritional Oils segment focused on the Company's lead pharmaceutical candidates, recombinant human insulin and Apo AI(Milano) and (ii) the Specialty Ingredients segment. As of October 1, 2007, Botaneco Specialty Ingredients Inc. was established as a separate legal entity, and SemBioSys' previously dormant U.S. subsidiary, SemBioSys Inc., was renamed as Botaneco Inc.
Total revenue for the three and six-month periods ended June 30, 2008 was $62,207 and $272,234 respectively, compared with $459,407 and $1,002,195 for the corresponding periods in 2007. The difference is due mainly to a license fee payment earned from the Company's collaboration agreement with Martek BioSciences Corporation in the first half of 2007 which is partially offset by 2008 product sales revenue from Hydresia(TM) and the option payment received from INDEAR S.A.
Total expenditures for the three and six-month periods ended June 30, 2008 were $6,542,258 and $11,799,869 respectively, compared with $4,046,723 and $7,990,131 for the corresponding periods last year.
Research and development expenses for the three and six-month periods ended June 30, 2008 were $3,357,683 and $6,151,786, compared with $1,924,745 and $3,668,717 for the corresponding periods last year. The difference is primarily related to the shift in the stage of development of the Company from research to preclinical development of two major drug candidates, which requires significant external resources to advance and prepare for the upcoming clinical trials. These include increased contract research organization (CRO) costs, independent third party animal studies, preparation of GMP and cGMP material and other outsourcing costs, as well as increased personnel and the associated support costs and laboratory supplies related to preclinical activity.
General and administrative expenses for the three and six-month periods ended June 30, 2008 were $1,666,323 and $3,061,598 respectively, compared with $1,086,766 and $2,110,477 for the corresponding periods last year. The difference is mainly due to the commercial operations of Botaneco being fully established during 2008 resulting in additional increases in general and administrative costs and legal fees incurred for the Botaneco debenture financing.
Intellectual property costs for the three and six-month periods ended June 30, 2008 were $504,690 and $847,020 respectively, compared with $307,414 and $835,663 for the corresponding periods last year. The difference in costs for the three-month periods is due mainly to an increase in legal costs for patent applications for the Company's insulin program during 2008, which were partially offset by a decrease in royalty payments.
Business development costs for the three and six-month periods ended June 30, 2008 were $155,522 and $315,152 respectively, compared with $404,434 and $713,909 for the corresponding periods last year. The difference is primarily due to the shift in Botaneco's activities from essentially entirely business development related prior to the commissioning of its commercial manufacturing operations which occurred in September 2007, to now being fully operational.
Net loss for the 2008 second quarter was $6,414,856 or ($0.25) per share, compared to a net loss of $3,225,371 or ($0.15) per share for the same period last year. Net loss for the six-month period ended June 30, 2008 was $11,431,911 or ($0.44) per share compared with $6,453,782 or ($0.31) per share for the same six-month period last year. The change in net loss is primarily due to the increased commercial activities of Botaneco and the increased preclinical activities related to insulin and Apo AI.
As at June 30, 2008 the Company had cash and cash equivalents totaling $14,101,923 and a net positive working capital balance of $13,154,749 compared to $20,444,013 and $19,518,408 respectively, at December 31, 2007. Total long-term debt and convertible debentures at June 30, 2008 was $4,352,904 compared with $1,389,047 at December 31, 2007.
As at July 31, 2008 the Company had 25,938,294 common shares outstanding, 2,390,000 warrants and 2,387,269 options.
About SemBioSys Genetics Inc. (www.sembiosys.com)
Calgary, Alberta-based SemBioSys Genetics Inc. is a biotechnology company developing protein-based pharmaceuticals for metabolic and cardiovascular diseases. The Company's lead pharmaceutical candidates, produced in the plant host safflower, are recombinant human insulin to serve the rapidly expanding global diabetes market and Apo AI(Milano), a next generation cardiovascular drug. In addition to its pharmaceutical products, SemBioSys and its subsidiary, Botaneco Specialty Ingredients Inc., are developing a series of non-pharmaceutical products addressing human topical, nutritional oils and agricultural biotechnology markets. More information is available and can be accessed at www.sembiosys.com.
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.
Financials results included below:
SemBioSys Genetics Inc.
Consolidated Balance Sheets
(Unaudited)
-------------------------------------------------------------------------
(expressed in Canadian dollars)
June 30, December 31,
2008 2007
$ $
------------ ------------
Assets
Current assets
Cash and cash equivalents 14,101,923 20,444,013
Accounts receivable 228,300 613,912
Prepaid expenses and deposits 317,810 538,718
Inventory 743,568 426,641
------------ ------------
15,391,601 22,023,284
Property and equipment 8,969,956 9,272,415
------------ ------------
24,361,557 31,295,699
------------ ------------
------------ ------------
Liabilities
Current liabilities
Accounts payable and accrued liabilities 1,673,651 1,875,397
Short-term portion of long-term debt 563,201 629,479
------------ ------------
2,236,852 2,504,876
Deferred cost recoveries 207,527 286,596
Long-term debt 1,216,830 759,568
Convertible debenture 2,572,873 -
------------ ------------
6,234,082 3,551,040
------------ ------------
------------ ------------
Shareholders' Equity
Capital stock 70,427,920 70,396,170
Warrants 2,550,880 6,180,690
Contributed surplus 11,312,622 7,326,962
Equity component of convertible debenture 1,427,127 -
Deficit (67,591,074) (56,159,163)
------------ ------------
18,127,475 27,744,659
------------ ------------
24,361,557 31,295,699
------------ ------------
------------ ------------
SemBioSys Genetics Inc.
Consolidated Statements of Loss, Comprehensive Loss and Deficit
(Unaudited)
-------------------------------------------------------------------------
(expressed in Canadian dollars, except shares)
Three month period ended Six month period ended
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
------------ ------------ ------------ ------------
$ $ $ $
Revenue
Licensing fees - 437,012 50,110 874,024
Contract research - 22,395 - 128,171
Product sales 62,207 - 222,124 -
------------ ------------ ------------ ------------
62,207 459,407 272,234 1,002,195
Expenses
Research and
development 3,357,683 1,924,745 6,151,786 3,668,717
General and
administration 1,666,323 1,086,766 3,061,598 2,110,477
Intellectual property
costs 504,690 307,414 847,020 835,663
Business development 155,522 404,434 315,152 713,909
Sales and marketing 96,621 - 249,781 -
Cost of products sold 45,534 - 317,279 -
Stock-based
compensation 175,947 186,654 355,850 365,704
Amortization 580,733 241,887 1,074,567 469,945
Cost recoveries (40,795) (105,177) (573,164) (174,284)
------------ ------------ ------------ ------------
6,542,258 4,046,723 11,799,869 7,990,131
------------ ------------ ------------ ------------
Loss before the
undernoted (6,480,051) (3,587,316) (11,527,635) (6,987,936)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Interest income 96,649 262,962 267,507 475,195
Interest expense (43,412) (52,570) (105,076) (110,543)
Loss on sale of
property and
equipment - (1,483) - (1,483)
Foreign exchange
gain (loss) 11,958 153,036 (66,707) 170,985
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
65,195 361,945 95,724 534,154
------------ ------------ ------------ ------------
Net loss and
comprehensive loss
for the period (6,414,856) (3,225,371) (11,431,911) (6,453,782)
Deficit - Beginning
of period (61,176,218) (43,968,897) (56,159,163) (40,740,486)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Deficit - End of
period (67,591,074) (47,194,268) (67,591,074) (47,194,268)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Loss per share -
basic and diluted (0.25) (0.15) (0.44) (0.31)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Weighted average
shares outstanding 25,937,476 22,089,356 25,936,634 20,511,557
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
SemBioSys Genetics Inc.
Consolidated Statements of Cash Flows
(Unaudited)
-------------------------------------------------------------------------
(expressed in Canadian dollars)
Three month period ended Six month period ended
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
------------ ------------ ------------ ------------
$ $ $ $
Cash provided by
(used in)
Operating activities
Net loss for the
period (6,414,856) (3,225,371) (11,431,911) (6,453,782)
Add items not
affecting cash:
Amortization 580,733 241,887 1,074,567 469,945
Loss on sale of
property and
equipment - 1,483 - 1,483
Stock-based
compensation 175,947 186,654 355,850 365,704
Unrealized foreign
exchange loss (gain) 4,991 (128,534) 49,002 (149,544)
Non-cash interest
expense 18,288 - 37,068 -
------------ ------------ ------------ ------------
(5,634,897) (2,923,881) (9,915,424) (5,766,194)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Change in non-cash
working capital and
other balances
related to
operations 88,886 (686,470) 298,802 795,297
------------ ------------ ------------ ------------
Cash used in operating
activities (5,546,011) (3,610,351) (9,616,622) (4,970,897)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Financing activities
Issuance of capital
stock - - - 15,904,488
Share issue costs - (168,939) (57,884) (1,525,478)
Issuance of
convertible debenture 4,000,000 - 4,000,000 -
Exercise of stock
options - 10,000 31,750 14,500
Repayment of
long-term debt (158,038) (191,843) (310,584) (375,812)
Proceeds from
long-term debt - - 634,900 -
Repayment of
repayable advances - - - (85,640)
------------ ------------ ------------ ------------
Cash provided by
(used in) financing
activities 3,841,962 (350,782) 4,298,182 13,932,058
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Investing activities
Proceeds on sale of
property and
equipment - 6,000 - 6,000
Acquisition of
property and
equipment (478,806) (1,973,020) (1,023,650) (2,417,836)
------------ ------------ ------------ ------------
Cash used in
investing activities (478,806) (1,967,020) (1,023,650) (2,411,836)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Increase (decrease)
in cash and cash
equivalents (2,182,855) (5,928,153) (6,342,090) 6,549,325
Cash and cash
equivalents -
Beginning of period 16,284,778 28,805,937 20,444,013 16,328,459
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Cash and cash
equivalents - End
of period 14,101,923 22,877,784 14,101,923 22,877,784
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Supplemental
Information
Cash interest
received 224,636 308,755 325,244 912,394
Cash interest paid 25,123 47,864 53,878 99,206
Non-cash transactions
Capital items
included in
accounts payable 24,831 824,063 24,831 824,063
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
SOURCE SemBioSys Genetics Inc.
