SemBioSys Announces Third Quarter Highlights and Financial Results

TSX symbol: SBS

CALGARY, Nov. 14, 2011 /CNW/ - SemBioSys Genetics Inc. (TSX: SBS), an agricultural biotechnology company, today announced its financial and operational results for the third quarter, ended September 30, 2011.

Subsequent to quarter end, the Company announced a broad development commercialization partnership with Tasly Pharmaceutical Co., Ltd, of Tianjin, China, and its U.S. Subsidiary, Tasly Pharmaceuticals, Inc.

"We had a successful third quarter, achieving a major corporate objective. We will begin to build a new company with one of China's most respected and fastest growing brand names in the health, wellness and pharmaceutical markets. Our new corporate joint venture anticipates commercializing products in the short, medium and long term, for both the Chinese and global markets by combining Tasly and SemBioSys' respective core competencies. Our technology and innovation are now joined with Tasly's well established global development and commercialization organizations," said James Szarko, President and CEO of SemBioSys.

Tasly Corporate Highlights:

  • China's second largest producer of plant made Traditional Chinese Medicines ("TCMs");
  • The fifth largest publically listed pharmaceutical company in China  with a market capitalization currently of approximately 22 billion RMB (approximately CAD$3.5 billion);
  • Recorded revenues of 4.65 billion RMB (approximately CAD$750 million) with a ten-year compounded annual growth rate of approximately 21% in 2010;
  • Their leading product (Cardiotonic Pill) has been the number one selling TCM in China for the last seven years;
  • Its scope of business includes the manufacture and sale of modern TCMs, chemical and biological drugs, generic drugs, vaccines, personal care products, healthcare products, and functional foods; and
  • Operations exist within China, South East Asia, the United States, Africa, and the UK with its partner Coop Group Ltd.

Joint Venture Highlights:

  • Upon receiving government approval, a new company called Tasly-SemBioSys (Tianjin) Bio-Pharmaceuticals Co., Ltd., will be incorporated and based in Tianjin, China. The pre-approval process and preregistration process has been under way since October 10, 2011;
  • Tasly will pay 100 percent of all development and commercialization expenses of the new company; and
  • SemBioSys will contribute certain intellectual property and know how to the incorporated joint venture (the "Joint Venture") for a 30% equity and profit sharing interest.

Other events for Q3 2011

  • Continued partnership discussions for other plant derived products for  territories and product candidates excluded from our recently announced Joint Venture,
  • Received $761,583 of non-dilutive Canadian Government funding, including a $750,000 promissory note from Agriculture Finance Service Corporation ("AFSC")

Financial Highlights
Operating burn for the nine months ended September 30, 2011, was $3,834,687 compared to $4,446,029 for the same period in 2010, meeting the Company's goal of keeping cash expenditures low while focusing primarily on strategic partnering and development of its therapeutic product candidates.  The operating burn for the three months ended September 30, 2011 of $1,385,238 is higher than the comparable 2010 period burn of $966,791 primarily due to SemBioSys receiving a $318,994 scientific research & experimental development ("SR&ED") tax credit refund in the third quarter of 2010 whereas the estimated refund of $223,902 for 2011 remains outstanding.  In addition, business development activities were significantly higher in the current period to enable the successful completetion of the Tasly partnership noted above.

Net loss for the three months ended September 30, 2011, was $2,238,276 (net of a $257,799 non-cash loss related to the $4.0 million financing closed in the first quarter of 2011) or $0.04 per share compared to $1,834,230 or $0.04 per share for the same period last year. Net loss for the nine months ended September 30, 2011 was $7,050,696 (net of a $2,563,353 non-cash expense and a $1,207,361 non-cash gain related to the $4.0 million financing closed in the first quarter of 2011) or $0.14 per share and $6,978,781 or $0.14 per share for the same period last year.

Revenue for the three and nine months ended September 30, 2011, were $5,761 and $75,287 compared to $5,974 and $473,478 for the same period last year.   The Company recorded no licensing fees in the nine months ended September 30, 2011 while there was $315,789 in licensing fees in the first nine months of 2010.

Expenditures for the three and nine months ended September 30, 2011 compared to the same period last year:

  • $762,505 and $2,526,509 research & development costs compared to $852,017 and $4,155,601 (net of $318,994 SR&ED tax credit);
  • $642,521 and $1,448,578 operating costs compared to $413,762 and $1,542,706; and
  • $331,258 and $964,012 amortization expense compared to $341,443 and $1,040,004.

The overall decrease in expenditures for the nine month period is primarily due to the general cost-cutting implemented in the third quarter of 2010.  The increase in operating costs for the current quarter compared to the prior year period is due to the intensive business development effort we made to achieve the strategic partnership with Tasly as mentioned above.

Total finance income (expense) for the three and nine month periods ended September 30, 2011 was $(508,763) and $373,296 respectively, and related primarily to the $4.0 million financing closed in the first quarter.  A one-time non-cash expenditure of $2,563,353 unidentified consideration in bond and warrants issuance also related to the $4.0 million financing was recorded in the first quarter of 2011.

At September 30, 2011, the Company had cash and cash equivalents of $1,348,441 as compared to $267,436 at December 31, 2010. The increase in cash during the period resulted primarily from the successful closing of a $4,000,000 financing and the receipt of $250,000 non-dilutive financing from AVAC Ltd. and $750,000 from AFSC during the period, offset by net cash burn over the course of the nine-month period.

Total short-term debt, long-term debt, long-term bonds and convertible debentures were $6,721,928 at September 30, 2011, compared to $2,665,176 at December 31, 2010. The increase in debt relates mainly to the $4.0 million financing and $750,000 AFSC debt noted above.

At September 30, 2011, the Company had a net negative working capital balance of $1,339,088 as compared to a net negative working capital of $2,168,782 at December 31, 2010. The improvement in working capital is primarily due to the increase of cash resulting from the financing activities noted above, offset by the operating cash burn.

As at November 13, 2011, the Company had 51,829,818 common shares outstanding, 81,853,286 warrants, 4,654,900 options,  905,927 deferred share units and debentures which are convertible into 8,924,922 common shares.

About SemBioSys
SemBioSys employs its patented, renewable plant seed oilbody and protein expression technology platforms to develop and commercialize high value proteins and oils including health and wellness products and drug candidates. SemBioSys is listed on the Toronto Stock Exchange under the ticker SBS. More information is available at www.sembiosys.com.

Forward-Looking Statements
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 the fact that, the Company is a development stage entity and currently relies on investments and funding from strategic partners and not profits to fund it operations. The Company's ability to continue to secure and attract future strategic and investment capital. The Company's ability to assure that its strategic partnerships will continue to be successful. The Company's' ability to continue to successful development its existing and future product candidates or commercialize them. The Company's exposure to changing global market dynamics, addressable markets and global regulatory environments required to register and market its product candidates. The acceptance of IND's by the FDA in respect of clinical studies, the submission of CTA's to the appropriate European authorities, the successful initiation and timely and successful completion of clinical studies, the fact that Apo AIMilano is currently a development stage drug, the establishment of future corporate alliances and partnerships, 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. On June 17, 2011, at our Annual and Special Meeting of Shareholders, shareholders unanimously approved a special resolution, approving an amendment to the Company's articles of incorporation to consolidate its issued and outstanding Common Shares. This provides the board of directors of the Company the authority, in its discretion, prior to June 17, 2012, to select the exact consolidation ration, provided that (i) the ration may be no smaller than one post-consolidation Share for every (8) pre-consolidation Common Shares and no larger than one post-consolidation Share for every thirty (30) pre-consolidation Common Shares, and (ii) the number of pre-consolidation Common Shares in the ratio must be a whole number of common shares. There is no current plan to effect such a Share Consolidation. However, if under take, the Company's total market capitalization immediately after the proposed consolidation may be lower than immediately before the proposed consolidation. A decline in the Common Shares after a Share Consolidation may result in a greater percentage decline than would occur in the absence of a consolidation, and the liquidity of the Common Shares could be adversely affected following such a consolidation. In addition, the consolidation may result in some shareholders owning "odd lots" of less than 100 Shares, on a post-consolidation basis, which may be difficult or more expensive to sell on a per share basis, than a round lot of shares. These are only some of the risks associated with a potential Share Consolidation. Further risks and regarding the Company are set out in the annual information from 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 STATEMENT OF FINANCIAL POSITION  
(unaudited)        
(expressed in Canadian dollars)        
As at September 30, 2011    September 30,    December 31, 
     2011
  2010
$
ASSETS        
         
Current assets        
Cash and cash equivalents   1,348,441   267,436
Accounts receivable   54,872   184,016
GST receivable   34,747   59,620
Prepaid expenses and deposits   402,877   229,590
    1,840,937   740,662
         
         
Property and equipment   1,399,867   2,294,026
         
    3,240,804   3,034,688
         
LIABILITIES        
         
Current liabilities        
Accounts payable and accrued liabilities   897,837   1,003,083
Short-term debt    28,689   -
Current portion of long-term debt   2,253,499   1,906,361
    3,180,025   2,909,444
         
Royalty liabilities   5,067,601   4,527,509
Long-term bonds   3,142,600   -
Warrants liability   2,519,821   -
Convertible debentures   797,140   758,815
Long-term debt   500,000   -
         
    15,207,187   8,195,768
         
SHAREHOLDERS' DEFICIENCY        
         
Capital stock   75,579,602   75,459,690
Warrants   2,010,519   3,527,425
Contributed surplus    16,102,215   14,459,827
Deficit   (105,658,719)   (98,608,023)
    (11,966,383)   (5,161,081)
         
    3,240,804   3,034,688

SemBioSys Genetics Inc.                
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS        
(unaudited)                
(expressed in Canadian dollars, except shares)                
    Three month period ended   Nine month period ended
    September 30   September 30
    2011   2010   2011   2010
     $     $     $     $ 
REVENUE                
                 
Royalty revenue   5,761   5,974   12,246   5,974
Contract research   -   -   63,041   151,715
Licensing fees   -   -   -   315,789
    5,761   5,974   75,287   473,478
                 
EXPENSES                
                 
Research and development
(net of scientific research & experimental development tax credits for three
and nine month periods: $nil (2010 - $318,994))
  762,505   852,017   2,526,509   4,155,601
Operating   642,521   413,762   1,448,578   1,542,706
Amortization   331,258   341,443   964,012   1,040,004
                 
    1,736,284   1,607,222   4,939,099   6,738,311
                 
Loss before the undernoted   (1,730,523)     (1,601,248)   (4,863,812)   (6,264,833)
                 
Interest income   1,010   1,263   3,173   3,269
Finance income/(expense)   (508,763)   (212,062)   373,296   (559,108)
Unidentified consideration in bond and warrants issuance   -   -   (2,563,353)   -
Realized loss on disposal of investment   -   (5,375)   -   (25,764)
    (507,753)   (216,174)   (2,186,884)   (581,603)
                 
Loss for the period   (2,238,276)     (1,817,422)   (7,050,696)   (6,846,436)
                 
Other comprehensive loss                
  Unrealized loss on investment   -   (22,183)   -   (158,109)
  Realized loss on investment   -   5,375   -   25,764
                 
Net comprehensive loss   (2,238,276)     (1,834,230)   (7,050,696)   (6,978,781)
                 
Loss per share                 
Basic and diluted   (0.04)   (0.04)   (0.14)   (0.14)
                 
Weighted average shares outstanding    51,522,998    51,297,448   51,424,567     48,875,804

 

SemBioSys Genetics Inc.                  
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIENCY)            
(unaudited)                  
(expressed in Canadian dollars, except shares)                  
    Capital Stock Contributed Surplus Warrants Accumulated Other Comprehensive Loss Deficit Total Equity (Deficiency)
     Number  $  $  Number  $  $  $  $
Balance - January 1, 2010   40,653,592 73,726,414 14,083,050 12,655,341   3,527,425 (54,372) (90,131,442) 1,151,075
Private placement   10,720,944 1,733,276 - - - - - 1,733,276
Net loss and comprehensive loss for the period   - - - - - (132,345) (6,846,436) (6,978,781)
Stock-based compensation   - - 209,531 - - - - 209,531
DSU compensation   - - 54,997 - - - - 54,997
Balance - September 30, 2010   51,374,536 75,459,690 14,347,578 12,655,341 3,527,425 (186,717) (96,977,878) (3,829,902)
                   
Balance - January 1, 2011   51,374,536 75,459,690 14,459,827 12,655,341   3,527,425 - (98,608,023) (5,161,081)
Net loss for the period   - - - - - - (7,050,696) (7,050,696)
Expiration of warrants   - - 1,516,906 (550,000)  (1,516,906) - - -
Stock-based compensation   - - 222,988 - - - - 222,988
DSU compensation   - - 27,499 - - - - 27,499
DSU redemption   455,282 119,912 (125,005) - - - - (5,093)
Balance - September 30, 2011   51,829,818 75,579,602 16,102,215 12,105,341 2,010,519 - (105,658,719)  (11,966,383)

 

SemBioSys Genetics Inc.        
CONSOLIDATED STATEMENTS OF CASH FLOWS        
(unaudited)        
(expressed in Canadian dollars)        
    Nine month period ended
    September 30, 2011   September 30, 2010
     $    $
Cash provided by (used in)        
         
Operating activities        
Net loss for the period   (7,050,696)   (6,846,436)
Add items not affecting cash:        
  Amortization   964,012   1,040,004
  Stock-based compensation   222,988   209,531
  Shares issued for services   -   113,635
  Deferred stock units issued   -   54,997
  Unrealized foreign exchange loss   -   14,828
  Finance (income)/expense    (373,296)   559,108
  Loss on disposal of shares   -   25,764
  Unidentified consideration in bond and warrants issuance   2,563,353   -
  Non-cash license fees expenses   -   625,000
    (3,673,639)   (4,203,569)
         
Change in non-cash working capital   (161,048)   (242,460)
         
Cash used in operating activities   (3,834,687)   (4,446,029)
         
Financing activities        
Issuance of capital stock   -   1,778,595
Share issue costs   -   (163,709)
Issuance of long-term bonds and warrants   3,999,577   -
Warrant issue costs   -   (6,340)
Proceeds from royalty liabilities   250,000   -
Proceeds from long-term debt   750,000   -
Costs related to the corporate reorganization   -   (233,715)
Repayment of short-term debt   (14,669)   -
Repayment of royalty liabilities   (11,773)   (9,299)
Repayment of long-term debt   (87,590)   (43,345)
         
Cash provided by financing activities   4,885,545   1,322,187
         
Investing activities        
Acquistion of property and equipment   (69,853)   -
Proceeds on disposition of property and equipment   100,000   46,229
         
Cash provided by investing activities   30,147   46,229
         
         
Increase(decrease) in cash and cash equivalents   1,081,005   (3,077,613)
         
Cash and cash equivalents - Beginning of period   267,436   3,687,548
         
Cash and cash equivalents - End of period   1,348,441   609,935
         
Supplemental Information        
Cash interest received   3,173   3,381
Cash interest paid   4,328   729

 

 

 

SOURCE SemBioSys Genetics Inc.

For further information:

SemBioSys Genetics Inc. 
Rick Pierce
President, U.S. and International Operations
Phone: (617) 447-8299
E-mail: piercer@sembiosys.com
TMX | Equicom
Ross Marshall
Senior Vice President
Phone: (416) 815-0700 ext. 238
E-mail: rmarshall@equicomgroup.com

Profil de l'entreprise

SemBioSys Genetics Inc.

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