ARIUS announces fourth quarter and year-end fiscal 2007 financial results



    TORONTO, Jan. 29 /CNW/ - ARIUS Research Inc., (TSX: ARI), a biotechnology
company discovering and developing the next wave of antibody therapeutics,
today announced its financial and operational results for the fourth quarter
and fiscal year, ended November 30, 2007.
    "Fiscal 2007 was a critical year in our development, highlighted by the
significant advancement we made with the pre-IND programs for our lead drug
candidates, our CD44 Cancer Stem Cell Program, our Trop-2 Signal Transduction
Program, our CD59 Complement Inhibitor Program and our CD9 Cancer Stem Cell
Program. The majority of our programs target cancer stem cells, an area that
cancer researchers are particularly excited about as cancer stem cells have
been implicated as the key cells responsible for the growth and spread of
cancer," said Dr. David Young, President and CEO. "Building on this momentum,
fiscal 2008 will be a pivotal year for us as we transition from a pre-clinical
to a clinical company with the mission of moving one or more of our lead
products into human clinical trials."

    
    Program Updates:

    CD44 Cancer Stem Cell Program

    -   Announced positive findings demonstrating no dose-limiting toxic
        effects of ARIUS' lead therapeutic, ARH460-16-2, at doses up to
        95 mg/kg in a dose-ranging pilot toxicology study in a non-human
        primate model.
    -   Achieved significant and potent tumor growth inhibitory activity in
        in vivo animal models of breast, prostate, liver, and AML cancers.
    -   Engaged the manufacturer Avid Bioservices to produce ARIUS' lead
        anti-CD44 MAb under Current Good Manufacturing Practices ("cGMP") for
        human clinical trials. Cell line producing the humanized anti-CD44
        antibody was successfully transferred to Avid.
    -   Presented key data at AACR, ASCO, ASCO's Breast Cancer Symposium,
        and AACR-EORTC.
    -   Met with FDA to discuss plans for the upcoming IND submission.
    -   Prepared to file a Phase I IND application and begin human clinical
        trials for the CD44 Cancer Stem Cell program in 2008.

    Trop-2 Signal Transduction Program

    -   Announced positive findings demonstrating a significant anti-tumor
        effect of the lead anti-Trop-2 antibody in animal models of human
        pancreatic cancer, inhibiting tumor growth by up to 100 percent.
    -   Discovered that ARIUS' Trop-2 antibody inhibits a key growth
        regulatory pathway in cancer cells.
    -   Trop-2 therapeutic antibody program was selected for presentation and
        press conference at the AACR-NCI-EORTC 2007 International Conference
        on Molecular Targets and Cancer Therapeutics. The abstract was one of
        only 12 selected from more than 900 abstracts for presentation.
    -   Engaged the manufacturer Laureate Pharma Inc. for the cGMP
        manufacture of humanized AR47A6.4.2 for Phase 1 clinical supply. Cell
        line producing the humanized anti-Trop-2 antibody was successfully
        transferred to Laureate.
    -   Preparing to complete the dose ranging toxicology studies in the
        first quarter of 2008, followed by a pre-IND meeting with the FDA in
        the third quarter of 2008, and the filing of a Phase I IND
        application in late 2008.

    CD59 Complement Inhibitor Program

    -   Announced positive findings demonstrating highly potent tumor
        regression in animal models of breast cancer at doses as low as
        0.2 mg/kg.
    -   Selected to discuss results of the CD59 therapeutic antibody program
        at the AACR-NCI-EORTC 2007 International Conference on Molecular
        Targets and Cancer Therapeutics press conference.
    -   Cell line producing humanized CD59 antibody was generated
        successfully; humanized mAb retains binding characteristics and
        potent in vivo activity.
    -   Preparing to perform preclinical toxicology studies in 2008 in
        preparation for filing a Phase I IND application.

    CD9 Cancer Stem Cell Program

    -   CD9 is more highly expressed in leukemia stems cells than normal
        stem cells.
    -   Presented positive findings demonstrating the ability of the lead
        anti-CD9 antibody to kill cancer stem cells in an in vivo model using
        cells from human leukemia patients.
    -   Demonstrated ability to kill cancer stem cells while potentially
        leaving normal cells alone.

    CD63 Antibody Program

    -   Licensed to Genentech, Inc. in March 2006, the CD63 program continues
        to advance in preclinical studies in a variety of cancer indications
        as part of a program to move the lead antibody towards the clinic.

    Takeda Collaboration

    -   Discovered and delivered novel antibodies to Takeda under the terms
        of the research collaboration agreement, ARIUS has successfully met
        its obligations to date and has received all scheduled research
        payments from Takeda.

    Additional Product Updates

    -   Currently, ARIUS has antibody programs targeting the MCSP antigen and
        37LRP, in addition to several other undisclosed programs.
    -   Furthered lead optimization for antibodies covering additional novel
        targets generated using ARIUS' proprietary FunctionFIRST(TM)
        technology.

    Other Highlights:

    -   Granted eight US patents for antibodies and one European patent to
        date, and currently have 18 issued or allowed patents covering its
        antibody programs and discovery platform and over 185 patents pending
        worldwide.

    -   Promoted Susan Hahn, PhD to the position of Vice President of
        Development.

    -   Appointed Mr. James Rae and Mr. Joseph Zakrzewski to its Board of
        Directors and also appointed Mr. Carl Gordon as non-executive Chair
        of the Board of Directors.
    

    Financial Results:

    All amounts are in Canadian dollars unless otherwise indicated.

    For the year ended November 30, 2007, the Company recorded a net loss of
$11,057,039 compared to a net loss of $6,444,189 for the year ended November
30, 2006. The increase in net loss was the result of higher research and
development, general administrative and foreign exchange expenses and lower
revenues, partially offset by lower interest expense and the absence of a loss
on extinguishment of debt. For the three-month period ended November 30, 2007,
the Company recorded a net loss of $2,952,338 compared to a net loss of
$3,623,727 for the three-month period ended November 30, 2006. This decrease
in net loss for the three-month period is primarily the result of lower
research and development, general and administrative and interest expenses and
the 2006 one time loss on extinguishment of debt of $782,143 relating to the
repayment of the convertible bridge loan, partially offset by higher foreign
exchange losses and income tax expense.
    Revenue decreased to $1,144,094 for the year ended November 30, 2007,
compared to $2,847,761 for the year ended November 30, 2006. The decrease
during the year ended November 30, 2007, was primarily the result of the
recognition of licensing fee revenue from Genentech in the fiscal 2006 period
and a decrease in financial contributions from the National Research Council's
Industrial Research Assistance Program, partially offset by the recognition of
product and research contract revenue from the Takeda collaboration and the
recognition of unearned revenue for PDL BioPharma Inc. in the fiscal 2007
period. For the three-month period ended November 30, 2007, the Company's
revenue increased to $298,120 compared to $179,751 for the three-month period
ended November 30, 2006. The increase was primarily the result of the
recognition of product and research contract revenue from the Takeda
collaboration.
    Interest income decreased to $679,457 for the year ended November 30,
2007, compared to $726,308 for the same period in fiscal 2006. For the
three-month period ended November 30, 2007, the Company's interest income
decreased to $142,329 compared to $329,342 for the same period in fiscal 2006.
The decrease in interest income is the result of lower average cash and
investment balances.
    Research and development costs amounted to $8,606,344 for the year ended
November 30, 2007, compared to $5,688,029 for the same period in fiscal 2006.
For the three-month period ended November 30, 2007, the Company's research and
development costs amounted to $2,144,353 compared to $2,512,366 for the same
period in fiscal 2006. For the year, this increase is primarily the result of
increased product development activity, including process development and
scale-up, as the Company prepares several of its programs for the clinic as
well as an increase in staffing levels and stock option remuneration expense.
For the three month period, the decrease in research and development costs is
primarily the result of decreased stock option remuneration expense and a
decrease in legal expense for patents, offset by an increase in staffing
levels.
    General and administrative expenses increased to $3,257,430 for the year
ended November 30, 2007, compared to $2,833,802 for the same period in fiscal
2006. For the three-month period ended November 30, 2007, the Company's
general and administrative expenses decreased to $691,910 compared to $806,589
for the same period in fiscal 2006. The increase for the year is the result of
increased head count, stock option remuneration expense, and severance costs,
partially offset by decreased consulting and legal costs. The decrease for the
three month period is the result of a decrease in stock option remuneration
expense, professional fees and salaries, partially offset by an increase in
consulting and directors fees.
    As at November 30, 2007, the Company's cash and cash equivalents,
short-term investments and working capital position were $5,635,365,
$6,825,190 and $9,088,712 respectively, compared with November 30, 2006
balances of $4,077,065, $16,135,490 and $20,222,321, respectively. The Company
believes that it has adequate financial resources for anticipated expenditures
until the fourth quarter of fiscal 2008.

    Conference Call

    ARIUS will host a conference call today (Tuesday January 29, 2008 at 8:00
a.m. ET) to discuss its fourth quarter and year-end fiscal 2007 results. To
access the conference call by telephone, dial 416-644-3414 or 1-800-731-6941.
Please connect approximately five minutes prior to the beginning of the call
to ensure participation. A live audio webcast of the conference call will be
available at www.ariusmabs.com. Please connect at least 15 minutes prior to
the conference call to ensure adequate time for any software download that may
be required to join the webcast. The webcast will be archived at the above
website for 365 days.

    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 500
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.ariusmabs.com

    Financial Information to follow:

    
    ARIUS RESEARCH INC.
    (A DEVELOPMENT STAGE COMPANY)

                               BALANCE SHEETS

    As of November 30, 2007 and 2006
    -------------------------------------------------------------------------
                                                         2007           2006
                                                            $              $
    -------------------------------------------------------------------------

    Assets

    Current assets:
      Cash and cash equivalents                     5,635,365      4,077,065
      Short-term investments                        6,825,190     16,135,490
      Receivables                                     230,126        716,727
      Refundable tax credits                          400,000        400,000
      Prepaid expenses                                387,674        340,695
      -----------------------------------------------------------------------
                                                   13,478,355     21,669,977

    Facilities and equipment, net                   1,889,921      1,539,536

    -------------------------------------------------------------------------
                                                   15,368,276     23,209,513
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity

    Current liabilities:
      Accounts payable and accrued liabilities      2,034,972      1,211,528
      Accrued loss on embedded foreign exchange
       derivative                                     296,064              -
      Current portion of leasehold inducements         41,484         41,486
      Current portion of capital lease obligation      25,710         29,630
      Current portion of deferred revenue and
       contract advances                            1,991,413        165,012
      -----------------------------------------------------------------------
                                                    4,389,643      1,447,656

    Leasehold inducements                             235,291        276,775

    Capital lease obligation                            2,224         27,934

    Deferred revenue and contract advances          1,758,898      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                           2,355,378      1,510,176
      Deficit                                     (32,533,633)   (21,476,594)
      -----------------------------------------------------------------------
                                                    8,982,220     19,194,057

    -------------------------------------------------------------------------
                                                   15,368,276     23,209,513
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    ARIUS RESEARCH INC.
    (A DEVELOPMENT STAGE COMPANY)

           STATEMENTS OF OPERATIONS, COMPREHENSIVE LOSS AND DEFICIT

    -------------------------------------------------------------------------
                                                                 Period from
                                                               incorporation
                                                                on August 11,
                                                                     1999 to
                                      Years ended November 30,   November 30,
                                          2007           2006           2007
                                             $              $              $
    -------------------------------------------------------------------------

    Revenue:
      Research contract                746,780              -        746,780
      Product                          158,942              -        158,942
      Licensing fees                   165,012      2,678,087      3,284,703
      Research grant payments           73,360        169,674        273,663
      -----------------------------------------------------------------------
                                     1,144,094      2,847,761      4,464,088

    Expenses:
      Research and development,
       net of tax credits of
       $200,000 (2005 - $200,000)    8,606,344      5,688,029     25,398,579
      General and administrative     3,257,430      2,833,802     10,997,811
      Foreign exchange loss (gain)     764,695        (38,626)       710,836
      Interest expense                   2,874        752,910        904,397
      -----------------------------------------------------------------------
                                    12,631,343      9,236,115     38,011,623
      -----------------------------------------------------------------------

    Loss before the undernoted     (11,487,249)    (6,388,354)   (33,547,535)

    Interest income                    679,457        726,308      2,045,292
    Loss on extinguishment of debt           -       (782,143)      (782,143)
    -------------------------------------------------------------------------

    Loss before income taxes       (10,807,792)    (6,444,189)   (32,284,386)

    Income taxes:

    Current                           (249,247)             -       (249,247)
    -------------------------------------------------------------------------

    Loss and comprehensive loss
     for the period                (11,057,039)    (6,444,189)   (32,533,633)

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

    -------------------------------------------------------------------------
    Deficit, end of period         (32,533,633)   (21,476,594)   (32,533,633)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Loss per share -
     basic and diluted                   (0.25)         (0.18)

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

    Weighted average common shares
     outstanding                    44,750,964     35,751,822

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


    ARIUS RESEARCH INC.
    (A DEVELOPMENT STAGE COMPANY)

                           STATEMENTS OF CASH FLOWS

    -------------------------------------------------------------------------
                                                                 Period from
                                                               incorporation
                                                                on August 11,
                                                                     1999 to
                                      Years ended November 30,   November 30,
                                          2007           2006           2007
                                             $              $              $
    -------------------------------------------------------------------------
    Cash provided by (used in):

    Operating activities:
      Loss for the period          (11,057,039)    (6,444,189)   (32,533,633)
      Items not involving cash:
        Amortization of:
          Facilities and equipment     389,713        215,793      1,278,871
          Deferred costs                     -         55,055         55,055
          Leasehold inducements        (41,486)        (5,852)       (56,153)
        Loss/(Gain) on disposal
         of equipment                        -         31,518         23,532
        Write-off of leasehold
         improvements                        -              -         86,349
        Leasehold inducement                 -         71,095         89,148
        Non-cash stock-based
         compensation                  845,202        593,327      1,630,601
        Accretion of convertible
         debentures                          -        396,511        429,905
        Loss on extinguishment
         of debt                             -        782,143        782,143
        Services received for
         common shares                       -              -        400,024
        Write-off of investment              -              -         20,000
        Interest expense paid in
         common shares                       -        140,032        140,032
      Change in non-cash operating
        working capital items        2,881,338      1,016,936      5,063,547
      -----------------------------------------------------------------------
                                    (6,982,272)    (3,147,631)   (22,590,579)
    Financing activities:
      Issue of shares, warrants
       and units, net of issuance
       costs                                 -     24,853,112     38,281,778
      Issuance of convertible
       bridge loan, net                      -      2,126,619      2,196,619
      Repayment of convertible
       bridge loan, including costs          -     (2,338,886)    (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                     (29,630)       (91,019)      (290,431)
      -----------------------------------------------------------------------
                                       (29,630)    24,164,826     37,787,661
    Investing activities:
      Purchase of short-term
       investments                 (27,015,587)   (16,135,490)   (43,151,077)
      Maturity of short-term
       investments                  36,325,887              -     36,325,887
      Leasehold inducements                  -        243,780        243,780
      Long-term investment                   -              -        (20,000)
      Acquisition of facilities
       and equipment                  (740,098)    (1,201,387)    (2,969,293)
      Disposal of equipment                  -              -          8,986
      -----------------------------------------------------------------------
                                     8,570,202    (17,093,097)    (9,561,717)

    Increase (decrease) in cash
     and cash equivalents            1,558,300      3,924,098      5,635,365

    Cash and cash equivalents,
     beginning of period             4,077,065        152,967              -

    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period                   5,635,365      4,077,065      5,635,365
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    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.

    %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@ariusmabs.com, contact@ariusmabs.com; James Smith, Investor
Relations, (416) 815-0700 ext. 229, jsmith@equicomgroup.com

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ARIUS RESEARCH INC.

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