AURORA, ON, Dec. 17 /PRNewswire-FirstCall/ - Helix BioPharma Corp. (TSX,
FSE: "HBP") today announced financial results for the first quarter of fiscal
2008, ended October 31, 2007.
HIGHLIGHTS
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- Subsequent to the first quarter, the Company announced a
CDN$16.9 million private placement of common shares, subject to
closing
- Announced management changes, with Dr. Donald H. Segal remaining the
Company's Chief Executive Officer and Mr. John Docherty assuming the
role of President
- Announced University of Arizona professor, Kenneth D. Hatch, MD, as
medical advisor
- Jerome F. McElroy resigned as chairman and director of the Company
RESULTS FROM OPERATIONS
Three month period ended October 31, 2007 compared to the same period in
the previous year
Revenues were higher in the first quarter of fiscal 2008 when compared to
the first quarter of 2007 with margins remaining relatively flat. Overall
expenses in the first quarter of fiscal 2008 were higher when compared to
fiscal 2007 and are mainly attributable to a one time charge related to the
resignation of the Company's Chairman which is reflective of the higher loss
for the period. The Company adopted four new accounting standards in the first
quarter of fiscal 2008, of which one impacted the Company resulting in a net
unrealized gain on an available-for-sale investment.
Loss for the period
During the first quarter of fiscal 2008, the Company recorded a loss of
$1,644,000 or $0.05 per common share, resulting in an increase of $302,000
when compared to the first quarter of fiscal 2007. The Company recorded a loss
of $1,342,000, or $0.04 per common share in the first quarter of fiscal 2007.
Revenues
Total revenues in the first quarter of fiscal 2008 totaled $885,000 (2007
- $826,000), resulting in an increase of $59,000 or 7.1%.
Product Revenue
Product revenues totaled $754,000 in the first quarter of fiscal 2008 and
represent 85.2% of total revenues. When compared to the first quarter of
fiscal 2007, product revenues increased by $58,000 or 8.3% and are primarily
driven by Klean-Prep(TM) product sales.
License fees and royalty revenue
License fees and royalties totaled $131,000 in the first quarter of fiscal
2008 and represent 14.8% of revenues. When compared to the first quarter of
fiscal 2007, license fees and royalties were higher by $1,000 or 1.0%. The
license fees and royalties in the first quarter of fiscal 2008 and 2007 were
comprised solely of royalties related to sales of Klean-Prep(TM) outside of
Canada.
Research and development contract revenue
The Company had no research and development contract revenue in both the
first quarters of fiscal 2008 and 2007.
Cost of sales and margins
Cost of sales totaled $313,000 in the first quarter of fiscal 2008 (2007 -
$290,000) with margins remaining relatively flat. Margins, on a percentage
basis, in the first quarter of fiscal 2008 were 58.5% (2007 - 58.3%).
Research & development
Research and development costs in the first quarter of fiscal 2007 totaled
$782,000 (2007 - $871,000) for a decrease of $89,000. Lower research and
development costs in the first quarter of fiscal 2008 mainly reflect timing of
expenditures associated with the Company's L-DOS47 program.
Research and development expenditures related to Topical Interferon
Alpha-2b remained relatively flat, with expenditures from the late stage phase
II German study during the first quarter of fiscal 2007 being offset by
expenditures in the first quarter of fiscal 2008 relating to patient
enrollment in the phase II trial in Sweden along with costs associated with
patent filings and consulting services.
The Company expects to increase its R&D spending through the remainder of
fiscal 2008, as its Topical Interferon Alpha-2b and L-DOS47 product candidates
continue to be developed.
Operating, general & administration
Operating, general and administration expenses in the first quarter of
fiscal 2008 totaled $1,313,000 (2007 - $906,000), for an increase of $407,000.
The increase is mainly attributable to a one time charge of $434,000 relating
to the resignation of the Company's Chairman.
Amortization of intangible and capital assets
Amortization of intangible assets in the first quarter of fiscal 2008
totaled $7,000 (2007 - $40,000). The variance is due to certain intangible
assets which have now been fully amortized. Amortization of capital assets in
first quarter of fiscal 2008 totaled $66,000 (2007 - $77,000).
Stock-based compensation
Stock-based compensation expense in the first quarter of fiscal 2008
totalled $12,000 (2007 - $12,000). The stock-based compensation expense
relates to the ongoing amortization of compensation costs of stock options
granted on June 30, 2005, over their vesting period.
Interest income
Interest income in the first quarter of fiscal 2008 totaled $104,000 and
remained flat when compared to the first quarter of fiscal 2007 which totaled
$102,000.
Foreign exchange loss
Foreign exchange losses in the first quarter of fiscal 2008 totaled
$108,000 (2007 - $45,000). Foreign exchange losses resulting from the foreign
currency translation of the Company's integrated foreign operation in Ireland
were offset by foreign exchange gains related to the Canadian dollar
appreciation versus the U.S. dollar. The Company's net assets in Europe
consist mainly of cash and cash equivalents, denominated in Euro currency and
are used to fund clinical trials of Topical Interferon Alpha-2b in Europe.
Income taxes
Income tax expense in the first quarter of fiscal 2008 totaled $32,000
(2007 - $29,000). All income taxes are attributable to the Company's
operations in Europe.
Other comprehensive income
In the first quarter of fiscal 2008, the Company recorded comprehensive
income of $16,000 and accumulated other comprehensive income totaling
$148,000. The total amount of $164,000 represents an adjustment to fair value
of available-for-sale financial instruments, which in this case, represent
shares in Orchid Cellmark Inc., a Nasdaq listed company.
CASH FLOW
Operating activities
Net loss from operations totaled $1,644,000 in the first quarter of fiscal
2008 (2007 - $1,342,000) for an increase of $302,000. Excluding non-cash and
working capital items, the cash used in the first quarter of fiscal 2008
totaled $1,836,000 (2007 - $1,602,000) and represents an increase of $234,000.
Financing activities
Financing activities in the first quarter of fiscal 2008 were nil (2007 -
$6,480,000). In the first quarter of fiscal 2007, the Company completed a
private placement with net proceeds of $6,480,000.
Investing activities
Investing activities in the first quarter of fiscal 2008 used cash of
$50,000 while in the first quarter of fiscal 2007 investing activities
provided a source of cash totaling $6,625,000. The majority of the reduction
in investing activities reflects the redemption of $6,640,000 in short term
investments in the first quarter of fiscal 2007. Capital purchases were
negligible in both the first quarters of fiscal 2008 and 2007 totaling $50,000
and $15,000, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has financed its operations from public and
private sales of equity, the exercise of warrants and stock options, interest
income on funds available for investment, government grants, investment tax
credits, and revenues from distribution, licensing and contract services.
Since the Company does not have net earnings from its operations, the
Company's long-term liquidity depends on its ability to access the capital
markets, which depends substantially on the Company's ongoing research and
development programs.
At October 31, 2007, the Company had cash and cash equivalents totaling
$9,578,000 (July 31, 2007 - $11,379,000), a decrease of $1,801,000 and working
capital of $9,859,000 (July 31, 2007 - $11,468,000).
After taking into consideration the Company's anticipated revenue, planned
research and development expenditures and assuming no unanticipated expenses,
the Company expects that its working capital will be sufficient to finance
operations through to September 2008. On the assumption that the private
placement referred to below closes as planned, and then based on the same
factors, the Company expects that it will have sufficient working capital to
finance operations beyond the 2009 fiscal year.
Subsequent to the first quarter of fiscal 2008, the Company received
subscriptions for the purchase, by way of private placement, of a total of
10,040,000 common shares at $1.68 per share, for gross proceeds totalling
CDN$16,867,200. The Company anticipates closing the private placement before
the end of December 2007.
The Company will continue to seek additional funding, primarily by way of
equity offerings, to carry out its business plan and to minimize risks to its
operations. The market, however, for equity financings for companies such as
Helix is challenging, and there can be no assurance that additional funding by
way of equity financing will be available. The failure of the Company to
obtain additional funding on a timely basis may result in the Company reducing
or delaying one or more of its planned research, development and marketing
programs and reducing related personnel, any of which could impair the current
and future value of the business. Any additional equity financing, if secured,
may result in significant dilution to the existing shareholders at the time of
such financing. The Company may also seek additional funding from other
sources, including technology licensing, co-development collaborations, and
other strategic alliances, which, if obtained, may reduce the Company's
interest in its projects or products. There can be no assurance, however, that
any alternative sources of funding will be available.
The Company's unaudited interim consolidated first quarter fiscal 2007 and
2006 financial statements are summarized below:
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Consolidated Statements of Operations
for the three month period ended October 31
(thousand $, except for per share data)
2007 2006
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Revenue:
Product revenue 754 696
License fees and royalties 131 130
Research and development contracts - -
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885 826
Expenses:
Cost of sales 313 290
Research and development 782 871
Operating, general and admin 1,313 906
Amortization of intangibles 7 40
Amortization of capital assets 66 77
Stock-based compensation 12 12
Interest income, net (104) (102)
Foreign exchange loss 108 45
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2,497 2,139
Loss before income taxes (1,612) (1,313)
Income taxes 32 29
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Loss for the period (1,644) (1,342)
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Loss per share: (0.05) (0.04)
Basic and Diluted (0.05) (0.04)
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Consolidated Statements of Cash Flows
for the three month period ended October 31
(thousand $)
2007 2006
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Cash provided by (used in):
Loss for the period (1,644) (1,342)
Items not involving cash:
Amortization of capital assets 66 77
Amortization of intangibles 7 40
Stock-based compensation 12 12
Foreign exchange loss 108 45
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(1,451) (1,168)
Change in non-cash working capital (192) (260)
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Operating activities (1,643) (1,428)
Financing activities - 6,480
Investing activities (50) 6,625
Effect of exchange rate changes on
cash and cash equivalents (108) (45)
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Increase in cash and cash equivalents (1,801) 11,632
Cash and cash equivalents:
Beginning of the period 11,379 4,392
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End of the period 9,578 16,024
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Consolidated Balance Sheets as at
($ thousands)
31-Oct 31-Jul
2007 2007
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Current assets:
Cash and cash equivalents 9,578 11,379
Accounts receivable 779 902
Inventory 592 539
Prepaid and other 130 187
Deferred financing costs 124 -
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11,203 13,007
Non current assets 1,407 1,266
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12,610 14,273
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Current liabilities:
Accounts payable 735 565
Accrued liabilities 609 974
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1,344 1,539
Shareholders' equity 11,266 12,734
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12,610 14,273
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The Company's unaudited interim consolidated financial statements and
management's discussion and analysis of financial condition and results of
operations have been filed, today, with Canadian securities regulatory
authorities and will be available at SEDAR at www.sedar.com.
About Helix BioPharma Corp.
Helix BioPharma Corp. is a biopharmaceutical company specializing in the
field of cancer therapy. The Company is actively developing innovative
products for the prevention and treatment of cancer based on its proprietary
technologies. Helix's product development initiatives include its Topical
Interferon Alpha-2b and its novel L-DOS47 new drug candidate. Helix is listed
on the TSX under the symbol "HBP".
The Toronto and Frankfurt Stock Exchanges have not reviewed and do not
accept responsibility for the adequacy or accuracy of the content of this News
Release. Reported financial information may not necessarily be indicative of
future operating results or of future financial position, due to a number of
risks and uncertainties, including those set forth below. This News Release
contains certain forward-looking statements and information regarding the
Company's activities and finances, which statements and information can be
identified by the use of forward-looking terminology such as "future",
"anticipated", "planned", "expects", "continue", "developing", or variations
thereon, or comparable terminology referring to future events or results.
Forward-looking statements and information are statements and information
about the future and are inherently uncertain. Helix's actual results could
differ materially from those anticipated in these forward-looking statements
and information as a result of numerous risks and uncertainties including
without limitation, the risk that the $16.9 million private placement may not
close, either wholly or in part, which would result in the Company continuing
to need financing in the near term, which may not be available in a timely
manner or at all and which, if not obtained, will have a material adverse
impact on the Company and its ability to continue; uncertainty whether Topical
Interferon Alpha-2b or L-DOS47 will be successfully developed and
commercialized as a drug or at all; the need for additional clinical trials,
the occurrence and success of which cannot be assured; product liability and
insurance risks; research and development risks, the risk of technical
obsolescence; the need for further regulatory approvals, which may not be
obtained in a timely matter or at all; intellectual property risks;
marketing/manufacturing and partnership/strategic alliance risks; the effect
of competition; uncertainty of the size and existence of a market opportunity
for Helix's products; as well as a description of other risks and
uncertainties affecting Helix and its business, as contained in news releases
and filings with the Canadian Securities Regulatory Authorities, including its
latest Annual Information Form, at www.sedar.com, any of which could cause
actual results to vary materially from current results or Helix's anticipated
future results. Forward-looking statements and information are based on the
beliefs, opinions and expectations of Helix's management at the time they are
made, and Helix does not assume any obligation to update any forward-looking
statement or information should those beliefs, opinions or expectations, or
other circumstances change, except as required by law.
SOURCE Helix BioPharma Corp.
Investor Relations: Christina Bessant, The Equicom Group Inc., Tel: (416)
815-0700 ext. 269, (800) 385-5451, Fax: (416) 815-0080, Email:
cbessant@equicomgroup.com; Media Relations: David Schull, Russo Partners LLC,
Tel: (212) 845-4271, Fax: (212) 845-4260, Email:
david.schull@russopartnersllc.com, www.russopartnersllc.com
