Bioniche Reports First Quarter Results for Fiscal 2006
- net loss reduced by 30% -
- sale of Pharma Group and additional financing in progress -
BELLEVILLE, ON, Nov. 4 /CNW/ - Bioniche Life Sciences Inc. (TSX: BNC), a research-based, technology-driven Canadian biopharmaceutical company, today released first quarter results for fiscal 2006 (for the period ended September 30, 2005).
The Company reported several operating highlights during and subsequent to the first quarter of fiscal 2006:
- The Company announced its intent to sell its 65% stake of Bioniche Pharma Group Limited to RoundTable Healthcare Partners, a U.S.-based private equity firm focused exclusively on the health care industry. Bioniche Life Sciences will retain a minority ownership position in Bioniche Pharma Group going forward.
- The Company announced its intention to raise funds for working capital and refinancing of its long-term debt through a private placement of up to US$10 million with an institutional investor. A further potential US$7.5 million would be made available to the Company, if required, as a bridge facility while the Company completes the sale of Bioniche Pharma Group. At the annual meeting of shareholders on November 3, 2005, the shareholders approved the US$10 million private placement and US$7.5 million bridge facility financing, to the extent it permits the issuance of more than 9 million, and up to 15 million common shares.
- During the quarter, Bioniche Pharma Group launched a new product in the U.S.: Sotradecol(R) Injection (Sodium Tetradecyl Sulfate Injection). Sotradecol is approved by the U.S. Food and Drug Administration (FDA) for the treatment of small, uncomplicated varicose veins of the lower extremities. It is used in sclerotherapy (non-surgical vein removal).
- On October 18, 2005, Bioniche Pharma announced that it has signed an exclusive distribution agreement with AngioDynamics, Inc. for Sotradecol. The seven year contract resulted in a US$1.5 million upfront payment along with further payment of US$800,000, which will be due following the first commercial sale of the product. The contract also contains provisions for minimum annual purchase requirements.
Graeme McRae, President & CEO of Bioniche commented: "The sale of our Pharma division and subsequent financing will significantly strengthen our balance sheet and assist us in focusing our efforts to move forward with the development of our two key proprietary technologies: Our Mycobacterial Cell Wall-DNA Complex (MCC), with which the Company is finalizing a protocol for a multi-centre Phase III/pivotal clinical trial in superficial bladder cancer to be conducted in Europe and North America; and our E. coli O157:H7 cattle vaccine, which is nearing the final regulatory phase in the U.S.
First Quarter Results for Bioniche Life Sciences
The Company's consolidated revenues for the first quarter of fiscal 2006 reached C$6.3 million as compared to C$7.0 million in the same period last year. This shortfall in sales is primarily attributed to a decrease in sales of Cystistat due to the timing of orders. Annual sales for this product in 2005 grew 27% to C$3.7 million.
Animal Health sales were C$5.6 million for the first quarter of fiscal 2006 compared to C$5.9 million in the same period last year. This decrease is due to increased competition in the Australian marketplace. The Company has plans to respond to this competitive pressure.
"The re-opening of the U.S. border to Canadian beef exports should result in positive growth for Bioniche Animal Health in Canada this year, after three disappointing years where the segment and the industry as a whole experienced a downturn related to the Bovine Spongiform Encephalopathy (BSE - "mad cow") situation," noted Mr. McRae.
During the first quarter, Bioniche launched a new embryo transfer holding media that is synthetic and contains no material of animal origin. SYNGRO(TM) was introduced at the joint American and Canadian Embryo Transfer Associations' meeting in Minnesota September 8 - 10, 2005. SYNGRO joins a line of embryo transfer products that continue to show strong sales performance.
Overall gross margins improved to 57% this quarter as compared to 51% in the same period last year. This improvement reflects a proportional increase in sales of the Company's branded proprietary products, which have higher margins than non-branded products.
Expenses in the first quarter of fiscal 2006 were identical to the same period last year - at C$2.8 million. The Company continues to invest in an integrated infrastructure that is needed to move its key strategic priorities forward. EBITDA before research and development in the first quarter remained at C$0.8 million, unchanged from the same period last year.
Gross research and development expenses in the first quarter were C$3.0 million, unchanged from the first quarter of fiscal 2005. Field trials related to the E. coli O157:H7 cattle vaccine continued during the quarter. On the Human Health side, research and development expenses are expected to increase with initiation of the proposed Phase III/pivotal clinical trial for Mycobacterial Cell Wall-DNA Complex (MCC) for bladder cancer. The trial is pending finalization of the protocol, which is expected to be filed with the U.S. Food and Drug Administration (FDA) by calendar year-end.
Loss from continuing operations was C$3.7 million in the first quarter of fiscal 2006, compared to a loss of C$3.0 million in the same period last year. This reflects an increase in interest of C$0.2 million, amortization of C$0.1 million, and net research and development expenses of C$0.3 million. The increase in net research and development expenses reflects a reduction of government incentives specific to the Technology Partnerships Canada (TPC) program during the quarter.
The Company's discontinued operations (Bioniche Pharma Group) recorded a profit of C$0.3 million in the first quarter of fiscal 2006 as compared to a loss of C$1.7 million in the same period last year. This reversal is directly linked to the introduction of Sotradecol Injection in July, 2005. It achieved sales of C$1.3 million in its first three months in the market. Amortization was not recorded this quarter as it was in the first quarter of 2005, amounting to C$0.2 million in that period. Under Generally Accepted Accounting Principles (GAAP), no further amortization is recorded when an asset is assigned for divestiture.
Accordingly, basic net loss per share of C$0.09 per share for the first quarter of fiscal 2006 compares to a loss of C$0.14 recorded in the same period last year.
"We have focused the business and prioritized our key proprietary technologies: MCC for bladder cancer and the E. coli O157:H7 cattle vaccine. We are approaching the remainder of the year with enhanced financial flexibility and a more efficient operating structure. We look forward to sharing news of our continued development and progress towards commercialization of these significant technologies for large potential markets," concluded Mr. McRae.
Download the consolidated Balance Sheets (pdf)