ConjuChem Biotechnologies Announces Fiscal 2009 Year-End Financial Results

MONTREAL, Jan. 29 /CNW/ - ConjuChem Biotechnologies Inc. (TSX: CJB) today announced financial results for its fiscal year ended October 31, 2009.

"We achieved an important milestone this year by confirming that PC-DAC(TM):Exendin-4 achieved statistically significant glycemic control and weight loss in Phase II clinical trials for Type 2 diabetes. The data achieved our efficacy and safety objectives and confirmed statistically significant reductions in HbA1c versus both baseline and placebo seen in all active treatment groups throughout the treatment period," said Mark Perrin, President and CEO of ConjuChem. "We achieved these results within a challenging capital markets environment. Based on our current situation, the Board of Directors recently established a Special Committee of independent Board members to thoroughly explore and evaluate all strategic alternatives for the Company. While we have built a strong foundation with our albumin conjugation technology platform, we have an obligation to consider all legitimate options that may enhance value for stakeholders. We have reached a stage that necessitates we explore all opportunities available to us. Our intention is to report on this process once the Board has approved a specific transaction or other strategic alternative."

The Company's net loss for the quarter ended October 31, 2009 amounted to $2.5 million or ($0.01) per share, compared to $10.9 million or ($0.04) per share, for the quarter ended October 31, 2008. The net loss for the year ended October 31, 2009 amounted to $15.8 million or ($0.06) per share, compared to $39.4 million or ($0.16) per share, for the year ended October 31, 2008. The decrease is mainly attributable to a decrease in net research and development expenses of $15.8 million described below resulting from the completion of the Phase II clinical trials for PC-DAC(TM):Exendin-4 in November 2008 and a reduction in research activities.

The Company recorded interest income on cash and short-term investments that amounted to $13,226 for the quarter ended October 31, 2009 compared to $194,703 for the same period last year. Interest income for the year ended October 31, 2009 was $167,515 versus $1.4 million for fiscal 2008. The decrease in interest income was a result of a reduced investment portfolio base combined with a marked general decrease in market rates.

Net research and development expenses have decreased significantly in the quarter ended October 31, 2009 to a recovery of expenses of $89,654 as compared to $6.6 million for the quarter ended October 31, 2008. Net research and development expenses amounted to $5.7 million for the year ended October 31, 2009 compared to $21.5 million for fiscal 2008. The decrease is largely attributable due to the completion of the Phase II clinical trials for PC-DAC(TM):Exendin-4 in November 2008, a reduction in research activities and to the recovery of the clinical trials costs from a clinical research organization for a PC-DAC(TM):Exendin-4 study.

General and administrative costs amounted to $819,839 for the quarter ended October 31, 2009 compared to $2.0 million for the quarter ended October 31, 2008. For the year ended October 31, 2009 general and administrative costs amounted to $2.9 million, compared to the $6.0 million incurred for the same period the previous year. 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 year ended October 31, 2008 and by the reversal of a tax withholding contingency amounting to $1,257,000 in 2009.

At October 31, 2009, the Company had cash and cash equivalents and short-term investments totalling $7.5 million and an additional $1.6 million in accounts receivables and investment tax credits receivable, compared to $21.1 million as at October 31, 2008. As at October 31, 2009, working capital amounted to $6.1 million. The Company believes that its current cash and cash equivalents, investments and interest income will be sufficient to carry out operations into the third quarter of the year ending 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.


                               BALANCE SHEETS

    As at October 31
                                                        2009            2008
                                                           $               $
                                                -----------------------------
    ASSETS
    Current
    Cash and cash equivalents                      1,743,327       2,187,423
    Investments                                    5,717,766      18,934,737
    Accounts receivable                            1,087,670         160,644
    Investment tax credits receivable                524,000         542,000
    Prepaid expenses                                 181,799         229,006
                                                -----------------------------
    Total current assets                           9,254,562      22,053,810
    Property, plant and equipment                    635,550         841,685
    Intangible assets                                  5,554          11,108
                                                -----------------------------
                                                   9,895,666      22,906,603
                                                -----------------------------
                                                -----------------------------

    LIABILITIES AND SHAREHOLDERS' DEFICIENCY
    Current liabilities
    Accounts payable and accrued liabilities       3,135,216      10,080,463
                                                -----------------------------
    Total current liabilities                      3,135,216      10,080,463
    Convertible unsecured subordinated
     debentures                                   16,548,369      13,634,906
                                                -----------------------------
                                                  19,683,585      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                           55,533,174      48,818,826
    Deficit                                     (348,182,669)   (332,390,857)
    Accumulated other comprehensive loss                 680         (71,657)
                                                -----------------------------
    Total shareholders' deficiency                (9,787,919)       (808,766)
                                                -----------------------------
                                                   9,895,666      22,906,603
                                                -----------------------------
                                                -----------------------------


    ConjuChem Biotechnologies Inc.


                            STATEMENTS OF DEFICIT

    Years ended October 31
                                                        2009            2008
                                                          $               $
                                                -----------------------------
    Deficit, beginning of year                  (332,390,857)   (292,973,699)
    Net loss for the year                        (15,791,812)    (39,417,158)
                                                -----------------------------
    Deficit, end of year                        (348,182,669)   (332,390,857)
                                                -----------------------------
                                                -----------------------------


    ConjuChem Biotechnologies Inc.


                         STATEMENTS OF OPERATIONS AND
                              COMPREHENSIVE LOSS

    Years ended October 31
                                                       2009             2008
                                                         $                $
                                                -----------------------------

    REVENUES
    Contract revenues                                 37,113          60,731
    Interest income                                  167,515       1,449,360
                                                -----------------------------
                                                     204,628       1,510,091
                                                -----------------------------

    EXPENSES
    Research and development                       8,351,483      22,212,279
    Investment tax credits                        (2,641,174)       (701,306)
                                                -----------------------------
    Net research and development expenses          5,710,309      21,510,973
    General and administrative expenses            2,878,492       5,965,092
    Amortization of property, plant and
     equipment                                       166,090         220,918
    Amortization of intangible assets                  5,554          10,122
    Stock-based compensation                       2,570,038       2,567,057
    Financial charges                                 13,953         209,500
    Foreign exchange loss                             85,711         937,925
    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                                      4,566,293       3,733,796
    Loss on redemption of long-term
     investments                                           -         267,439
                                                -----------------------------
                                                  15,996,440      40,927,249
                                                -----------------------------
    Net loss for the year                        (15,791,812)    (39,417,158)

    Other comprehensive loss
    Unrealized gain (loss) on investments             72,337         (56,324)
                                                -----------------------------
    Comprehensive loss                           (15,719,475)    (39,473,482)
                                                -----------------------------
                                                -----------------------------

    Basic and diluted loss per share                   (0.06)          (0.16)
                                                -----------------------------
                                                -----------------------------

    Weighted average number of common shares
     outstanding during the year                 250,548,685     244,260,543
                                                -----------------------------
                                                -----------------------------


    ConjuChem Biotechnologies Inc.


                           STATEMENTS OF CASH FLOWS

    Years ended October 31
                                                        2009            2008
                                                          $               $
                                                -----------------------------
    OPERATING ACTIVITIES
    Net loss for the year                       (15,791,812)    (39,417,158)
    Items not affecting cash
      Amortization of property, plant and
       equipment                                     166,090         220,918
      Amortization of intangible assets                5,554          10,122
      Amortization of premium on long-term
       investments                                         -          (8,436)
      Stock-based compensation                     2,570,038       2,567,057
      Accretion in carrying value of
       convertible senior unsecured notes
       and interest                                        -       5,504,427
      Accretion in carrying value of
       convertible unsecured subordinated
       debentures                                  2,939,437       2,292,066
      Gain on sale of property, plant and
       equipment                                     (44,273)              -
      Loss on redemption of long-term
       investments                                         -         267,439
                                                -----------------------------
                                                 (10,154,966)    (28,563,565)
    Net changes in non-cash working capital
     balances related to operations               (7,807,066)      2,018,463
                                                -----------------------------
    Cash flows relating to operating
     activities                                  (17,962,032)    (26,545,102)
                                                -----------------------------

    INVESTING ACTIVITIES
    Acquisition of investments                   (12,277,560)    (46,878,259)
    Proceeds on maturities of investments         25,566,868      52,684,741
    Acquisition of long-term investments                   -        (167,037)
    Proceeds on redemption of long-term
     investments                                           -      59,644,133
    Acquisition of property, plant and
     equipment                                       (13,138)        (13,456)
    Proceeds from sale of property, plant and
     equipment                                        97,456               -
    Acquisition of intangible assets                       -          (1,973)
                                                -----------------------------
    Cash flows relating to investing
     activities                                   13,373,626      65,268,149
                                                -----------------------------

    FINANCING ACTIVITIES
    Proceeds from reorganization                   5,000,000               -
    Costs of reorganization                         (855,690)              -
    Repayment of convertible senior unsecured
     notes                                                 -     (58,006,914)
    Issuance of convertible unsecured
     subordinated debenture units                          -      22,000,000
    Issuance costs paid in cash                            -      (1,764,414)
                                                -----------------------------
    Cash flows relating to financing
     activities                                    4,144,310     (37,771,328)
                                                -----------------------------

    Net change in cash and cash equivalents
     during the year                                (444,096)        951,719
    Cash and cash equivalents, beginning of
     year                                          2,187,423       1,235,704
                                                -----------------------------
    Cash and cash equivalents, end of year         1,743,327       2,187,423
                                                -----------------------------
                                                -----------------------------

    Supplemental cash flow information:
    Interest paid                                  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; Ross Marshall, Investor Relations, (416) 815-0700 ext. 238, RMarshall@equicomgroup.com

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