BioSyntech announces third quarter fiscal 2010 financial results

LAVAL, QC, Feb. 12 /CNW/ - BioSyntech, Inc. (TSX: BSY), a biotechnology company developing biotherapeutic thermogels for regenerative medicine, today announced its financial and operational results for the third quarter of fiscal 2010, ended December 31, 2009.

"During the quarter, we closed the second portion of our financing, raising $4.5 million in gross proceeds, which has provided us with the necessary resources to conduct our review of strategic alternatives with PriceWaterhouseCoopers," said Ms. Jeanne M. Bertonis, Chief Executive Officer for BioSyntech. "This financing has also allowed us to carry on with our Canadian/European pivotal trial for BST-CarGel(R), our lead product for cartilage repair; we expect final results from this trial in the summer of 2010."

Financial Review

The loss for the three-month period ended December 31, 2009 amounted to $3,380,184 ($0.03 per share), compared to $4,531,024 ($0.05 per share) for the three-month period ended December 31, 2008. The loss for the nine-month period ended December 31, 2009 amounted to $9,663,969 ($0.09 per share), compared to $9,882,640 ($0.10 per share) for the nine-month period ended December 31, 2008. Limited sales and significant expenses are still being incurred in the development of the Company's products. Research and development expenses have decreased and general and administrative expenses have increased in the third quarter of fiscal 2010 as the Company considers strategic alternatives. Accretion of convertible debentures has also increased during the third quarter of fiscal 2010 due to an increase in the level of debt. When compared with the third quarter of fiscal 2009, these changes are offset by restructuring charges.

During the three-month period ended December 31, 2009, the Company had revenues of $509 compared to revenues of $4,697 for the three-month period ended December 31, 2008. During the nine-month period ended December 31, 2009, the Company had revenues of $176,001 compared to revenues of $17,065 for the nine-month period ended December 31, 2008. The increases in revenues were mainly due to the sale of instrumentation product (Mach-1) during the quarter ended September 30, 2009.

Research and development ("R&D") expenses were $937,108 for the three-month period ended December 31, 2009 compared to $1,567,177 for the three-month period ended December 31, 2008, representing a decrease of $630,069. Research and development expenses were $2,658,035 for the nine-month period ended December 31, 2009 compared to $4,511,681 for the nine-month period ended December 31, 2008, representing a decrease of $1,853,646. The decrease in research and development expenses is primarily the result of lower salaries, benefits and clinical costs, partially offset by higher consulting fees.

General and administrative expenses were $641,106 for the three-month period ended December 31, 2009 compared to $540,404 for the three-month period ended December 31, 2008, representing an increase of $100,702. General and administrative expenses were $2,584,302 for the nine-month period ended December 31, 2009 compared to $2,205,637 for the nine-month period ended December 31, 2008, representing an increase of $378,665. The increases were mainly due to higher professional fees and consulting fees offset partially by lower salaries and benefits, marketing and investor relations expenses.

Accretion in the carrying value of the subordinated secured convertible debentures and interest amount to $1,773,570 for the three-month period ended December 31, 2009 compared to an accretion expense of $1,029,436 for the three-month period ended December 31, 2008, representing an increase of $744,134. Accretion expense was $4,224,035 for the nine-month period ended December 31, 2009 compared to an accretion expense of $1,819,255 for the nine-month period ended December 31, 2008, representing an increase of $2,404,780. The increase in accretion expense is due primarily to the issuance of new debentures in August 2009 and October 2009.

As of December 31, 2009, the Company had cash and cash equivalents in the amount of $1,437,858 compared to $3,803,036 at March 31, 2009. This decrease reflects mainly the funds used for operating and investing activities during the nine-month period ended December 31, 2009, net of the proceeds from the new debentures issued in August 2009 and October 2009.

On December 31, 2009, interest totaling $739,800 was paid to the Company's holders of 2008 debentures through the issuance of common shares. It has subsequently been determined that a miscalculation in the volume weighted average stock price resulted in the Company issuing excess common shares valued at approximately $182,000. The Company has accounted for this $182,000 as a prepayment of future interest payments owing under the debentures and is in the process of amending the debenture indenture to provide for this prepayment.

Subsequent to the quarter end from January 1, 2010 to February 10, 2010, BioSyntech issued 274,181 Common Shares upon conversion of debentures in the amount of $30,160.

The Company's Management's Discussion and Analysis is available on the BioSyntech website at www.biosyntech.com and in the Company's regulatory filings at www.sedar.com.

About BioSyntech

BioSyntech is a medical device Company specialized in the development, manufacturing and commercialization of advanced biotherapeutic thermogels for regenerative medicine (tissue repair) and therapeutic delivery. BioSyntech's platform technology is a family of hydrogels called BST-Gel(R), some of which are liquid at low temperature and solid at human body temperature. These gels can be injected or applied to a specific local site and offer beneficial properties for the local repair of damaged tissue such as cartilage, bone and chronic wounds and provide the benefit of avoiding invasive surgery. The Company's lead, late-stage product, BST-CarGel(R) is currently undergoing an international pivotal trial. For additional information, visit www.biosyntech.com

Forward-Looking Statements

This press release contains forward-looking statements and information which are subject to material risks and uncertainties. Such statements are not historical facts and are based on the current expectations of management. You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause actual results, future circumstances, or events to differ materially from those projected in the forward-looking information. These risks include, but are not limited to, those associated with our capacity to finance our activities, the adequacy, timing, and results of our clinical trials, the regulatory approval process, competition, securing and maintaining corporate alliances, market acceptance of BioSyntech's products, the availability of government and insurance reimbursements for BioSyntech's products, the strength of our intellectual property, the success of our research and development programs, reliance on subcontractors and key personnel, and other risks and uncertainties detailed from time-to time in our filings with the Canadian securities commissions.

Readers should not place undue reliance on the forward-looking information, given that (i) our actual results could differ materially from a conclusion, forecast or projection in the forward-looking information, and (ii) certain material factors or assumptions which were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information, could prove to be inaccurate. Additional information about (i) the material factors that could cause actual results to differ materially from the conclusion, forecast or projection in the forward-looking information, and (ii) the material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information, is contained in BioSyntech's annual report and other documents filed from time to time with the Canadian securities commissions which are available at www.sedar.com. These statements speak only as of the date they are made, and we assume no obligation to revise such statements as a result of any event, circumstance or otherwise, except in accordance with law.

    

    BioSyntech, Inc.
    A development stage company

                     INTERIM CONSOLIDATED BALANCE SHEETS

                                                   December 31,   March 31,
                                                      2009          2009
                                                       CA$           CA$
                                                   (unaudited)     (audited)
    -------------------------------------------------------------------------

    ASSETS

    Current assets
    Cash and cash equivalents                        1,437,858     3,803,036
    Accounts receivable                                153,148       208,179
    Investment tax credits receivable                1,634,470     1,132,053
    Inventories                                         32,151        56,892
    Prepaid expenses                                   418,467       156,565
    -------------------------------------------------------------------------
                                                     3,676,094     5,356,725
    -------------------------------------------------------------------------
    Property, plant and equipment                    1,594,641     1,839,825
    Deposits                                            13,000         2,760
    -------------------------------------------------------------------------
                                                     5,283,735     7,199,310
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' DEFICIENCY
    Current liabilities
    Accounts payable and accrued liabilities         1,449,533     1,719,501
    Deferred revenues                                   40,099        59,733
    Current portion of long-term debt                  603,590       591,937
    Subordinated secured convertible debentures     15,201,369     9,536,156
    -------------------------------------------------------------------------
                                                    17,294,591    11,907,327

    Long-term debt                                   1,492,966     1,950,408
    -------------------------------------------------------------------------
                                                    18,787,557    13,857,735
    -------------------------------------------------------------------------

    Shareholders' deficiency
    Share capital                                   52,417,680    50,608,283
    Warrants                                         2,790,757     1,881,784
    Equity portion of subordinated secured
     convertible debentures                          2,113,497     1,784,517
    Contributed surplus                              6,166,928     5,870,706
    Deficit accumulated during the development
     stage                                         (76,992,684)  (66,803,715)
    -------------------------------------------------------------------------
                                                   (13,503,822)   (6,658,425)

    Basis of presentation and going concern
     assumption
    Subsequent event
    -------------------------------------------------------------------------
                                                     5,283,735     7,199,310
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------




    BioSyntech, Inc.
    A development stage company

          INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT

                          Three-month periods         Nine-month periods
                          -------------------         ------------------
                       December 31,  December 31,  December 31,  December 31,
                          2009          2008          2009          2008
                           CA$           CA$           CA$           CA$
                       (unaudited)   (unaudited)   (unaudited)   (unaudited)
    -------------------------------------------------------------------------

    Revenues:
    Sales and services         509         4,697       176,001        17,065

    Expenses:
    Cost of sales and
     services                  918         1,542        62,187         8,799
    Research and
     development           937,108     1,567,177     2,658,035     4,511,681
    Investment tax
     credits              (148,384)     (213,095)     (502,417)     (644,095)
    General and
     administrative        641,106       540,404     2,584,302     2,205,637
    Stock-based
     compensation           (2,869)       87,698       297,262       157,614
    Interest on
     long-term debt
     and capital
     lease obligation       41,089        60,252       125,119       205,009
    Depreciation of
     property, plant
     and equipment          79,438        84,332       251,704       273,164
    Patents and
     trademarks             51,185        36,539        93,640        60,113
    Amortization of
     debt issue costs        8,734        13,734        29,105        44,169
    Accretion of
     carrying value of
     convertible
     debentures          1,773,570     1,029,436     4,224,035     1,819,255
    Interest revenue          (466)      (45,242)       (5,377)     (120,834)
    Restructuring costs          -     1,356,358        34,111     1,356,358
    (Gain) loss on
     foreign exchange         (736)       16,586       (11,736)       22,835
    -------------------------------------------------------------------------
                         3,380,693     4,535,721     9,839,970     9,899,705
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net loss and
     comprehensive loss (3,380,184)   (4,531,024)   (9,663,969)   (9,882,640)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Weighted average
     number of common
     shares
     outstanding:      106,081,973    96,087,015   104,306,995    95,821,687
    Basic and diluted
     loss per share          (0.03)        (0.05)        (0.09)        (0.10)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    BioSyntech, Inc.
    A development stage company

                INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

                      --------------------------- ---------------------------
                          Three-month periods         Nine-month periods
                      --------------------------- ---------------------------
                       December 31,  December 31,  December 31,  December 31,
                          2009          2008          2009          2008
                           CA$           CA$           CA$           CA$
                      -------------------------------------------------------
    OPERATING
     ACTIVITIES
    Loss for the period (3,380,184)   (4,531,024)   (9,663,969)   (9,882,640)
    Adjustments for:
      Depreciation of
       property, plant
       and equipment        79,438        84,332       251,704       273,164
      Amortization of
       debt issue costs      8,734        13,734        29,105        44,169
      Stock-based
       compensation         (2,869)       87,698       297,262       157,614
      Accretion of
       carrying value
       of convertible
       debentures        1,773,570     1,029,436     4,224,035     1,819,255
      Exchange gain         (7,600)       (6,666)       (8,990)       (6,676)
    Changes in
    ----------
     operating assets
     ----------------
     and liabilities
     ---------------
      Interest
       receivable                -        (2,241)            -        (5,714)
      Accounts
       receivable          188,722       (46,949)       55,031       (11,391)
      Investment tax
       credits            (148,384)     (213,095)     (502,417)     (644,095)
      Inventories                -       (16,676)       24,741           648
      Prepaid expenses
       and deposits         32,136       (17,814)      (90,044)       99,537
      Deferred revenues          -             -       (19,634)            -
      Accounts payable
       and accrued
       liabilities         (96,712)      801,747       (75,503)      911,996
    -------------------------------------------------------------------------
    Cash flows related
     to operating
     activities         (1,553,149)   (2,817,518)   (5,478,679)   (7,244,133)
    -------------------------------------------------------------------------
    INVESTING ACTIVITIES
    Purchase of
     property, plant and
     equipment              (6,520)      (27,770)       (6,520)     (227,154)
    -------------------------------------------------------------------------
    Cash flows related
     to investing
     activities             (6,520)      (27,770)       (6,520)     (227,154)
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES
    Issuance of
     subordinated
     secured
     convertible
     debentures          3,100,000             -     4,500,000    12,550,000
    Subordinated
     secured
     convertible
     debentures issue
     costs                (648,193)            -      (841,094)   (1,196,852)
    Repayment of
     long-term debt       (158,298)     (158,298)     (474,894)     (430,494)
    Share issue costs       (1,400)            -       (75,981)            -
    Issuance of share
     capital                 1,500             -         3,000             -
    -------------------------------------------------------------------------
    Cash flows related
     to financing
     activities          2,293,609      (158,298)    3,111,031    10,922,654
    -------------------------------------------------------------------------
    Effect of exchange
     rate changes on
     cash and cash
     equivalents             7,600         6,666         8,990         6,676
    -------------------------------------------------------------------------
    Net increase
     (decrease) in cash
     and cash
     equivalents           741,540    (2,996,920)   (2,365,178)    3,458,043
    Cash and cash
     equivalents,
     beginning of
     period                696,318     9,290,769     3,803,036     2,835,806
    -------------------------------------------------------------------------
    Cash and cash
     equivalents, end
     of period           1,437,858     6,293,849     1,437,858     6,293,849
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Additional
     information
    -------------------------------------------------------------------------
    Interest paid           41,516        66,407       125,119       206,057
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

%SEDAR: 00020217EF

SOURCE BIOSYNTECH, INC.

For further information: For further information: Casey Gurfinkel, The Equicom Group, (416) 815-0700 x283, cgurfinkel@equicomgroup.com

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BIOSYNTECH, INC.

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