Akela Pharma reports results for the second quarter of fiscal 2008



    www.akelapharma.com
    Toronto Stock Exchange Symbol: AKL

    MONTREAL, Aug. 14 /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 six
months ended June 30, 2008.
    Consolidated revenues for the second quarter and six months ended
June 30, 2008 were $3.2 million and $7.1 million, respectively. For the three
and six months ended June 30, 2008, Akela's consolidated net loss was
$4.2 million and $8.7 million.
    During the second quarter of 2008, we had a number of operational
achievements which position us well for accelerated growth through the close
of the year. In May our original licensing and development agreement with
Janssen Pharmaceutica NV for Fentanyl TAIFUN(R) was amended to secure advanced
milestones of $3.9 million (2.5 million euros) on the first local regulatory
approval of the Phase III protocol and $3.1 million (2.0 million euros) on
clinical site readiness. Under the licensing agreement an additional milestone
of $3.9 million (2.5 million euros) will be due as of the inclusion of the 7th
patient in the study. We expect all events to occur during the next four to
five months. During the second quarter our PharmaForm subsidiary was awarded
with several new drug formulation and manufacturing contracts with an
estimated revenue potential in excess of $5.0 million. On July 28, 2008
PharmaForm entered into a lease agreement for a 69,872 square foot facility
located in Austin, Texas. This state of the art facility will allow us to
accommodate the growing demand for our current service offering and expand
into commercial scale manufacturing.

    2008 Second Quarter Financial Highlights

    
    - Total consolidated revenues for the second quarter of 2008 were
      $3.2 million, including $0.5 million in co-development fees and
      $2.7 million of contract services. Total consolidated revenues for the
      first quarter of 2007 were $3.4 million, including $0.4 million in
      co-development fees and $2.6 million of contract services.
    - Consolidated net loss for the second quarter of 2008 was $4.2 million
      or ($0.19) per share. Consolidated net loss for the second quarter of
      2007 was $8.6 million or ($0.50) per share.

    2008 Second Quarter Operational Highlights

    - On May 14, 2008, the Company announced that it had won the "Best
      Abstract Reward" at the recent 11th Asia Pacific Congress of Nephrology
      in Kuala Lumpur, Malaysia in the "International Abstract" category for
      its GHRH Phase II results abstract.
    - On May 23, 2008, the Company's original licensing and development
      agreement with Janssen Pharmaceutica NV for Fentanyl TAIFUN(R) was
      amended to secure advanced milestones of $3,900 (2,500 euros) on the
      first local regulatory approval of the Phase III protocol and $3,100
      (2,000 euros) on clinical site readiness. Under the licensing
      agreement an additional milestone of $3,900 (2,500 euros) will be due
      as of the inclusion of the 7th patient in the study.
    - On July 28, 2008, the Company's PharmaForm subsidiary signed an office
      lease agreement with HEP-Davis Spring, L.P. Pursuant to the lease,
      PharmaForm will relocate operations from its current 50,000 square foot
      facility to approximately 69,872 square feet of space in a building
      located at 9825 Spectrum Drive, Austin, Texas for a term of 15 years,
      commencing on or after November 1, 2008. The Company estimates that
      PharmaForm's gross base rental obligation over the term of the Lease
      will be approximately $15.8 million.

    Financial Results

    Consolidated SG&A expenses totalled $1.7 million for the second quarter of
2008 compared to $4.1 million for the second quarter of 2007.
    R&D costs for the second quarter of 2008 were $2.9 million compared to
$4.6 million for the second quarter of 2007. The decrease in spending is
primarily attributable to the downsizing of our Finnish operation and lower
Fentanyl TAIFUN(R) related clinical trial spending.
    The consolidated net loss for the second quarter of 2008 was $4.2 million,
or ($0.19) per share compared with a net loss of $8.6 million or ($0.50) per
share for the second quarter of 2007.
    The Company had a cash balance of $7.6 million as of June 30, 2008
compared with $6.7 million as of December 31, 2007.

    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 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
    (Unaudited)

    Periods ended June 30, 2008 and 2007
    (in thousands of US dollars)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                       June 30,  December 31,
                                                          2008          2007
    -------------------------------------------------------------------------
    Assets

    Current assets:
      Cash                                         $     7,569   $     6,688
      Accounts receivable                                1,621         4,806
      Prepaid expenses                                     287           462
      -----------------------------------------------------------------------
                                                         9,477        11,956

    Restricted cash                                        600           600
    Property and equipment                               4,992         5,220
    Intangible assets                                   12,864        14,170
    Goodwill                                             6,457         6,457
    Other assets                                         2,292           738
    -------------------------------------------------------------------------
                                                   $    36,682   $    39,141
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity

    Current liabilities:
      Accounts payable and accrued liabilities     $     6,483   $     8,873
      Deferred revenue                                   2,453         2,598
      Current portion of long-term debt                    495           499
      -----------------------------------------------------------------------
                                                         9,431        11,970

    Deferred revenue                                     9,211        10,145
    Long-term debt                                       6,121         5,824
    Future income taxes                                  1,150         1,154

    Shareholders' equity:
      Common shares (unlimited authorized,
       21,615,577 and 11,768,294 common shares
       issued and outstanding with no par
       value at June 30, 2008 and
       December 31, 2007)                               66,346        54,227
      Preference shares (issuable in series,
       unlimited authorized, zero issued
       and outstanding)                                      -             -
      Warrants                                           2,814           364
      Additional paid-in capital                         7,909        11,702

      Accumulated other comprehensive income             3,110         3,110
      Deficit                                          (69,410)      (59,355)
      -----------------------------------------------------------------------
                                                       (66,300)      (56,245)

      Total shareholders' equity                        10,769        10,048

    Commitments, contingencies and guarantees
    -------------------------------------------------------------------------
                                                   $    36,682   $    39,141
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to unaudited consolidated financial statements.


    AKELA PHARMA INC.
    Consolidated Statements of Operations and Comprehensive Loss
    (Unaudited)

    Periods ended June 30, 2008 and 2007
    (in thousands of US dollars, except share and per share data)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                              Three months ended            Six months ended
                                         June 30,                    June 30,
                      -------------------------------------------------------
                              2008          2007          2008          2007
    -------------------------------------------------------------------------

    Revenues           $     3,222   $     3,409   $     7,092   $     4,783

    Expenses:
      Direct costs           1,750         1,448         3,438         2,241
      Selling,
       general and
       administrative        1,713         4,102         3,806         6,538
      Research and
       development           2,882         4,595         5,454         9,638
      Stock-based
       compensation            111           379           281           497
      Depreciation
       of property
       and equipment           445           245           908           409
      Amortization
       of intangible
       assets                  680           700         1,424         1,234
      Interest on
       long-term debt           40            50            71            97
      Foreign
       exchange               (181)       (1,127)          350          (714)
      -----------------------------------------------------------------------
                             7,440        10,392        15,732        19,940

    Net loss before
     income taxes           (4,218)       (6,983)       (8,640)      (15,157)

    Recovery of
     (provision for)
     income taxes:
      Current                    -          (119)            -          (138)
      Future                    47            (6)           93            80
      -----------------------------------------------------------------------
                                47          (125)           93           (58)

    -------------------------------------------------------------------------
    Net loss and
     comprehensive
     loss              $    (4,171)  $    (7,108)  $    (8,547)  $   (15,215)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and
     diluted net
     loss per share    $     (0.19)  $     (0.60)  $     (0.50)  $     (1.30)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted
     weighted average
     number of shares
     outstanding        21,615,577    11,762,938    16,938,309    11,674,506
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to unaudited consolidated financial statements.


    AKELA PHARMA INC.
    Consolidated Statement of Shareholders' Equity
    (Unaudited)

    Six month period ended June 30, 2008
    (in thousands of US dollars)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                                           Common Shares
                                                    -------------------------
                                                        Number       Dollars
    -------------------------------------------------------------------------

    Balance, December 31, 2007                      11 768 294   $    54 227
    Issuance of units                                8 625 000         8 045
    PharmaForm acquisition -
     Phase II Share Payment                          1 222 283         4 074
    Stock-based compensation                                 -             -
    Net loss                                                 -             -

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

    Balance, June 30, 2008                          21 615 577   $    66 346
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                               Accumu-
                                                lated
                                                other
                                Additional     compre-
                                   Paid-in    hensive
                       Warrants    Capital     income    Deficit       Total
    -------------------------------------------------------------------------

    Balance, December
     31, 2007         $     364  $  11 702  $   3 110  $ (59 355) $   10 048
    Issuance of units     2 450          -          -     (1 508)      8 987
    PharmaForm
     acquisition -
     Phase II Share
     Payment                  -     (4 074)         -          -           -
    Stock-based
     compensation             -        281          -          -         281
    Net loss                  -          -          -     (8 547)     (8 547)

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

    Balance,
     June 30, 2008    $   2 814  $   7 909  $   3 110  $ (69 410)  $  10 769
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to unaudited consolidated financial statements.


    AKELA PHARMA INC.
    Consolidated Statements of Cash Flows
    (Unaudited)

    Periods ended June 30, 2008 and 2007
    (in thousands of US dollars)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                              Three months ended            Six months ended
                                         June 30,                    June 30,

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

    Cash flows
     from operating
     activities:
      Net loss         $    (4 171)  $    (7 108)  $    (8 547)  $   (15 215)
      Adjustments for:
        Depreciation
         of property
         and equipment         445           245           908           409
        Amortization
         of intangible
         assets                680           700         1 424         1 234
        Stock-based
         compensation          111           379           281           497
        Unrealized
         foreign
         exchange
         (gain) loss          (250)            -           264             -
        Services
         rendered for
         shares                  -             -             -            52
        Future income
         taxes                 (47)            6           (93)          (80)
      Net changes
       in operating
       assets and
       liabilities              95           (28)           90        (1 268)
    -------------------------------------------------------------------------
                            (3 137)       (5 806)       (5 673)      (14 371)

    Cash flows from
     financing
     activities:
      Restricted cash            -          (600)            -          (600)
      Repayments of
       long-term debt         (107)       (1 242)         (326)       (1 860)
      Proceeds from
       issuance of
       long-term debt            -         1 200             -         1 200
      Proceeds from
       issuance of
       units                     -             -        10 200             -
      Unit issue costs        (163)            -        (1 213)            -
    -------------------------------------------------------------------------
                              (270)         (642)        8 661        (1 260)

    Cash flows from
     investing
     activities:
      Acquisition of
       PharmaForm, net
       of cash                   -           (55)            -        (8 180)
      Acquisition of
       property and
       equipment            (1 453)         (618)       (1 984)         (869)
      Addition to
       intangible
       assets                 (168)            -          (189)            -
    -------------------------------------------------------------------------
                            (1 621)         (673)       (2 173)       (9 049)

    Net increase
     (decrease) in
     cash                   (5 028)       (7 121)          815       (24 680)

    Cash, beginning
     of period              12 837        19 658         6 688        35 304

    Effect of
     exchange rate
     changes                  (240)         (417)           66         1 496

    -------------------------------------------------------------------------
    Cash, end of
     period            $     7 569   $    12 120   $     7 569   $     12 120
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to unaudited consolidated financial statements.
    




For further information:

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

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