Akela Pharma Reports Results for Fourth Quarter and Fiscal 2008



    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 an inhaled fentanyl product
(Fentanyl Taifun) for breakthrough cancer pain and a growth hormone releasing
hormone (GHRH) for chronic renal disease, today announced its financial
results for the three and twelve month period ended December 31, 2008.
    Akela's consolidated fourth quarter revenues were $3.6 million ($4.7
million - 2007) and $14.8 million for the year ($12.6 million - 2007).
    Akela's consolidated net loss for the fourth quarter was $13.6 million
($8.9 million - 2007) and included a $9.6 million charge for the impairment of
intangible and other assets. The consolidated net loss for the year was $26.0
million ($32.7 million -2007).
    The $9.6 million impairment charge is specific to the Fentanyl Taifun,
GHRH and Calcitone Gene Related Peptide (CGRP) development programs and was
made to reflect the increased risk that the cost of the intangible and other
assets relating to these programs may not be recovered due to the company's
limited cash resources and the general difficulty in raising the necessary
capital for continued development activities. With regard to CGRP, the Company
has made a decision to terminate the development program and has recently
given notice of termination of its license agreements related to this
compound.
    SG&A expenses for the year were $7.1 million, down $6.9 million (49%)
from 2007, while Research and Development expenses dropped by more than $6.2
million (35%) to $11.6 million over the same period. The cost reduction plan
implemented by the Company at the beginning of 2008 and the transfer of
product development activities from its subsidiary in Turku, Finland to
PharmaForm LLC, its subsidiary in Austin, Texas, which was completed in the
fourth quarter of 2007, contributed directly to the substantial year-over-year
reductions. Additional cost cutting measures were announced in February 2009.
    The Company had cash of $2.3 million as of December 31, 2007 compared
with $6.7 million as of December 31, 2007.

    
    2008 Highlights

    - On January 3rd, 2008, the Company announced the extension of its
      Fentanyl Taifun licensing agreement with Janssen Pharmaceutica NV to
      include Canada.

    - On February 4th, 2008, the Company announced it had received notice
      from the FDA that, due to GLP deviations, the 6-month inhalation
      toxicology studies of Fentanyl Taifun were deemed invalid. The company
      has subsequently informed of its intent to repeat the studies.

    - On March 27th, 2008, the Company closed a C$10.35 MM financing.

    - On June 9th, 2008, the Company announced amendments to its Fentanyl
      Taifun licensing agreement with Janssen Pharmaceutica NV, advancing a
      milestone payment of (euro)4.5 MM (Approx. USD $7 MM) to support the
      development of the Fentanyl Taifun product.

    - On September 4th, 2008, the Company announced that its Japanese
      licensee, Teikoku Seiyaku, had started the clinical program of Fentanyl
      Taifun in Japan.

    - On November 6th, 2008, the Company announced changes in its board of
      directors and senior management, including the resignation of the
      Company's CEO, Dr. Halvor Jaeger.

    - In November, 2008, the Company started enrolment in the phase III
      clinical program of Fentanyl Taifun.

    Highlights Subsequent to December 31, 2008

    - In February 2009, Akela announced measures to cut costs in order to
      preserve cash for its continued operations. The reduction in costs is
      targeted to Akela's development programs, as well as its service
      business, PharmaForm. The Company expects to record a one time charge
      of approximately $700 ($0.03 per share) in employee severance in the
      first quarter of 2009.

    - On March 10th, 2009, the Company agreed to accept a payment of C$2.0 MM
      ($1.6 MM) and 500,000 warrants with an exercise price of C$0.50
      ($0.39 US) from LAB Research Inc. as full and final settlement of its
      lawsuit relating to the Fentanyl TAIFUN(R) toxicology studies.

    - On March 27th, 2009, the Company announced that pursuant to an
      agreement between the Company and Nventa Biopharmaceuticals Corporation
      ("Nventa"), the Company has agreed to acquire all of the issued shares
      of Nventa by way of a plan of arrangement under the Business
      Corporations Act (British Columbia) on the basis of 0.0355 common
      shares of the Company for each common share of Nventa. The transaction
      is subject to a number of conditions including a minimum of C$1.5 MM of
      cash in Nventa, approval of the Toronto Stock Exchange for the listing
      of the common shares of the Company issuable to the shareholders of
      Nventa, and to the favorable votes of not less than two-thirds of the
      votes cast in respect of the transaction by the shareholders of Nventa
      at a meeting of shareholders.

    - In February 2009, Dr. H. Rainer Hoffmann resigned from the board of
      directors of the Company.
    

    About Akela Pharma Inc.:

    Akela Pharma is a drug development company with its lead product,
Fentanyl TAIFUN(R), being developed for the treatment of breakthrough cancer
pain. Fentanyl TAIFUN(R) is a fast- acting fentanyl formulation delivered
using the Company's TAIFUN(R) multi-dose dry powder inhaler platform. Akela's
pipeline also includes a growth hormone releasing hormone (GHRH), which is
being developed for frailty and wasting in chronic renal disease. The product
is also suitable for other chronic diseases involving a catabolic state and
wasting. PharmaForm, Akela's wholly owned subsidiary, is a leading specialty
contract service provider offering a portfolio of innovative technologies in
drug product development, manufacturing and analytical testing to the
pharmaceutical and biotechnology industries. Through its diverse offerings,
PharmaForm solutions help clients reduce development costs and accelerate
time-to-market.

    Akela's common shares trade on The Toronto Stock Exchange ("TSX") under
the symbol "AKL" with 21.6 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.
    Consolidated Balance Sheets

    Years ended December 31, 2008 and 2007
    (in thousands of US dollars)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                            2008        2007
    -------------------------------------------------------------------------
    Assets

    Current assets:
      Cash                                            $    2,345  $    6,688
      Restricted cash                                        600           -
      Accounts receivable                                  6,070       4,806
      Prepaid expenses                                       346         462
      -----------------------------------------------------------------------
                                                           9,361      11,956

    Restricted cash and deposits                           1,258         600
    Property and equipment                                 5,229       5,220
    Intangible assets                                      4,755      14,170
    Goodwill                                               6,457       6,457
    Other assets                                           1,397         738
    -------------------------------------------------------------------------
                                                      $   28,457  $   39,141
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Liabilities and Shareholders' Equity

    Current liabilities:
      Accounts payable and accrued liabilities        $    7,917  $    8,873
      Deferred revenue                                     4,515       2,598
      Current portion of long-term debt                    1,311         499
      -----------------------------------------------------------------------
                                                          13,743      11,970

    Deferred revenue                                      16,266      10,145
    Long-term debt                                         4,894       5,824
    Future income taxes                                        -       1,154

    Shareholders' equity:
      Common shares                                       66,346      54,227
      Warrants                                             2,814         364
      Additional paid-in capital                           8,105      11,702

      Accumulated other comprehensive income               3,110       3,110
      Deficit                                            (86,821)    (59,355)
      -----------------------------------------------------------------------
                                                         (83,711)    (56,245)

      Total shareholders' equity                          (6,446)     10,048

                                                      $   28,457  $   39,141
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    AKELA PHARMA INC.
    Consolidated Statements of Operations and Comprehensive Loss

    Periods ended December 31, 2008 and 2007
    (in thousands of US dollars, except share and per share data)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                             Three months ended              Year ended
                                 December 31,                December 31,
                            ----------------------     ----------------------
                              2008          2007          2008          2007
    -------------------------------------------------------------------------

    Revenues           $     3,527   $     4,705   $    14,774   $    12,632

    Expenses:
      Direct costs           2,132         2,363         7,730         5,897
      Selling, general
       and
       administrative        1,618         3,525         7,103        14,016
      Research and
       development           2,934         2,383        11,563        17,744
      Stock-based
       compensation             93           169           477           997
      Depreciation of
       property and
       equipment               461           386         1,866         1,122
      Amortization of
       intangible
       assets                  715           738         2,875         2,722
      Interest on
      long-term debt            46            54           158           194
      Foreign exchange         473           127           471        (1,249)
      -----------------------------------------------------------------------
                             8,472         9,745        32,243        41,443

    Net loss before
     under noted items      (4,945)       (5,040)      (17,469)      (28,811)

    Other (expense)
     income:
      Impairment of
       intangible and
       other assets         (9,635)            -        (9,635)            -
      US Listing charges         -        (3,988)            -        (3,988)
      -----------------------------------------------------------------------
    Net loss before
     income taxes          (14,580)       (9,028)      (27,104)      (32,799)

    Recovery of
     (provision for)
     income taxes:
      Current                    -           102             -           (62)
      Future                   976            44         1,115           166
      -----------------------------------------------------------------------
                               976           146         1,115           104
    -------------------------------------------------------------------------
    Net loss and
     comprehensive
     loss              $   (13,604)  $    (8,882)  $   (25,989)  $   (32,695)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic and diluted
     net loss per
     share             $     (0.63)  $     (0.75)  $     (1.35)  $     (2.79)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic and diluted
     weighted average
     number of shares
     outstanding        21,615,577    11,768,295    19,276,943    11,720,507
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    AKELA PHARMA INC.
    Consolidated Statements of Shareholders' Equity

    Years ended December 31, 2008 and 2007
    (in thousands of US dollars)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                     Common Shares               Additional
                                 ---------------------              Paid-in
                                  Number     Dollars    Warrants    Capital
    -------------------------------------------------------------------------
    Balance, December 31,
     2006                     10,891,218 $    49,758 $       366 $    6,629 $
    Purchase of PharmaForm       862,791       4,379           -      4,074
    Services rendered             14,285          90           -          -
    Expiration of warrants             -           -          (2)         2
    Stock-based compensation           -           -           -        997
    Net loss                           -           -           -          -
    -------------------------------------------------------------------------

    Balance, December 31,
     2007                     11,768,294 $    54,227 $       364 $   11,702 $
    Issuance of units          8,625,000       8,045       2,450          -
    Purchase of
     PharmaForm                1,222,283       4,074           -     (4,074)
    Stock-based compensation           -           -           -        477
    Net loss                           -           -           -          -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Balance, December 31,
     2008                     21,615,577 $    66,346 $     2,814 $    8,105 $


                                   Accumulated other
                                       comprehensive
                                              income     Deficit       Total
    -------------------------------------------------------------------------
    Balance, December 31,
     2006                                      3,110 $   (26,660) $   33,203
    Purchase of PharmaForm                         -           -       8,453
    Services rendered                              -           -          90
    Expiration of warrants                         -           -           -
    Stock-based compensation                       -           -         997
    Net loss                                       -     (32,695)    (32,695)
    -------------------------------------------------------------------------

    Balance, December 31,
     2007                                      3,110 $   (59,355) $   10,048
    Issuance of units                              -      (1,477)      9,018
    Purchase of
     PharmaForm                                    -           -           -
    Stock-based compensation                       -           -         477
    Net loss                                       -     (25,989)    (25,989)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Balance, December 31,
     2008                                      3,110 $   (86,821) $   (6,446)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    AKELA PHARMA INC.
    Consolidated Statements of Cash Flows
    Years ended December 31, 2008 and 2007
    (in thousands of US dollars)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                            2008        2007
    -------------------------------------------------------------------------

    Cash flows from operating activities:
      Net loss                                        $  (25,989) $  (32,695)
      Adjustments for:
        Depreciation of property and equipment             1,866       1,122
        Amortization of intangible assets                  2,875       2,722
        Impairment of intangible and other assets          9,635           -
        Stock-based compensation                             477         997
        Unrealized foreign exchange loss                      54      (1,268)
        Services rendered for shares                           -          90
        Future income taxes                               (1,115)       (166)
      Net changes in operating assets and liabilities      5,486      14,268
    -------------------------------------------------------------------------
                                                          (6,711)    (14,930)

    Cash flows from financing activities:
      Restricted cash                                          -        (600)
      Repayments of long-term debt                          (626)     (1,816)
      Proceeds from issuance of units                     10,200           -
      Unit issue costs                                    (1,182)          -
    -------------------------------------------------------------------------
                                                           8,392      (2,416)
    Cash flows from investing activities:
      Acquisition of PharmaForm, net of cash                   -      (8,196)
      Deposits                                            (1,258)          -
      Acquisition of property and equipment               (4,315)     (2,815)
      Addition to intangible assets                         (340)       (734)
    -------------------------------------------------------------------------
                                                          (5,913)    (11,745)
    Effect of exchange rate changes                         (111)        475
    Net decrease in cash                                  (4,343)    (28,616)
    Cash, beginning of period                              6,688      35,304
    -------------------------------------------------------------------------
    Cash, end of period                               $    2,345  $    6,688
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    




For further information:

For further information: Dr. Taneli Jouhikainen, Acting CEO, (512)
834-0449, ext. 275; www.akelapharma.com

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