Akela Pharma reports results for fourth quarter and fiscal 2007



    www.akelapharma.com
    Toronto Stock Exchange Symbol: AKL

    MONTREAL, March 31 /CNW Telbec/ - Akela Pharma Inc. (TSX: AKL), a drug
development company focused on developing therapies for the inhalation and
pain markets, today announced its financial results for the three and twelve
month period ended December 31, 2007.
    Akela consolidated revenues were $4.7 million for the fourth quarter and
$12.6 million for the year. Akela's consolidated net loss for the fourth
quarter of 2007 was $8.9 million and $32.7 million for 2007.
    "2007 was distinguished yet again by strong clinical results from our
product development programs, partnership for commercialization and the
addition of PharmaForm's platforms and products. We first announced
statistically significant results from our GHRH Phase II trial demonstrating a
marked stimulation of growth hormone, IGF-1 production, increase in fat
free-mass and decrease in fat mass. We have also announced positive results
for our lead product Fentanyl TAIFUN(R) for the Phase IIb demonstrating
efficacy resulting in faster and superior pain relief. We have successfully
completed the integration of our acquired contract formulation subsidiary
PharmaForm and have entered into a licensing and development agreement with
Janssen Pharmaceutica NV for our lead product. Notwithstanding the setback in
the US regulatory environment and market place, we strongly believe that the
quality of our clinical development programs and results will ultimately
prevail." said Dr Halvor Jaeger, Chief Executive Officer of Akela Pharma Inc.

    
    Financial Highlights

    - Total consolidated revenues for the fourth quarter of 2007 were
      $4.7 million, including $0.5 million in co-development fees and
      $4.0 million of contract services. Total consolidated revenues for 2007
      were $12.6 million, including $2.2 million in co-development fees and
      $9.8 million of contract services.
    - Consolidated net loss for the fourth quarter of 2007 was $8.9 million
      or ($0.75) per share. Consolidated net loss for 2007 was $32.7 million
      or ($2.79) per share.

    2007 Operational Highlights

    - Akela signed the definitive purchase and sale agreement and
      subsequently closed the acquisition of PharmaForm L.L.C.
    - Akela announced the signing of a licensing agreement with
      Janssen Pharmaceutica NV for its lead product, Fentanyl TAIFUN(R) for
      the European Union, Eastern Europe, Russia, the Middle East and Africa.
      A signing fee of $10.7 million was received.
    - Akela announced the change of its corporate name from
      LAB International Inc. following the approval of a special resolution
      at its Annual and Special Shareholders meeting.
    - Akela announced positive interim results from its GHRH Phase II study
      producing within 4 weeks of treatment a highly significant stimulation
      of endogenous growth hormone (GH) secretion, a marked increase of
      circulating insulin-like growth factor (IGF-1) as compared to placebo,
      a significant increase in fat-free mass and a significant decrease in
      fat mass.
    - Akela announced positive results from its Fentanyl TAIFUN(R) Phase IIb
      extension arm demonstrating statistically significant differences
      compared to placebo in the measured primary and secondary efficacy
      variables resulting in faster and superior pain relief.
    - Akela announced the consolidation of its issued and outstanding common
      shares on the basis of one post-consolidation common share for every
      seven pre-consolidation common shares. Akela also announced the
      undertaking of a public offering in the USA of 5,250,000 shares and an
      application to list the common shares on the NASDAQ Global Market.
      Subsequently, due to adverse market conditions, Akela withdrew its
      offering.

    Financial Results

    Consolidated SG&A expenses totaled $3.5 million for the fourth quarter of
2007 and $14.0 million for fiscal 2007 compared to $2.2 million and
$13.3 million for the same respective 2006 periods.
    R&D costs for the fourth quarter of 2007 were $2.4 million and
$17.7 million for fiscal 2007 compared to $3.9 million and $11.5 million for
the same respective 2006 periods. The increase in spending is primarily
attributable to the costs associated with the advancement and finalization of
the Fentanyl TAIFUN(R) Phase II trial program and the development of our other
product candidates.
    The consolidated net loss for the fourth quarter of 2007 was $8.9 million,
or ($0.75) per share and $32.7 million or ($2.79) per share for fiscal 2007,
compared with a net loss of $0.7 million and $0.2 million, respectively, for
fiscal 2006.
    The Company had cash and cash equivalents as of December 31, 2007 of
$6.7 million compared with $35.3 million as of December 31, 2006.

    About Akela Pharma Inc.

    Akela Pharma is an integrated drug development company focused on
developing therapies for the growing multi-billion dollar inhalation and pain
markets. Its lead product, for the treatment of breakthrough cancer pain, is a
fast-acting Fentanyl formulation delivered using the Company's TAIFUN(R) dry
powder inhaler platform. Its pipeline also includes therapeutics for asthma,
COPD, growth hormone deficiencies and controlled substance abuse deterrent
formulations.

    Akela's common shares trade on The Toronto Stock Exchange ("TSX") under
the symbol "AKL" with 20.4 million shares outstanding.

    This news release contains certain forward-looking statements that reflect
the current views and/or expectations of Akela Pharma Inc. with respect to its
performance, business and future events. Such statements are subject to a
number of risks, uncertainties and assumptions. Actual results and events may
vary significantly.

    AKELA PHARMA INC.
    (formerly LAB International Inc.)
    Consolidated Balance Sheets
    Years ended December 31, 2007 and 2006
    (in thousands of US dollars)

    ------------------------------------------------------------------------
                                                   2007                2006
    ------------------------------------------------------------------------
    Assets

    Current assets:
      Cash                                   $    6,688          $   35,304
      Accounts receivable                         4,806               1,347
      Prepaid expenses                              462                 712
      ----------------------------------------------------------------------
                                                 11,956              37,363

    Restricted cash                                 600                   -
    Property and equipment                        5,220                 397
    Intangible assets                            14,170               8,015
    Goodwill                                      6,457                   -
    Other assets                                    738                 828
    ------------------------------------------------------------------------
                                             $   39,141          $   46,603
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------

    Liabilities and Shareholders' Equity

    Current liabilities:
      Accounts payable and accrued
       liabilities                           $    8,873          $    4,886
      Deferred revenue                            2,598               1,606
      Current portion of long-term debt             499               1,456
      ----------------------------------------------------------------------
                                                 11,970               7,948

    Deferred revenue                             10,145                   -
    Long-term debt                                5,824               4,248
    Future income taxes                           1,154               1,204

    Shareholders' equity:
      Common shares (unlimited authorized,
       11,768,294 and 10,891,218 common
       shares issued and outstanding with
       no par value at December 31, 2007
       and 2006)                                 54,227              49,758
      Preference shares (issuable in
       series, unlimited authorized,
       zero issued and outstanding)                   -                   -
      Warrants                                      364                 366
      Additional paid-in capital                 11,702               6,629

      Accumulated other comprehensive income      3,110               3,110
      Deficit                                   (59,355)            (26,660)
      ----------------------------------------------------------------------
                                                (56,245)            (23,550)

      Total shareholders' equity                 10,048              33,203

                                             $   39,141          $   46,603
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------
    See accompanying notes to unaudited consolidated financial statements.


    AKELA PHARMA INC.
    (formerly LAB International Inc.)
    Consolidated Statements of Operations and Comprehensive Loss

    Periods ended December 31, 2007 and 2006
    (in thousands of US dollars, except share and per share data)

    ------------------------------------------------------------------------
    ------------------------------------------------------------------------
                                    Three-months                 Year ended
                               ended December 31,         ended December 31,
                         ------------------------     ----------------------
                              2007          2006           2007        2006
    ------------------------------------------------------------------------
    Revenues             $   4,705     $   1,296      $  12,632   $  25,966

    Expenses:
      Direct costs           2,363             -          5,897      14,088
      Selling, general
       and
       administrative        3,525         2,254         14,016      13,303
      Research and
       development           2,383         3,873         17,744      11,521
      Stock-based
       compensation            169           296            997         886
      Amortization of
       property and
       equipment               386           287          1,122       2,071
      Amortization of
       intangible
       assets                  738           271          2,722       1,281
      Interest on
       long-term debt
       and loss on
       settlement of
       convertible
       debentures               54          (183)           194       1,436
      Foreign exchange         127           539         (1,249)        996
      ----------------------------------------------------------------------
                             9,745         7,337         41,443      45,582

    Net loss before
     under noted items      (5,040)       (6,041)       (28,811)    (19,616)

    Other (expense)
     income:
      Gain on disposal
       of interest in
       LAB Research              -        11,481              -      30,111
      Share in net
       income of a
       company subject
       to significant
       influence                 -           141              -         265
      US Listing charges    (3,988)            -         (3,988)          -
      Restructuring              -        (3,859)             -      (3,859)
      ----------------------------------------------------------------------
                            (3,988)        7,763         (3,988)     26,517

    Net (loss) earnings
     before income taxes    (9,028)        1,722        (32,799)      6,901

    Recovery of
     (provision for)
     income taxes:
      Current                  102        (1,090)           (62)     (2,519)
      Future                    44        (1,375)           166      (4,581)
      ----------------------------------------------------------------------
                               146        (2,465)           104      (7,100)

    ------------------------------------------------------------------------
    Net loss and
     comprehensive
     loss                $  (8,882)    $    (743)     $ (32,695)  $    (199)
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------
    Basic and diluted
     net loss per share  $   (0.75)    $   (0.07)     $   (2.79)  $   (0.02)
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------

    Basic and diluted
     weighted average
     number of shares
     outstanding        11,768,294    10,751,180     11,720,507  10,388,586
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------
    See accompanying notes to audited consolidated financial statements.


    AKELA PHARMA INC.
    (formerly LAB International Inc.)
    Consolidated Statements of Shareholders' Equity

    Years ended December 31, 2007 and 2006

    ------------------------------------------------------------------------
    ------------------------------------------------------------------------
                                   Common Shares                     Holder
                            --------------------                 conversion
                            Number       Dollars       Warrants     options
    ------------------------------------------------------------------------

    Balance,
     December 31,
     2005                9,997,476     $  42,121      $     563   $     969

    Settlement of
     debentures            659,778         6,194              -        (935)

    Services rendered      195,474         1,056              -           -

    Share issue costs            -             -              -           -

    Expiration of
     conversion options          -             -              -         (34)

    Expiration of
     warrants                    -             -           (174)          -

    Exercise of
     warrants               15,714           146            (23)          -

    Exercise of
     options                22,776           241              -           -

    Stock-based
     compensation                -             -              -           -

    Net loss                     -             -              -           -

    ------------------------------------------------------------------------
    ------------------------------------------------------------------------


    Balance,
     December 31,
     2006               10,891,218     $  49,758      $     366   $       -

    Purchase of
     PharmaForm            862,791         4,379              -           -

    Services rendered       14,285            90              -           -

    Expiration of
     warrants                    -             -             (2)          -

    Stock-based
     compensation                -             -              -           -

    Net loss                     -             -              -           -

    ------------------------------------------------------------------------

    Balance,
     December 31,
     2007               11,768,294     $  54,227      $     364   $       -
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------
    See accompanying notes to audited consolidated financial statements.


    ------------------------------------------------------------------------
    ------------------------------------------------------------------------
                                     Accumulated
                                           other
                        Additional comprehensive
                   Paid-in Capital        income        Deficit       Total
    ------------------------------------------------------------------------

    Balance,
     December 31,
     2005                $   5,627     $   3,110      $ (25,024)  $  27,366

    Settlement of
     debentures                  -             -         (1,476)      3,783

    Services rendered            -             -              -       1,056

    Share issue costs            -             -             39          39

    Expiration of
     conversion
     options                    34             -              -           -

    Expiration of
     warrants                  174             -              -           -

    Exercise of
     warrants                    -             -              -         123

    Exercise of
     options                   (92)            -              -         149

    Stock-based
     compensation              886             -              -         886

    Net loss                     -             -           (199)       (199)


    ------------------------------------------------------------------------
    ------------------------------------------------------------------------

    Balance,
     December 31,
     2006                $   6,629     $   3,110      $ (26,660)  $  33,203

    Purchase of
     PharmaForm              4,074             -              -       8,453

    Services rendered            -             -              -          90

    Expiration of
     warrants                    2             -              -           -

    Stock-based
     compensation              997             -              -         997

    Net loss                     -             -        (32,695)    (32,695)

    ------------------------------------------------------------------------
    ------------------------------------------------------------------------

    Balance,
     December 31,
     2007                $  11,702     $   3,110      $ (59,355)  $  10,048
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------
    See accompanying notes to audited consolidated financial statements.


    AKELA PHARMA INC.
    (formerly LAB International Inc.)
    Consolidated Statements of Cash Flows

    Years ended December 31, 2007 and 2006
    (in thousands of US dollars)

    ------------------------------------------------------------------------
    ------------------------------------------------------------------------
                                                   2007                2006
    ------------------------------------------------------------------------

    Cash flows from operating activities:
      Net loss                               $  (32,695)         $     (199)
      Adjustments for:
        Amortization and write-off
         of property and equipment                1,122               2,071
        Amortization of intangible assets         2,722               1,281
        Stock-based compensation                    997                 886
        Loss on settlement of convertible
         debenture                                    -                 658
        Accretion expense on convertible
         debenture                                    -                 157
        Unrealized foreign exchange (gain)
         loss                                    (1,268)                988
        Services rendered for shares                 90                  24
        Future income taxes                        (166)              4,575
        Gain on disposal of interest
         in LAB Research                              -             (30,111)
        Share in net income of a company
         subject to significant influence             -                (265)
        Restructuring                                                 3,523
        Gain on disposal of long-term
         investment                                   -                (129)
      Net changes in operating assets and
       liabilities                               14,268                 174
    ------------------------------------------------------------------------
                                                (14,930)            (16,367)
    Cash flows from financing activities:
      Restricted cash                              (600)                  -
      Proceeds from issuance of shares                -                 331
      Repayments of long-term debt               (1,816)               (528)
    ------------------------------------------------------------------------
                                                 (2,416)               (197)
    Cash flows from investing activities:
      Acquisition of PharmaForm,
       net of cash                               (8,196)                  -
      Acquisition of property and
       equipment                                 (2,815)             (1,830)
      Addition to intangible assets                (734)               (399)
      Cash balance transferred to
       LAB Research                                   -                (847)
      Proceeds on disposal of LAB Research            -              50,164
      Transaction costs                               -              (8,505)
      Other advances and investments                  -                (150)
    ------------------------------------------------------------------------
                                                (11,745)             38,433

    Net (decrease) increase in cash             (29,091)             21,869

    Cash, beginning of year                      35,304              13,989

    Effect of exchange rate changes                 475                (554)

    ------------------------------------------------------------------------
    Cash, end of year                        $    6,688          $   35,304
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------
    See accompanying notes to audited consolidated financial statements.


    
    %SEDAR: 00003466EF




For further information:

For further information: visit Akela's website at www.akelapharma.com,
or contact: Frédéric Dumais, Vice-President, Investor Relations, (514)
315-3330 ext. 106, Fax: (514) 315-3325

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