Akela Pharma reports results for the second quarter of fiscal 2009



    
    www.akelapharma.com
    Toronto Stock Exchange Symbol: AKL
    

    MONTREAL, Aug. 14 /CNW Telbec/ - Akela Pharma Inc. (TSX: AKL), today
announced its financial results for the three and six months ended June 30,
2009.

    2009 Second Quarter Financial Highlights

    Total consolidated revenues for the second quarter of 2009 were $4.0
million, including $3.1 million of contract services, as compared to $3.2
million, including $2.7 million of contract services, for the same period
during the previous year.
    Consolidated net loss for the second quarter of 2009 was $1.1 million, or
($0.04) per share, versus $4.2 million, or ($0.19) per share, for the second
quarter of 2008. Operating results for the three months ended June 30, 2009
benefited from the Company's cost reduction plan, which affected a $2.0
million reduction in research and development expense, and revenue growth from
contract development and manufacturing services, which rose $0.4 million over
the previous year. The current quarter also reflects $0.2 million in
unanticipated cash refunds from a former contract research organization (CRO)
of Akela's wholly owned subsidiary, "Nventa," and $0.5 million in noncash
gains resulting from settlements to repay current obligations associated with
Akela's product development program. Excluding these one time gains, Akela's
consolidated net loss was $1.8 million or ($0.07) per share.
    The Company had a cash balance of $2.7 million as of June 30, 2009
compared with $2.3 million as of December 31, 2008.

    2009 Second Quarter Operational Highlights

    
    - On May 21, 2009, Akela acquired all of the issued and outstanding
      securities of Nventa Biopharmaceuticals Corporation ("Nventa") by way
      of plan of arrangement (the "Arrangement") under the Business
      Corporations Act (British Columbia), netting the Company cash of
      approximately $1.1 million after transaction costs. Subsequent to the
      close, the Company netted an additional $0.2 million in unanticipated
      cash refunds from a former CRO of Nventa, which was charged against
      SG&A during the second quarter of 2009.

    - On June 26, 2009 Akela announced that the shareholders of the Company
      had elected a new Board of Directors at its annual general meeting of
      the shareholders, held on the 25th of June in Toronto, Canada. The
      Board of Directors consists of six members, Gordon H. Busenbark, Michel
      Lagueux, Raj Maheshwari, Gregory M. McKee, Bob Rieder, and Prof. Robert
      O. Williams III. Mr. Maheshwari and Prof. Williams III were previously
      standing members of Akela's Board of Directors. Gregory M. McKee, and
      Bob Rieder were appointed to Akela's Board of Directors in late May of
      2009, subsequent to the Company's merger with Nventa, whereas Gordon H.
      Busenbark and Michel Lagueux are newly elected.

    - On June 17, 2009, Akela announced that it signed an amendment to its
      Fentanyl TAIFUN(R) license and codevelopment agreement with Teikoku
      Seiyaku Co. Ltd., in order to advance certain milestone payments to
      support the continued development of the product. According to the
      amendment to the original agreement announced in January 2006,
      milestone payments of up to $2.0 million will be advanced to be payable
      earlier than originally intended. Akela received $0.2 million upon
      signing of the amendment, and will receive $1.8 million subject to
      meeting a near term development milestone related to the pharmaceutical
      development of the Fentanyl TAIFUN(R).

    - On June 30, 2009, Akela announced that its Finnish subsidiary, Akela
      Pharma Oy, had reached an agreement with Tekes, the Finnish Funding
      Agency for Technology and Innovation, to settle a demand for repayment
      of certain grants totalling (euro)1.0 million plus interest. According
      to the terms of the agreement, Akela Pharma Oy will pay back the grants
      received plus interest, in equal quarterly instalments during a period
      of four years, starting in September 2010 with the last payment to
      occur in September 2014.

    - As part of a series of changes undertaken by the Board of Directors of
      Akela, Andrew Reiter is no longer Chief Financial Officer of the
      Company and Chief Operating Officer of any of its subsidiaries.
    

    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 in the area of hot melt extrusion, and also offers a
portfolio of other innovative technologies in drug product development,
manufacturing and analytical testing to the pharmaceutical and biotechnology
industries. Through its diverse offerings, PharmaForm solutions help clients
reach their development targets, reduce development costs and accelerate
time-to-market.
    Akela's common shares trade on The Toronto Stock Exchange ("TSX") under
the symbol "AKL" with 30.9 million shares outstanding.

    The audit committee of the company has reviewed and approved of the
contents of this press release. Summary financial statements are attached
below. The full financial statements and MD&A for the six months ended June
30, 2009 can be found on SEDAR at http://www.sedar.com.

    This press release contains statements which may constitute
forward-looking information under applicable Canadian securities legislation
or forward-looking statements within the meaning of the United States Private
Securities Litigation Reform Act of 1955. Such forward-looking statements or
information may include financial and other projections as well as statements
regarding the company's future plans, objectives, performance, revenues,
growth, profits, operating expenses or the company's underlying assumptions.
The words "may", "would", "could", "will", "likely", "expect", anticipate",
"intend", "plan", "forecast", "project", "estimate" and "believe" or other
similar words and phrases may identify forward-looking statements or
information. Persons reading this press release are cautioned that such
statements or information are only expectations, and that the company's actual
future results or performance may be materially different.
    Forward-looking statements or information in this press release include,
but are not limited to, statements or information concerning our ongoing drug
development programs and collaborations as well as the possible receipt of
future payments upon achievement of milestones.
    Such forward-looking statements or information involve known and unknown
risks, uncertainties and other factors that may cause our actual results,
events or developments to be materially different from results, events or
developments expressed or implied by such forward-looking statements or
information. Such factors include, among others, the possibility that risks
associated with requirements for approvals by government agencies such as the
FDA before products can be tested in clinical trials; the possibility that
such government agency approvals will not be obtained in a timely manner or at
all or will be conditioned in a manner that would impair our ability to
advance development; risks associated with the requirement that a drug
candidate be found safe and effective after extensive clinical trials; our
dependence on suppliers, collaborative partners and other third parties and
the prospects and timing for negotiating supply agreements, corporate
collaborations or licensing arrangements; our ability to attract and retain
key personnel; and other factors as described in detail in our filings with
the Canadian securities regulatory authorities at http:www.sedar.com.
    Assumptions underlying our expectations regarding forward-looking
statements or information contained in this press release include, among
others, that future clinical trail results will be favorable; that our drug
candidate will treat target diseases as intended; that we will raise enough
capital, on reasonable terms and in a timely manner; that we will retain our
key personnel; that we will obtain the necessary regulatory approvals.
    In the event that any of these assumptions prove to be incorrect, or in
the event that we are impacted by any of the risks identified above, we may
not be able to continue in our business as planned.
    For a complete discussion of the assumptions, risks and uncertainties
related to our business, you are encouraged to review our filings with
Canadian securities regulatory authorities, filed on SEDAR at
http://www.sedar.com.
    All forward-looking statements and information made herein are based on
our current expectations as of the date hereof and we disclaim any intention
or obligation to revise or update such forward-looking statements and
information to reflect subsequent events or circumstances, except as required
by law.

    
    AKELA PHARMA INC.
    Consolidated Balance Sheets
    (Unaudited)

    June 30, 2009 and 2008
    (in thousands of US dollars)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                       June 30,  December 31,
                                                          2009          2008
    -------------------------------------------------------------------------
    Assets

    Current assets:
      Cash                                         $     2,732   $     2,345
      Restricted cash                                      600           600
      Accounts receivable                                2,531         6,070
      Prepaid expenses and other current assets            822           346
      -----------------------------------------------------------------------
                                                         6,685         9,361

    Restricted cash and deposits                         1,258         1,258
    Property and equipment                               4,879         5,229
    Intangible assets                                    3,909         4,755
    Goodwill                                             6,546         6,457
    Other assets                                         2,011         1,397
    -------------------------------------------------------------------------
                                                   $    25,288   $    28,457
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Deficiency

    Current liabilities:
      Accounts payable and accrued liabilities     $     6,352   $     7,491
      Deferred revenue                                   4,345         4,515
      Current portion of long-term debt                  1,470         1,311
      -----------------------------------------------------------------------
                                                        12,167        13,317

    Deferred revenue                                    14,751        16,266
    Long-term debt                                       6,341         4,894
    Other long-term liabilities                            696           426

    Shareholders' deficiency:
      Common shares (unlimited authorized,
       30,890,338 and 21,655,577 common
       shares issued and outstanding with
       no par value at June 30, 2009 and
       December 31, 2008, respectively)                 67,544        66,346
      Warrants                                           2,955         2,814
      Additional paid-in capital                         8,269         8,105

      Accumulated other comprehensive income             3,110         3,110
      Deficit                                          (90,545)      (86,821)
      -----------------------------------------------------------------------
                                                       (87,435)      (83,711)

      Total shareholders' deficiency                    (8,667)       (6,446)

                                                   $    25,288   $    28,457
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


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

    Periods ended June 30, 2009 and 2008
    (in thousands of US dollars, except share and per share data)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                  Three months ended        Six months ended
                                        June 30,                June 30,
                              -----------------------------------------------
                                    2009        2008        2009        2008
    -------------------------------------------------------------------------

    Revenues                  $    4,022  $    3,222  $    7,792  $    7,092

    Expenses:
      Direct costs                 2,154       1,750       4,222       3,438
      Selling, general
       and administrative          1,638       1,713       3,072       3,806
      Research and development       892       2,882       2,281       5,454
      Restructuring                 (327)          -         349           -
      Stock-based compensation        80         111         157         281
      Depreciation of property
       and equipment                 356         445         728         908
      Amortization of
       intangible assets             423         680         846       1,424
      Interest on long-term
       debt                           40          40          77          71
      Unrealized gain on
       securities held for
       trading                      (141)          -         (54)          -
      Foreign exchange (gain)
       loss                         (128)       (181)       (168)        350
      -----------------------------------------------------------------------
                                   4,987       7,440      11,510      15,732

    Loss before under noted
     items                          (965)     (4,218)     (3,718)     (8,640)

    Other income (expense):
      Settlement with LRI              -           -       1,664           -
      Provision for repayment
       of government grants         (126)          -      (1,670)          -
      -----------------------------------------------------------------------
    Loss before income taxes      (1,091)     (4,218)     (3,724)     (8,640)

    Recovery of income taxes:
      Current                          -           -           -           -
      Future                           -          47           -          93
      -----------------------------------------------------------------------
                                       -          47           -          93

    -------------------------------------------------------------------------
    Net loss and
     comprehensive loss       $   (1,091) $   (4,171) $   (3,724) $   (8,547)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted net
     loss per share           $    (0.04) $    (0.19) $    (0.16) $    (0.50)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted
     weighted average number
     of shares outstanding    25,737,693  21,615,577  23,676,635  16,938,309
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    AKELA PHARMA INC.
    Notes to Consolidated Financial Statements
    (Unaudited)

    For the period ended March 31, 2008
    (in thousands of US dollars, except share and per share data unless
    otherwise noted)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                  Three months ended        Six months ended
                                        June 30,                June 30,
                                 --------------------    --------------------
                                    2009        2008        2009        2008
    -------------------------------------------------------------------------

    Cash flows from operating
     activities:
    Net loss                  $   (1,091) $   (4,171) $   (3,724) $   (8,547)
    Adjustments for:
      Depreciation of
       property and equipment        356         445         728         908
      Amortization of
       intangible assets             423         680         846       1,424
      Provision for repayment
       of government grants          126           -       1,670           -
      Resctructuring                (528)          -          43           -
      Stock-based compensation        80         111         157         281
      Unrealized foreign
       exchange (gain) loss          (91)       (490)       (134)        330
      Unrealized gain on
       securities held
       for trading                  (141)          -         (54)          -
      Future income taxes              -         (47)          -         (93)
    Net changes in working
     capital                         (26)         95       1,274          90
    -------------------------------------------------------------------------
                                    (892)     (3,377)        806      (5,607)

    Cash flows from financing
     activities:
      Repayments of long-term
       debt                         (164)       (107)       (326)       (326)
      Proceeds from issuance
       of units                        -           -           -      10,200
      Unit issue costs                 -        (163)          -      (1,213)
    -------------------------------------------------------------------------
                                    (164)       (270)       (326)      8,661

    Cash flows from investing
     activities:
      Acquisition of property
       and equipment                (454)     (1,453)     (1,246)     (1,984)
      Acquisition of Nventa        1,153           -       1,153           -
      Addition to intangible
       assets                          -        (168)          -        (189)
    -------------------------------------------------------------------------
                                     699      (1,621)        (93)     (2,173)

    Net increase (decrease)
     in cash                        (357)     (5,268)        387         881

    Cash, beginning of period      3,089      12,837       2,345       6,688
    -------------------------------------------------------------------------
    Cash, end of period       $    2,732  $    7,569   $   2,732  $    7,569
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    




For further information:

For further information: Taneli Jouhikainen, Acting CEO, (512) 632-7537;
www.akelapharma.com

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