Bioniche Reports Fiscal 2010 Third Quarter Results

- consolidated revenues for the quarter totalled $15.6 million including $9.5 million in licensing revenues -

(all figures are in Canadian dollars unless otherwise noted)

BELLEVILLE, ON, May 12 /CNW/ - Bioniche Life Sciences Inc. (TSX: BNC), a research-based, technology-driven Canadian biopharmaceutical company, today announced financial results for its Fiscal 2010 third quarter, ended March 31, 2010.

"The third quarter was another solid one for our Company in which further income was generated through licensing revenues from our U.S. pharmaceutical partner over and above revenues from animal health product sales," stated Graeme McRae, Chairman, President & CEO of Bioniche Life Sciences Inc.

The Company entered a partnership with Endo Pharmaceuticals Inc. (Endo) in July, 2009 for Urocidin(TM), a patented intravesical formulation of Mycobacterial Cell Wall-DNA Complex (MCC) developed by Bioniche for the treatment of non-muscle-invasive bladder cancer. A U.S. Food and Drug Administration (FDA) fast tracked Phase III registration study of the product for the refractory indication is currently underway and is expected to report results later this year. Milestone incentives under the agreement total up to US$110 million. These are linked to the achievement of future clinical, regulatory, and commercial milestones. The Company achieved the first milestone of $6.4 million (US$6.0 million) in October, 2009, and achieved two additional milestones in February, 2010 amounting to $8.3 million (US$8.0 million).

Fiscal 2010 Q3 Financial Results Highlights

Consolidated revenues for the quarter totalled $15.6 million, an increase of $8.2 million, or 111%, over the same period in Fiscal 2009. This figure includes $9.5 million in licensing and research collaboration revenues, in the form of payments to Bioniche from Endo for milestones achieved in the period. This positive result is somewhat offset by decreased sales of Animal Health products in the quarter as compared to last year. The sales decrease relates to recessionary conditions in all markets and the effect of unfavourable foreign exchange rate changes related to the high percentage of products that are exported by the Company.

Gross profit on product sales totalled $3.0 million in the quarter, as compared to $4.1 million in the same quarter last year. Gross profit as a percentage of product sales totalled 49.3% this quarter, compared to 54.9% in the third quarter of Fiscal 2009. The decrease is primarily due to recessionary effects on product sales.

For the quarter ended March 31, 2010, expenses before research and development totalled $7.2 million, as compared to $7.3 million in the same quarter last year. Management expects sales and marketing costs to increase over the remainder of Fiscal 2010 to sustain and grow the business.

Gross research and development (R&D) expenses in this quarter totalled $5.1 million, compared to $3.6 million for the same period in Fiscal 2009. The majority of these costs can be attributed to the ongoing Phase III clinical program for the Company's Urocidin(TM) bladder cancer treatment and to an increased focus on the development of animal health reproduction products and vaccines.

The basic and fully-diluted net gain per share for the second quarter of Fiscal 2010 was $0.06, compared to a loss per share of ($0.04) for the corresponding period in Fiscal 2009. Total common shares outstanding at March 31, 2010 were 72,499,759 as compared to 71,532,411 for the corresponding period in Fiscal 2009.

Earnings before interest, taxes, depreciation, amortization and foreign exchange (before research and development) during the third quarter of Fiscal 2010 were $9.2 million, as compared to $1.1 million for the same period in Fiscal 2009, a 736% increase. This significant increase relates to the intake of licensing milestone revenue in the quarter.

At March 31, 2010, the Company's net working capital totalled $22.5 million including $15.5 million in cash, excluding the current portion of non-refundable deferred licensing revenue, as compared to negative working capital of ($0.5 million) at June 30, 2009.

Long-term liabilities at March 31, 2010 totalled $10.5 million, excluding non-refundable deferred licensing revenue of $19.7 million, which compares to $8.2 million reported at June 30, 2009. The increase reflects the long-term portion of the required repayment of government assistance to the Industrial Technologies Office (ITO - formerly TPC) of $3.2 million, less repayments of capital leases and long-term debt. The up-front payment related to the licensing agreement with Endo is reflected as non-refundable deferred licensing revenue, the current portion being $1.5 million and long-term portion - $19.7 million. The total revenue received was $22.3 million, which will be brought into income over the next 15 years.

About Bioniche Life Sciences Inc.

Bioniche Life Sciences Inc. is a research-based, technology-driven Canadian biopharmaceutical company focused on the discovery, development, manufacturing, and marketing of proprietary products for human and animal health markets worldwide. The fully-integrated company employs approximately 200 skilled personnel and has three operating divisions: Human Health, Animal Health, and Food Safety. The Company's primary goal is to develop proprietary cancer therapies supported by revenues from marketed products in human and animal health. For more information, please visit www.Bioniche.com or www.sedar.com.

Except for historical information, this news release may contain forward-looking statements that reflect the Company's current expectation regarding future events. These forward-looking statements involve risk and uncertainties, which may cause, but are not limited to, changing market conditions, the successful and timely completion of clinical studies, the establishment of corporate alliances, the impact of competitive products and pricing, new product development, uncertainties related to the regulatory approval process, and other risks detailed from time to time in the Company's ongoing quarterly and annual reporting.

    
    Bioniche Life Sciences Inc.
    Amalgamated under the laws of Ontario

                     INTERIM CONSOLIDATED BALANCE SHEETS
                                 (Unaudited)

                                                          As at        As at
                                                       March 31,     June 30,
                                                           2010         2009
    (thousands of Canadian dollars)                           $            $
    -------------------------------------------------------------------------

    ASSETS
    Current
    Cash and cash equivalents                            15,428        5,950
    Accounts receivable                                   5,617        3,720
    Inventories                                           7,069        5,408
    Prepaid expenses and deposits                         1,877          569
    Income and other taxes recoverable                       98            -
    Restricted cash                                          53        1,227
    -------------------------------------------------------------------------
                                                         30,142       16,874
    -------------------------------------------------------------------------
    Long-term
    Property, plant and equipment                        11,690        9,494
    Intangible assets                                     6,172        6,792
    Goodwill                                                456          456
    Long-term accounts receivable                         1,124        1,025
    -------------------------------------------------------------------------
                                                         49,584       34,641
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Revolving credit facility                                 -        4,448
    Accounts payable and accrued liabilities              6,231       11,607
    Income and other taxes payable                            -          321
    Deferred government assistance                           28          342
    Current portion of long-term debt and obligations
     under capital leases                                   700          635
    Current portion of repayable government assistance      943            -
    Current portion of non-refundable deferred
     licensing revenue                                    1,486            -
    -------------------------------------------------------------------------
                                                          9,388       17,353
    -------------------------------------------------------------------------
    Long-term
    Long-term debt                                          878        1,149
    Obligations under capital leases                      1,125        1,225
    Repayable government assistance                       6,072        2,476
    Deferred government incentives                        2,414        3,335
    Non-refundable deferred licensing revenue            19,724            -
    -------------------------------------------------------------------------
                                                         39,601       25,538
    -------------------------------------------------------------------------
    Shareholders' equity
    Share capital                                        96,323       95,855
    Other paid-in capital                                 8,695        8,540
    Deficit                                             (95,035)     (95,292)
    -------------------------------------------------------------------------
                                                          9,983        9,103
    -------------------------------------------------------------------------
                                                         49,584       34,641
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Bioniche Life Sciences Inc.

       INTERIM CONSOLIDATED STATEMENTS OF INCOME (LOSS), COMPREHENSIVE
                         INCOME (LOSS), AND DEFICIT
                                 (Unaudited)

    For the three and nine months ended March 31

                                                        Current
                              Current    Last Year         Year    Last Year
    (thousands of Canadian    Quarter      Quarter      to Date      to Date
     dollars, except share       2010         2009         2010         2009
     and per share amounts)         $            $            $            $
    -------------------------------------------------------------------------

    REVENUE
    Sales                       6,129        7,352       19,064       23,947
    Gain on sale of
     intangible assets              -            -          883            -
    Research collaborations       758            -          758            -
    Licensing                   8,742            -       15,832            -
    -------------------------------------------------------------------------
                               15,629        7,352       36,537       23,947
    -------------------------------------------------------------------------

    EXPENSES
    Cost of sales
     (excluding
     amortization)              3,109        3,316        9,174       10,529
    Administration              1,718        1,614        5,149        4,711
    Marketing and selling       1,557        1,316        4,507        4,741
    Financial expenses            163          511          515        1,738
    Amortization of property,
     plant and equipment          242          333          809        1,009
    Amortization and writedown
     of intangible assets         189          199          620          608
    Foreign exchange loss         242           35          506           72
    -------------------------------------------------------------------------
                                7,220        7,324       21,280       23,408
    -------------------------------------------------------------------------
    Income before research
     and development expenses
     and other items            8,409           28       15,257          539
    Research and development
     expenses, gross            5,092        3,565       13,246       10,596
    Repayable government
     assistance                     -            -        3,884            -
    Less: government
     incentives, net           (1,067)        (424)      (2,260)      (1,430)
    -------------------------------------------------------------------------
    Income (loss) before
     income taxes               4,384       (3,114)         387       (8,627)
    Provision for income
     taxes (recovery)               -          (61)         130          116
    -------------------------------------------------------------------------

    Net income (loss) and
     comprehensive income
     (loss) for the period      4,384       (3,053)         257       (8,743)
    Transition adjustment
     due to change in
     accounting policy              -            -            -          (39)
    Deficit, beginning
     of period                (99,419)     (90,481)     (95,292)     (84,752)
    -------------------------------------------------------------------------

    Deficit, end of period    (95,035)     (93,534)     (95,035)     (93,534)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic and diluted net
     income (loss) per share     0.06        (0.04)        0.00        (0.13)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted-average number
     of common shares
     outstanding           72,349,969   71,411,362   72,075,862   69,863,738
    Weighted-average
     fully-diluted number
     of common shares      73,787,191   71,411,362   73,147,266   69,863,738



    Bioniche Life Sciences Inc.

                       INTERIM CONSOLIDATED STATEMENTS
                                OF CASH FLOWS
                                 (Unaudited)


    For the three and nine months ended March 31

                                                        Current
                              Current    Last Year         Year    Last Year
                              Quarter      Quarter      to Date      to Date
    (thousands of Canadian       2010         2009         2010         2009
     dollars)                       $            $            $            $
    -------------------------------------------------------------------------

    OPERATING ACTIVITIES
    Net income (loss) for
     the period                 4,384       (3,053)         257       (8,743)
    Add (deduct) non-cash
     items:
      Amortization                431          532        1,377        1,616
      Unrealized foreign
       exchange loss (gain)        (7)         233          (32)         600
      Change in unrealized
       loss on foreign
       currency embedded
       derivatives                  -            -            -           60
      Accreted interest on
       discounted receivables
       and interest-free
       loans and amortization
       of financial expenses      104          165          315        1,112
      Stock-based compensation     63           60          173          185
      Employee share
       ownership plan             200          166          337          506
      Government assistance
      obligation                    -            -        3,884            -
      Amortization of deferred
       government incentive      (464)           -       (1,308)           -
      Licensing revenue          (372)           -       (1,076)           -
      Write-off of
       intangible assets            -            -           52            -
      Gain on sale of
       intangible assets            -            -         (883)           -
      Deemed government
       assistance                   -            -          (73)           -
    -------------------------------------------------------------------------
                                4,339       (1,897)       3,023       (4,664)
    Decrease (increase) in
     restricted cash              138       (1,440)       1,174       (1,440)
    Net change in non-cash
     working capital
     balances                  (1,849)        (783)      (7,877)        (587)
    Net change in non-
     refundable deferred
     licensing revenue              -            -       22,286            -
    -------------------------------------------------------------------------
    Cash provided by
     (used in) operating
     activities                 2,628       (4,120)      18,606       (6,691)
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Government incentives
     received on account
     of property, plant
     and equipment                135            7          186           60
    Proceeds on sale of
     intangible assets              -            -          606            -
    Proceeds on disposal
     of property, plant
     and equipment                  -            -            6            -
    Purchases of property,
     plant and equipment       (2,283)        (152)      (3,659)        (675)
    -------------------------------------------------------------------------
    Cash used in
     investing activities      (2,148)        (145)      (2,861)        (615)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Proceeds from deferred
     government incentives          -          332            -          434
    Proceeds from repayable
     government assistance        691        1,597          744        2,373
    Payment of financing
     fees - revolving
     credit facility                -            -       (2,117)         (11)
    Proceeds from exercise
     of stock options              72            -           72            -
    Proceeds from revolving
     credit facility                -        6,201            -       23,177
    Repayment of revolving
     credit facility                -       (6,361)      (4,416)     (19,627)
    Repayment of capital
     lease obligations            (24)        (100)        (259)        (230)
    Repayment of senior and
     other long-term debt        (141)        (139)        (291)        (310)
    -------------------------------------------------------------------------
    Cash provided by (used in)
     financing activities         598        1,530       (6,267)       5,806
    -------------------------------------------------------------------------

    Net increase in cash
     and cash equivalents
     during the period          1,078       (2,735)       9,478        1,500
    Cash and cash equivalents,
     beginning of period       14,350        5,634        5,950        4,399
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period             15,428        2,899       15,428
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

%SEDAR: 00013159EF

SOURCE Telesta Therapeutics Inc.

For further information: For further information: Jennifer Shea, Vice-President, Communications, Investor & Government Relations, Telephone: (613) 966-8058, Cell: (613) 391-2097, Jennifer.Shea@Bioniche.com; or Brian Ford, Chief Financial Officer, Telephone: (613) 966-8058, Cell: (613) 242-2298, Brian.Ford@Bioniche.com

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Telesta Therapeutics Inc.

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