SemBioSys announces 2009 financial and operational results

CALGARY, March 31 /CNW/ - SemBioSys Genetics Inc. (TSX:SBS), specializing in the manufacture of high-value proteins and oils in plant seeds, today announced its 2009 year end financial and operational results.

"We continue to advance our Apo AI(Milano) and insulin programs with positive results from our preclinical Apo AI(Milano) study conducted by leading cardiologists, and the completion of a positive Phase I/II trial for our plant-produced insulin. We intend to pursue commercial partners for each of these programs with the expectation of securing an agreement in one of the two programs in 2010," said James Szarko, President and Chief Executive Officer of SemBioSys. "We have undertaken a number of capital transactions, including non-dilutive events and new equity issues, in order to fund our insulin and Apo AI(Milano) programs to their next value driving milestones: a partnership transaction. Our proprietary protein production platform is an attractive technology for partners searching for a low-cost, scalable and high volume supply of therapeutic proteins."

Highlights

Corporate

    -   Raised a total of approximately $14,100,000 in new capital consisting
        of $5,200,000 in non-dilutive capital and $8,900,000 in new equity
        including;
        -  A non-brokered private placement offering of 10,163,398 shares of
           the Company at a price of $0.175 per share for total gross
           proceeds to the Company of $1,778,595, subsequent to the end of
           the year.
        -  A non-dilutive financing through a plan of arrangement providing
           approximately $3.7 million in capital to the Company.
        -  A public offering of 11,865,341 units at a price of $0.35 per unit
           for total gross proceeds to SemBioSys of $4,152,869.
    -   Announced, subsequent to the end of the year, that its partner
        Arcadia Biosciences Inc., had successfully completed the U.S. Food
        and Drug Administration (FDA) regulatory process for GLA-rich
        safflower. Under the terms of the agreement, SemBioSys is entitled to
        receive royalties from Arcadia on GLA-associated commercial product
        sales and an additional milestone payment.

    Apo AI(Milano)

    -   Received positive results from in vivo plaque remodelling and
        regression studies, conducted by Dr. Prediman K. Shah, confirming the
        anti-atherosclerotic effects of plant-derived Apo AI(Milano). The
        studies successfully demonstrate that a phospholipid complex
        containing SemBioSys' Apo AI(Milano) positively impacted the three
        key components required to achieve a therapeutic effect. The data
        demonstrated an increase in cholesterol efflux capacity (the ability
        to remove cholesterol from the vessel wall), an increase in
        circulating levels of free cholesterol and a reduction in total
        plaque volume vs. controls.
    -   Successfully completed the harvest of approximately 15 tonnes of Apo
        AI(Milano) seed, demonstrating the ability to eliminate seed
        production as a rate limiting step.
    -   Completed a pre-IND (Investigational New Drug) meeting during which
        the FDA confirmed SemBioSys' development plan necessary to file an
        IND application and addressed the proposed design of clinical trials
        for Apo AI(Milano).
    -   Completed bench to pilot plant scale-up of its Apo AI(Milano)
        manufacturing process.

    Insulin Program

    -   Announced in March 2009 the results of a single-dose three-arm Phase
        I/II clinical trial of SBS-1000 wherein safflower-produced insulin
        was shown to be bioequivalent to Humulin(R) R.
    -   Granted U.S. patent US 7,547,821 entitled "Methods for the Production
        of Insulin in Plants".

Outlook

The Company anticipates a number of insulin and Apo AI(Milano) milestone events in the coming months including:

-   Insulin: optimization of process production and scale-up of seed
        inventory;
    -   Apo AI(Milano): receipt of additional in vivo data, advancing to
        optimal process development; and
    -   Further progress with the partnering of both insulin and Apo AI
        (Milano).

Financials

SemBioSys has historically operated in two reportable segments: (i) Biopharmaceuticals and Bioproducts and (ii) Specialty Ingredients. Effective July 29, 2009, the Company divested its majority interest in Botaneco Specialty Ingredients Inc. and Botaneco Inc. (collectively referred to as "Botaneco"), and, therefore, it no longer has control nor significant influence over these entities. As a result, the Specialty Ingredients segment is no longer being consolidated and its operating results are included in discontinued operations. On November 20, 2009 the Company disposed of our remaining investment in Botaneco.

Net loss for the year ended December 31, 2009 compared to the same period last year:

-   $6,492,390 or $0.19 per share from continuing operations compared to
        $18,725,014 or $0.72 per share;
    -   $96,492 or $0.00 per share from discontinued operations compared to
        $4,212,127 or $0.16 per share; and
    -   $6,588,882 or $0.19 per share in total net loss compared to
        $22,937,141 or $0.88 per share.

Net loss decreased in 2009 as a result of completing the insulin clinical trials in the first quarter of the year, combined with the savings realized from the cost reduction programs implemented in the fourth quarter of 2008 and third quarter of 2009. The net loss was further offset by a one-time gain on the exchange of shares as part of the corporate reorganization and a gain on the disposal of our remaining shares of Botaneco.

Revenue for the year ended December 31, 2009 compared to the same period last year:

-   $1,571,114 in revenue from continuing operations compared to $50,110;
    -   $378,970 in revenue from discontinued operations compared to
        $611,577; and
    -   $1,950,084 in total revenue compared to $661,687.

The increase in revenue in 2009 for continuing operations is due mainly to the recognition of licensing option fees in 2009 from an option agreement entered into with MannKind in the fourth quarter of 2008 and licensing fees related to the Company's GLA program.

Expenditures (net of cost recoveries in each case) for the year ended December 31, 2009 compared to the same period last year:

-   $11,270,330 in expenditures from continuing operations compared to
        $18,740,332;
    -   $2,774,345 in expenditures from discontinued operations compared to
        $4,326,980; and
    -   $14,044,675 in total expenses net of cost recoveries compared to
        $23,067,312.

The overall decrease in expenditures is primarily due to the cost reductions implemented in the fourth quarter of 2008 and the third quarter of 2009, in addition to decreased preclinical costs as the majority of the preclinical work for the insulin clinical trial was completed in 2008. The reduction in cost recoveries in 2009 as compared to the prior year resulted from the achievement of all outstanding milestones related to our agreement with AVAC Ltd. for the insulin program in 2008.

As of December 31, 2009 the Company had cash and cash equivalents from continuing operations of $3,687,548 and a net positive working capital balance of $1,595,217, compared to $1,926,966 ($3,819,796 including cash related to discontinued operations), and $646,156 ($3,730,413 including working capital from discontinued operations), respectively at December 31, 2008. Total long-term debt, including the short-term portion thereof was $1,534,535 at December 31, 2009 compared to $752,644 ($5,127,829 including long-term debt from discontinued operations) at December 31, 2008.

Subsequent to the end of the year, the Company brought in an additional $1,800,000 of gross proceeds from a private placement. Based on the current cash on hand and a planned net burn rate of $500,000 per month the Company anticipates sufficient resources to fund operations into the third quarter of 2010.

As at March 30, 2010 the Company had 51,259,536 common shares outstanding, 12,655,341 warrants, 2,582,948 options, 711,920 broker warrants and 385,717 DSUs.

About SemBioSys

Calgary, Alberta-based SemBioSys is focused on leveraging its unique proprietary platform to manufacture high-value proteins and oils. SemBioSys' seed-based protein production system can provide for its partners product enablement, exceptionally low cost and unprecedented scalability. SemBioSys is applying the platform with high selectivity to products with tremendous clinical promise and value potential. The Company's current pharmaceutical development programs include insulin (SBS-1000, regulated as a biosimilar in Europe) and Apo AI(Milano), a next-generation cardiovascular therapy. SemBioSys' proprietary safflower-derived Apo AI(Milano) is a des-1,2- variant of Apo AI(Milano) as previously described in the literature. SemBioSys is listed on the Toronto Stock Exchange under the ticker SBS. More information is available 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 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 and market size, the acceptance of an IND by the FDA in respect of clinical studies, the submission of a CTA to the appropriate European authorities, the successful initiation and timely and successful completion of clinical studies, the fact that Apo AI(Milano) is currently a development stage drug, 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.

SemBioSys Genetics Inc.
    CONSOLIDATED BALANCE SHEETS

    As at December 31,                                    2009          2008
    (expressed in Canadian dollars)                          $             $
    -------------------------------------------------------------------------

    ASSETS

    Current assets
    Cash and cash equivalents                        3,687,548     1,926,966
    Investment                                         380,601             -
    Accounts receivable                                124,083       723,259
    GST receivable                                      52,649       213,981
    Prepaid expenses, deposits and other               175,894       406,054
    Current assets related to discontinued
     operations                                              -     3,849,220
                                                   ------------  ------------
                                                     4,420,775     7,119,480

    Property and equipment                           3,683,462     5,154,044

    Long-term assets related to discontinued
     operations                                              -     2,855,580
                                                   ------------  ------------

                                                     8,104,237    15,129,104
                                                   ------------  ------------
                                                   ------------  ------------

    LIABILITIES

    Current liabilities
    Accounts payable and accrued liabilities         1,291,023     1,489,757
    Deferred revenue                                         -       612,295
    Short-term portion of long-term debt             1,534,535       522,052
    Current liabilities related to discontinued
     operations                                              -       764,963
                                                   ------------  ------------
                                                     2,825,558     3,389,067

    Deferred cost recoveries                                 -        23,371
    Long-term debt                                           -       230,592
    Long-term liabilities related to discontinued
     operations                                              -     4,373,876
                                                   ------------  ------------
                                                     2,825,558     8,016,906
                                                   ------------  ------------
                                                   ------------  ------------

    SHAREHOLDERS' EQUITY

    Capital stock                                   73,726,414    70,428,431
    Warrants                                         3,527,425     2,550,880
    Contributed surplus                             13,764,398    11,802,064
    Equity component of convertible debenture,
     discontinued operations                                 -     1,427,127
    Accumulated other comprehensive loss               (54,372)           -
    Deficit                                        (85,685,186)  (79,096,304)
                                                   ------------  ------------
                                                     5,278,679     7,112,198
                                                   ------------  ------------

                                                     8,104,237    15,129,104
                                                   ------------  ------------
                                                   ------------  ------------



    SemBioSys Genetics Inc.
    CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT

    For the years ended December 31,                      2009          2008
    (expressed in Canadian dollars, except shares)           $             $
    -------------------------------------------------------------------------

    REVENUE

    Licensing option fees                            1,161,495        50,110
    Licensing fees                                     307,048             -
    Contract research                                  102,571             -
                                                   ------------  ------------
                                                     1,571,114        50,110

    EXPENSES

    Research and development                         4,672,020    10,901,553
    General and administration                       3,041,425     4,379,717
    Intellectual property costs                        941,583     1,526,702
    Business development                               518,955       672,029
    Stock-based compensation                           682,791       804,933
    Amortization                                     1,471,361     1,471,161
    Cost recoveries                                    (57,805)   (1,015,763)
                                                   ------------  ------------
                                                    11,270,330    18,740,332
                                                   ------------  ------------

    Loss before the undernoted                      (9,699,216)  (18,690,222)
                                                   ------------  ------------
                                                   ------------  ------------

    Interest income                                      9,427       343,582
    Interest expense                                  (210,648)     (111,665)
    Foreign exchange gain (loss)                        50,621      (266,709)
    Gain on exchange of shares                       2,941,981             -
    Gain on sale of shares                             415,445             -
                                                   ------------  ------------
                                                   ------------  ------------

                                                     3,206,826       (34,792)
                                                   ------------  ------------

    Net loss from continuing operations             (6,492,390)  (18,725,014)

    Discontinued operations                            (96,492)   (4,212,127)
                                                   ------------  ------------

    Net loss                                        (6,588,882)  (22,937,141)

    Deficit - Beginning of the year                (79,096,304)  (56,159,163)
                                                   ------------  ------------

    Deficit - End of the year                      (85,685,186)  (79,096,304)
                                                   ------------  ------------
                                                   ------------  ------------

    Loss per share
    Basic and diluted from continuing operations         (0.19)        (0.72)
    Basic and diluted from discontinued operations       (0.00)        (0.16)
    Basic and diluted                                    (0.19)        (0.88)
                                                   ------------  ------------
                                                   ------------  ------------

    Weighted average shares outstanding             33,869,094    25,937,446
                                                   ------------  ------------
                                                   ------------  ------------



    SemBioSys Genetics Inc.
    CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

    For the years ended December 31,                      2009          2008
    (expressed in Canadian dollars)                          $             $
    -------------------------------------------------------------------------

    Net loss for the year                           (6,588,882)  (22,937,141)

    Other comprehensive loss
    Unrealized loss on investment                      (54,372)            -
                                                   ------------  ------------

    Comprehensive loss                              (6,643,254)  (22,937,141)
                                                   ------------  ------------
                                                   ------------  ------------



    CONSOLIDATED STATEMENTS OF ACCUMULATED OTHER COMPREHENSIVE LOSS

    As at December 31,                                    2009          2008
    (expressed in Canadian dollars)                          $             $
    -------------------------------------------------------------------------

    Accumulated other comprehensive income
      - beginning of the year                                -             -

    Foreign currency translation adjustments
      Change in accounting policy                       26,534             -
      Adjustments during the year                      (32,365)            -
      Transferred to net income from discontinued
       operations during the year                        5,831             -
                                                   ------------  ------------

    Unrealized loss on Investment                      (54,372)            -
                                                   ------------  ------------

    Accumulated other comprehensive income - end
     of the year                                       (54,372)            -
                                                   ------------  ------------
                                                   ------------  ------------



    SemBioSys Genetics Inc.
    CONSOLIDATED STATEMENTS OF CASH FLOWS

    For the years ended December 31,                      2009          2008
    (expressed in Canadian dollars)                          $             $
    -------------------------------------------------------------------------

    Cash provided by (used in)

    Operating activities
    Net loss for the year from continuing
     operations                                     (6,492,390)  (18,725,014)
    Add items not affecting cash:
      Amortization                                   1,471,361     1,471,161
      Stock-based compensation                         682,791       804,933
      Shares issued for services                       152,985             -
      Deferred stock unit payments                     109,929             -
      Unrealized foreign exchange (gain) loss          (60,952)      217,842
      Non-cash interest expense                        158,237             -
      Gain on sale of assets                                 -        16,268
      Gain on exchange of shares                    (2,941,981)            -
      Gain on sale of shares                          (415,445)            -
                                                   ------------  ------------
                                                    (7,335,465)  (16,214,810)
                                                   ------------  ------------
                                                   ------------  ------------

    Change in non-cash working capital and other
     balances related to operations                   (138,221)      142,396
                                                   ------------  ------------

    Cash used in operating activities               (7,473,686)  (16,072,414)
                                                   ------------  ------------
                                                   ------------  ------------

    Financing activities
    Issuance of capital stock                        3,531,801             -
    Share issue costs                                 (303,609)      (57,884)
    Issuance of warrants                             2,454,668             -
    Warrant issue costs                               (333,223)            -
    Exercise of stock options                                -        32,261
    Proceeds from corporate reorganization           3,701,929             -
    Costs from corporate reorganization               (443,933)            -
    Proceeds from long-term debt                     1,431,118       159,240
    Repayment of long-term debt                       (767,822)     (679,457)
                                                   ------------  ------------

    Cash provided by (used in) financing
     activities                                      9,270,929      (545,840)
                                                   ------------  ------------
                                                   ------------  ------------

    Investing activities
    Proceeds on sale of property and equipment               -         5,000
    Purchase of Botaneco convertible debenture         (19,350)            -
    Acquisition of property and equipment              (17,311)     (969,748)
                                                   ------------  ------------

    Cash used in investing activities                  (36,661)     (964,748)
                                                   ------------  ------------
                                                   ------------  ------------

    Net change in cash from continuing operations    1,760,582   (17,583,002)

    Cash flow from discontinued operations

    Operating activities                            (2,081,450)   (3,980,760)
    Financing activities                               951,576     5,209,273
    Investing activities                              (762,956)     (269,728)
                                                   ------------  ------------

    Net change in cash from discontinued
     operations                                     (1,892,830)      958,785
                                                   ------------  ------------

    Decrease in cash and cash equivalents             (132,248)  (16,624,217)

    Cash and cash equivalents - Beginning of the
     year                                            3,819,796    20,444,013
                                                   ------------  ------------
                                                   ------------  ------------

    Cash and cash equivalents - End of of the year   3,687,548     3,819,796
                                                   ------------  ------------
                                                   ------------  ------------

      Cash and cash equivalents - discontinued
       operations                                            -     1,892,830

    Cash and cash equivalents - from continuing
     operations                                      3,687,548     1,926,966
                                                   ------------  ------------
                                                   ------------  ------------

    Supplemental Information (continuing
     operations)
    Cash interest received                              13,079       369,505
    Cash interest paid                                  51,816        97,308
    Non-cash transactions
      Capital items included in accounts payable             -        16,532
      Share issue costs included in accounts payable     7,276             -

For further information: SemBioSys Genetics Inc., Abby Garfunkel, Investor Relations, Phone: (403) 717-4185, E-mail: garfunkela@sembiosys.com; The Equicom Group Inc., Ross Marshall, Vice President, Phone: (416) 815-0700 ext. 238, E-mail: rmarshall@equicomgroup.com