ConjuChem Announces Fiscal 2009 Third Quarter Financial Results

MONTREAL, Sept. 14 /CNW/ - ConjuChem Biotechnologies (TSX:CJB) today announced financial results for the third quarter of fiscal 2009, ended July 31, 2009.

"During our fiscal third quarter, we had the opportunity to showcase the positive results from our Phase II program for PC-DAC(TM):Exendin-4 and from our PC-Insulin program at the American Diabetes Association's 69th Annual Scientific Sessions. We also continued to progress our partnering discussions for these products, focusing in particular on the advantageous features of PC-DAC(TM):Exendin-4, such as its excellent tolerability profile and its administration using a small volume, highly soluble liquid formulation," said Mark Perrin, President and CEO of ConjuChem. "Despite challenging economic conditions, subsequent to the end of the quarter we successfully completed a transaction that provided approximately $5 million in non-dilutive capital, in addition to the $4.3 million in cash and cash equivalents and $1.7 million in receivables available to the Company at the end of the fiscal quarter. These additional resources will provide us with greater flexibility to execute our business plan and drive our partnering discussions."

Financial Results

Net loss for the quarter ended July 31, 2009 amounted to $1.4 million compared to $8.7 million for the quarter ended July 31, 2008. Net loss for the nine-month period ended July 31, 2009 amounted to $13.3 million compared to $28.5 million for the nine-month period ended July 31, 2008. The decrease in the net loss over the nine-month periods is mainly attributable to a decrease in the accretion in the carrying value of the convertible senior unsecured notes and interest due to the early redemption of the convertible senior unsecured notes during the nine-month period of the 2008 fiscal year, a decrease in R&D expenses of $6.6 million, the reversal of tax-related reserves following the results of tax audits and by the reversal of a tax withholding contingency in the nine-month period ended July 31, 2009.

The Company recorded interest income on cash and investments that amounted to $15,772 for the quarter ended July 31, 2009, compared to $306,076 for the quarter ended July 31, 2008. The Company recorded interest income on cash and investments that amounted to $154,289 for the nine-month period ended July 31, 2009, compared to $1,254,657 for the nine-month period ended July 31, 2008. The decrease in interest income was a result of a reduced investment portfolio base combined with a general decrease in market rates.

Gross research and development expenses amounted to $1.5 million for the quarter ended July 31, 2009, compared to $6.2 million for the quarter ended July 31, 2008. Gross research and development expenses amounted to $8.6 million for the nine-month period ended July 31, 2009, compared to $15.2 million for the nine-month period ended July 31, 2008. The decrease is due to the completion of the Company's Phase II clinical trials for PC-DAC(TM):Exendin-4.

General and administrative reflects a recovery amount of $0.5 million for the quarter ended July 31, 2009, compared to an expense $1.2 million for the quarter ended July 31, 2008. General and administrative costs amounted to $2.1 million for the nine-month period ended July 31, 2009, compared to $4.0 million for the nine-month period ended July 31, 2008. The decrease in general and administrative expenses is largely attributable to fees related to the early redemption of the convertible senior unsecured notes in the nine-month period ended July 31, 2008 and by the reversal of a tax withholding contingency in the nine-month period ended July 31, 2009.

As at July 31, 2009, the Company had cash and cash equivalents and investments totaling $4.3 million and an additional $1.7 million in accounts receivables and investment tax credits receivable, compared to $21.1 million as at October 31, 2008. As at July 31, 2009, working capital amounted to $2.5 million, compared to $12.0 million as at October 31, 2008. Subsequent to the end of the quarter, the Company completed a transaction that provided approximately $5 million in non-dilutive capital. ConjuChem believes that its current cash and cash equivalents, marketable securities and interest income will be sufficient to carry out current research and development plans and operations into the second fiscal quarter of 2010.

About ConjuChem

ConjuChem, a developer of next generation medicines from therapeutic peptides, creates long-acting compounds based on its proprietary bioconjugation platform technology. The Company has two major development programs: PC-DAC(TM):Exendin-4, a GLP-1 receptor agonist in Phase II clinical development and PC-Insulin, a long-acting basal insulin in preclinical development.

Detailed descriptions of the Company and its technologies can be viewed on the Company's website www.conjuchem.com.

Forward-Looking Statements

Some of the statements made herein may constitute forward-looking statements. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause ConjuChem's actual results, performance or achievements to be materially different from those expressed or implied by any of the Company's statements. Actual events or results may differ materially. We disclaim any intention, and assume no obligation, to update these forward-looking statements.

    
    ConjuChem Biotechnologies Inc.

                       UNAUDITED INTERIM BALANCE SHEETS

    As at

                                                       July 31,   October 31,
                                                          2009          2008
                                                             $             $
                                                 ----------------------------
    ASSETS
    Current
    Cash and cash equivalents                          600,239     2,187,423
    Investments                                      3,704,941    18,934,737
    Accounts receivable                              1,013,069       160,644
    Investment tax credits receivable                  680,000       542,000
    Prepaid expenses                                   278,195       229,006
                                                 ----------------------------
    Total current assets                             6,276,444    22,053,810
    Property, plant and equipment                      677,072       841,685
    Intangible assets                                    6,942        11,108
    Other assets                                       653,325             -
                                                 ----------------------------
                                                     7,613,783    22,906,603
                                                 ----------------------------
                                                 ----------------------------

    LIABILITIES AND SHAREHOLDERS' DEFICIENCY
    Current liabilities
    Accounts payable and accrued liabilities         3,803,428    10,080,463
                                                 ----------------------------
    Total current liabilities                        3,803,428    10,080,463
    Convertible unsecured subordinated debentures   15,767,248    13,634,906
                                                 ----------------------------
                                                    19,570,676    23,715,369
                                                 ----------------------------

    Shareholders' deficiency
    Capital stock                                  266,858,635   266,823,735
    Warrants                                        10,817,394    10,817,394
    Equity portion of convertible unsecured
     subordinated debentures                         5,184,867     5,193,793
    Contributed surplus                             50,893,422    48,818,826
    Deficit                                       (345,711,211) (332,390,857)
    Accumulated other comprehensive loss                     -       (71,657)
                                                 ----------------------------
    Total shareholders' deficiency                 (11,956,893)     (808,766)
                                                 ----------------------------
                                                     7,613,783    22,906,603
                                                 ----------------------------
                                                 ----------------------------


    ConjuChem Biotechnologies Inc.

    UNAUDITED INTERIM STATEMENTS OF DEFICIT

                             Three-months ended           Nine-months ended
                           July 31,      July 31,      July 31,      July 31,
                              2009          2008          2009          2008
                                 $             $             $             $
                     --------------------------------------------------------
    Deficit,
     beginning of
     period           (344,298,290) (312,739,566) (332,390,857) (292,973,699)
    Net loss for
     the period         (1,412,921)   (8,736,726)  (13,320,354)  (28,502,593)
                     --------------------------------------------------------
    Deficit, end
     of period        (345,711,211) (321,476,292) (345,711,211) (321,476,292)
                     --------------------------------------------------------
                     --------------------------------------------------------



    ConjuChem Biotechnologies Inc.

                       UNAUDITED INTERIM STATEMENTS OF
                      OPERATIONS AND COMPREHENSIVE LOSS

                             Three-months ended           Nine-months ended
                           July 31,      July 31,      July 31,      July 31,
                              2009          2008          2009          2008
                                 $             $             $             $
                     --------------------------------------------------------

    REVENUES
    Contract revenues       13,589         8,827        29,032        60,731
    Interest income         15,772       306,076       154,289     1,254,657
                     --------------------------------------------------------
                            29,361       314,903       183,321     1,315,388
                     --------------------------------------------------------

    EXPENSES
    Research and
     development         1,532,858     6,153,681     8,597,138    15,233,963
    Investment tax
     credits            (1,467,174)     (100,000)   (2,797,174)     (300,000)
                     --------------------------------------------------------
    Net research and
     development expenses   65,684     6,053,681     5,799,964    14,933,963
    General and
     administrative
     expenses             (452,509)    1,198,403     2,058,651     3,996,354
    Amortization of
     property, plant
     and equipment          39,882        55,411       124,568       165,511
    Amortization of
     intangible assets       1,389         2,462         4,166         7,386
    Stock-based
     compensation          681,835       643,099     2,074,596     2,015,937
    Financial charges        2,434         2,987        11,331        13,294
    Foreign exchange
     loss (gain)           (62,125)       60,543        55,167       251,818
    Accretion in
     carrying value of
     convertible senior
     unsecured notes
     and interest                -             -             -     5,504,427
    Accretion in
     carrying value of
     convertible
     unsecured
     subordinated
     debentures and
     interest            1,165,692     1,035,043     3,375,232     2,661,852
    Loss on redemption
     of long-term
     investments                 -             -             -       267,439
                     --------------------------------------------------------
                         1,442,282     9,051,629    13,503,675    29,817,981
                     --------------------------------------------------------
    Net loss for
     the period         (1,412,921)   (8,736,726)  (13,320,354)  (28,502,593)

    OTHER COMPREHENSIVE
     INCOME (LOSS)
    Unrealized gain/
     (loss) on
     investments              (528)      (17,631)       71,657       (14,899)
                     --------------------------------------------------------
    Comprehensive loss
     for the period     (1,413,449)   (8,754,357)  (13,248,697)  (28,517,492)
                     --------------------------------------------------------
                     --------------------------------------------------------

    Basic and diluted
     loss per share          (0.01)        (0.04)        (0.05)        (0.12)
                     --------------------------------------------------------
                     --------------------------------------------------------

    Weighted average
     number of common
     shares outstanding
     during the
     period            250,432,418   246,094,442   250,514,149   242,188,235
                     --------------------------------------------------------
                     --------------------------------------------------------


    ConjuChem Biotechnologies Inc.

                 UNAUDITED INTERIM STATEMENTS OF CASH FLOWS

                             Three-months ended           Nine-months ended
                           July 31,      July 31,      July 31,      July 31,
                              2009          2008          2009          2008
                                 $             $             $             $
                     --------------------------------------------------------
    OPERATING
     ACTIVITIES
    Net loss            (1,412,921)   (8,736,726)  (13,320,354)  (28,502,593)
    Items not
     affecting cash:
      Amortization of
       property, plant
       and equipment        39,882        55,411       124,568       165,511
      Amortization
       of intangible
       assets                1,389         2,462         4,166         7,386
      Amortization of
       premium on
       long-term
       investments               -             -             -        (8,436)
      Stock-based
       compensation        681,835       643,099     2,074,596     2,015,937
      Accretion in
       carrying value
       of convertible
       senior unsecured
       notes and interest        -             -             -     5,504,427
      Accretion in
       carrying value of
       convertible
       unsecured
       subordinated
       debentures          749,064       672,613     2,158,316     1,630,769
      Gain on proceeds
       from sales of
       property, plant
       and equipment        (4,019)            -        (9,272)            -
      Loss on
       redemption of
       long-term
       investments               -             -             -       267,439
                     --------------------------------------------------------
                            55,230    (7,363,141)   (8,967,980)  (18,919,560)
      Net changes
       in non-cash
       working
       capital
       balances
       relating to
       operations       (3,777,978)      (63,878)   (7,316,649)      462,379
                     --------------------------------------------------------
    Cash flows
     relating to
     operating
     activities         (3,722,748)   (7,427,019)  (16,284,629)  (18,457,181)
                     --------------------------------------------------------

    INVESTING ACTIVITIES
    Acquisition of
     investments        (1,221,596)   (6,137,130)  (10,264,700)  (27,832,011)
    Proceeds on
     maturities of
     investments         3,488,708    15,823,221    25,566,153    37,338,629
    Acquisition
     long-term
     investments                 -             -             -      (167,037)
    Proceeds on
     redemption of
     long-term
     investments                 -             -             -    59,644,132
    Acquisition of
     property, plant
     and equipment          (1,486)       (1,318)      (13,138)      (11,090)
    Proceeds from sales
     of property, plant
     and equipment          21,065             -        62,455             -
    Acquisition of
     intangible
     assets                      -             -             -        (1,179)
                     --------------------------------------------------------
    Cash flows
     relating to
     investing
     activities          2,286,691     9,684,773    15,350,770    68,971,444
                     --------------------------------------------------------

    FINANCING ACTIVITIES
    Repayment of
     convertible
     senior unsecured
     notes                       -             -             -   (58,006,914)
    Issuance of
     convertible
     unsecured
     subordinated
     debentures                  -             -             -    22,000,000
    Issuance costs
     paid in cash                -             -             -    (1,764,414)
    Increase in
     other assets         (653,325)            -      (653,325)            -
                     --------------------------------------------------------
    Cash flows
     relating to
     financing
     activities           (653,325)            -      (653,325)  (37,771,328)
                     --------------------------------------------------------

    Net change in
     cash and cash
     equivalents
     during the
     period             (2,089,382)    2,257,754    (1,587,184)   12,742,935
    Cash and cash
     equivalents,
     beginning of
     period              2,689,621    11,720,885     2,187,423     1,235,704
                     --------------------------------------------------------
    Cash and cash
     equivalents,
     end of period         600,239    13,978,639       600,239    13,978,639
                     --------------------------------------------------------
                     --------------------------------------------------------

    Supplemental
     cash flow
     information:
    Interest paid          912,568       892,926     1,727,229    13,899,840
                     --------------------------------------------------------
    

SOURCE CONJUCHEM BIOTECHNOLOGIES INC.

For further information: For further information: Mark Perrin, President and CEO, ConjuChem Biotechnologies Inc., (514) 844-5558 ext 311, perrin@conjuchem.com; James Smith, Investor Relations, (416) 815-0700 ext. 229, JSmith@equicomgroup.com

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CONJUCHEM BIOTECHNOLOGIES INC.

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