Arius announces first quarter fiscal 2007 financial results



    TORONTO, April 12 /CNW/ - ARIUS Research Inc., ("ARIUS" or the "Company")
(TSX: ARI), a biotechnology company discovering and developing the next wave
of antibody therapeutics, today announced its financial and operational
results for the first quarter, ended February 28, 2007.
    "Our primary focus for 2007 will be to advance ARIUS-originated
antibodies towards clinical development," said Dr. David Young, President and
CEO. "During the quarter, we focused on moving our three lead antibody
programs into pre-IND enabling studies in preparation for toxicology studies
later in 2007 and human clinical trials planned for 2008. We also continued to
support our numerous research partnerships, delivering novel antibody
candidates to Takeda during the quarter and receiving a positive progress
report from Genentech."
    During the first quarter ended February 28, 2007, ARIUS achieved the
following:

    
    -  Genentech, Inc. reported positive progress on the CD63 antibody
       program ARIUS licensed to Genentech in March 2006, including
       conducting preclinical studies in a variety of cancer indications in
       order to move the lead antibody towards the clinic;
    -  Demonstrated significant positive results in animal models for the
       CD44 antibody in liver cancer, a new indication for this anti-cancer
       stem cell targeted antibody program;
    -  Successfully developed and delivered novel antibodies to Takeda
       Pharmaceutical Company Limited for evaluation under the research
       agreement with Takeda; and
    -  Received notice from the United States Patent and Trademark Office of
       two patent grants for antibodies within the CD63 program.
    

    CD44 Program:
    The Company engaged a manufacturer to begin process development and
manufacturing for its lead anti-CD44 monoclonal antibody under Current Good
Manufacturing Practices (cGMP). The Company expects to perform pre-clinical
toxicology studies in the second half of calendar 2007 in preparation for
filing a Phase I Investigational New Drug (IND) application in the first half
of 2008.

    CD59 Program:
    The Company selected an antibody to this target for preclinical
development based on potent tumor growth inhibition in several cancer types.
The Company has engaged Antitope Inc. to humanize the molecule and develop
expression cell lines, and expects to initiate process development and
manufacturing under cGMP in 2007. The Company expects to perform pre-clinical
toxicology studies in 2008 in preparation for filing a Phase I IND
application.

    Trop-2 Program:
    The Company selected an antibody to this target for preclinical
development based on efficacy in a human pancreatic cancer model. The Company
has engaged Antitope Inc. to humanize the molecule and develop expression cell
lines, and expects to initiate process development and manufacturing under
cGMP in 2007. The Company expects to perform pre-clinical toxicology studies
in 2008 in preparation for filing a Phase I IND application in the second half
of 2008.

    Additional Programs:
    Currently, ARIUS has antibody programs targeting the MCSP antigen, CD63,
and 37LRP in addition to several other undisclosed programs.

    Financial Results:
    All amounts are in Canadian dollars unless otherwise indicated.

    For the three-month period ended February 28, 2007, ARIUS recorded a net
loss of $2.3 million or $0.05 per share, compared to a net loss of $921,904 or
$0.09 per share for the three-month period ended February 28, 2006. The
increase in net loss is primarily attributable to higher research and
development and general administrative costs as the Company pursues
development of its lead compounds.
    Interest income amounted to $199,923 for the three-month period ended
February 28, 2007, compared with $328 for the same period in fiscal 2006. The
increase primarily resulted from higher average cash balances.
    Research and development expenditures amounted to $2.0 million for the
three-month period ended February 28, 2007, compared with $601,811 in the same
period in fiscal 2006. The increase was primarily the result of increased
product development activity and an increase in staffing levels.
    General and administrative expenses amounted to $590,089 for the
three-month period ended February 28, 2007, compared with $176,365 for the
same period in fiscal 2006. The increase was primarily the result of increased
consulting, legal and stock option remuneration costs as well as an expansion
of facilities and head count.
    As at February 28, 2007, the Company's cash and cash equivalents were
$4,824,896, short-term investments were $13,800,231, and the net working
capital position was $18,270,310 compared to $4,077,065, $16,135,490 and
$20,263,807, respectively as at November 30, 2006. The Company believes that
it has adequate financial resources for anticipated expenditures through the
end of the 2008 fiscal year and beyond.
    As at April 9, 2007, the Company had 44,750,964 Common Shares
outstanding, 37,075,334 Warrants and 3,610,705 Stock Options.

    Notice of Annual General Meeting:
    ARIUS will hold its Annual General Meeting of shareholders at the TSX
Conference Centre Gallery, 130 King Street West, Toronto, Ontario, on
April 17, 2007 at 10:00 a.m. EST.

    About ARIUS
    ARIUS is a biotechnology company discovering and developing the next wave
of antibody therapeutics. Established in 1999, ARIUS has built a proprietary
technology platform, FunctionFIRST(TM), that rapidly identifies and selects
antibodies based on their functional ability to affect disease. This antibody
generation engine has enabled ARIUS to assemble a portfolio of more than 400
antibody candidates. In addition to the antibodies it is developing in-house,
ARIUS has ongoing partnerships with key biotechnology and drug development
companies. ARIUS is listed on the TSX under the symbol "ARI". For further
information, visit www.ariusresearch.com.

    Forward-Looking Statements
    Certain statements in this news release constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, which involve known and unknown risks, uncertainties and other
factors that may cause our actual results to be materially different from any
future results, performance or achievements expressed or implied by such
statements. Forward-looking statements in this release include, but are not
limited to, ARIUS successfully advancing its new product programs as well as
licensing opportunities. These statements are only predictions and actual
events or results may differ materially. Factors that could cause such actual
events or results expressed or implied by such forward-looking statements to
differ materially from any future results expressed or implied by such
statements include, but are not limited to: early stage of development;
technology and product development; dependence on and management of current
and future corporate collaborations; future capital needs; uncertainty of
additional funding; no assurance of market acceptance; dependence on
proprietary technology and uncertainty of patent protection; intense
competition; manufacturing and market uncertainties; and government
regulation. These and other factors are described in detail in ARIUS' Annual
Report, forthcoming news releases and other filings with Canadian securities
regulatory authorities available at www.sedar.com. Forward-looking statements
are based on our current expectations and ARIUS is not obligated to update
such information to reflect later events or developments.

    The TSX has not reviewed and does not accept responsibility for the
    adequacy or accuracy of this statement.

    Summary Financial Statements attached below:


    
    ARIUS RESEARCH INC.
    (A DEVELOPMENT STAGE COMPANY)

    Interim Balance Sheets
    (Unaudited)

    -------------------------------------------------------------------------
                                                  February 28,   November 30,
                                                         2007           2006
    -------------------------------------------------------------------------

    Assets

    Current assets:
      Cash and cash equivalents                  $  4,824,896   $  4,077,065
      Short-term investments                       13,800,231     16,135,490
      Receivables                                     635,570        716,727
      Refundable tax credits                          510,219        400,000
      Prepaid expenses                                374,511        340,695
      -----------------------------------------------------------------------
                                                   20,145,427     21,669,977
    Property and equipment, net                     1,680,379      1,539,536

    -------------------------------------------------------------------------
                                                 $ 21,825,806   $ 23,209,513
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity

    Current liabilities:
      Accounts payable and accrued liabilities   $  1,356,597   $  1,211,528
      Current portion of capital lease obligation      24,398         29,630
      Current portion of unearned revenue and
       contract advances                              494,122        165,012
      -----------------------------------------------------------------------
                                                    1,875,117      1,406,170

    Leasehold inducements                             307,889        318,261
    Capital lease obligation                           21,674         27,934
    Unearned revenue and contract advances          2,523,180      2,263,091
    Shareholders' equity:
      Share capital:
        Common shares                              28,644,454     28,644,454
        Warrants                                    9,603,644      9,603,644
        Compensation warrants                         912,377        912,377
      Contributed surplus                           1,720,760      1,510,176
      Deficit                                     (23,783,289)   (21,476,594)
      -----------------------------------------------------------------------
                                                   17,097,946     19,194,057
    Guarantees
    Commitments

    -------------------------------------------------------------------------
                                                 $ 21,825,806   $ 23,209,513
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Interim Statements of Operations, Comprehensive Loss and Deficit
    (Unaudited)

    -------------------------------------------------------------------------
                                                                  Cumulative
                                   Three-month    Three-month          since
                                  period ended   period ended      inception
                                   February 28,   February 28,  on August 11,
                                          2007           2006           1999
    -------------------------------------------------------------------------

    Revenue:
      Product                     $     35,094   $          -   $     35,094
      Licensing fees                         -              -      3,119,691
      Research grant payments           73,360         16,034        273,663
      -----------------------------------------------------------------------
                                       108,454         16,034      3,428,448
    Expenses:
      Research and development,
       net of tax credits            1,957,328        601,811     18,749,563
      General and administrative       590,089        176,365      8,276,611
      Interest expense                     875        160,090        902,398
      -----------------------------------------------------------------------
                                     2,548,292        938,266     27,928,572
      -----------------------------------------------------------------------

    Loss before the undernoted      (2,439,838)      (922,232)   (24,500,124)

    Interest income                    199,923            328      1,565,758
    Loss on extinguishment of debt           -              -       (782,143)
    -------------------------------------------------------------------------

    Loss before income taxes        (2,239,915)      (921,904)   (23,716,509)

    Income taxes:
      Current                          (66,780)             -        (66,780)
    -------------------------------------------------------------------------

    Loss and comprehensive loss
     for the period                 (2,306,695)      (921,904)   (23,783,289)

    Deficit, beginning of period   (21,476,594)   (15,032,405)             -

    -------------------------------------------------------------------------
    Deficit, end of period        $(23,783,289)  $(15,954,309)  $(23,783,289)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Loss per share - basic and
     diluted                      $      (0.05)  $      (0.09)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted average common
     shares outstanding             44,750,964     10,640,206
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Interim Statements of Cash Flows
    (Unaudited)

    -------------------------------------------------------------------------
                                                                  Cumulative
                                   Three-month    Three-month          since
                                  period ended   period ended      inception
                                   February 28,   February 28,  on August 11,
                                          2007           2006           1999
    -------------------------------------------------------------------------
    Cash provided by (used in):

    Operating activities:
      Loss for the period         $ (2,306,695)  $   (921,904)  $(23,783,289)
      Items not involving cash:
        Amortization of:
          Property and equipment        81,415         34,280        970,573
          Deferred costs                     -              -         55,055
          Leasehold inducements        (10,372)             -        (25,039)
        Loss on disposal of equipment        -              -         23,532
        Write-off of leasehold
         improvements                        -              -         86,349
        Leasehold inducement                 -              -         89,148
        Non-cash stock-based
         compensation                  210,584         39,142        995,983
        Accretion of convertible
         debentures                          -         45,944        429,905
        Loss on extinguishment of
         debt                                -              -        782,143
        Services received for common
         shares                              -              -        400,024
        Write-off of investment              -              -         20,000
        Interest expense paid in
         common shares                       -              -        140,032
      -----------------------------------------------------------------------
                                    (2,025,068)      (802,538)   (19,815,584)
      Change in non-cash operating
       working capital items           671,390       (854,788)     2,853,599
      -----------------------------------------------------------------------
                                    (1,353,678)    (1,657,326)   (16,961,985)
    Financing activities:
      Issue of shares, warrants and
       units, net of issuance costs          -        985,377     38,281,778
      Issuance of convertible bridge
       loan, net                             -      2,253,600      2,196,619
      Repayment of convertible
       bridge loan, including costs          -              -     (2,408,886)
      Exercise of compensation
       warrants                              -              -          8,581
      Draw of bank line of credit            -              -        655,000
      Repayment of bank line of
       credit                                -        (85,000)      (655,000)
      Bridge loan                            -              -        300,000
      Repayment of bridge loan               -       (300,000)      (300,000)
      Repayment of capital lease and
       equipment financing
       obligations                     (11,492)       (21,263)      (272,293)
      -----------------------------------------------------------------------
                                       (11,492)     2,832,714     37,805,799
    Investing activities:
      Purchase of short-term
       investments                  (7,662,879)             -    (23,798,369)
      Maturity of short-term
       investments                   9,998,138              -      9,998,138
      Leasehold inducements                  -              -        243,780
      Long-term investment                   -              -        (20,000)
      Acquisition of property and
       equipment                      (222,258)             -     (2,451,453)
      Disposal of equipment                  -              -          8,986
      -----------------------------------------------------------------------
                                     2,113,001              -    (16,018,918)
    Increase in cash & cash
     equivalents                       747,831      1,175,388      4,824,896
    Cash & cash equivalents,
     beginning of period             4,077,065        152,967              -
    -------------------------------------------------------------------------
    Cash & cash equivalents,
     end of period                $  4,824,896   $  1,328,355   $  4,824,896
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    %SEDAR: 00013708E




For further information:

For further information: Warren Whitehead, C.M.A., Chief Financial
Officer, ARIUS Research Inc., (416) 862-2323 ext. 214,
wwhitehead@ariusresearch.com, contact@ariusresearch.com; James Smith, Investor
Relations, (416) 815-0700 ext. 229, jsmith@equicomgroup.com

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ARIUS RESEARCH INC.

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