Fralex Announces Fiscal 2007 Third Quarter Results



    TORONTO, Nov. 12 /CNW/ - Fralex Therapeutics Inc. (TSX: FXI) ("Fralex" or
the "Company"), a medical technology company developing a treatment for
chronic pain associated with fibromyalgia using a non-invasive neuromodulation
device, announced today its financial results for the third quarter ended
September 30, 2007.

    
    Third Quarter Highlights

    -   CE marking in the European Union of the PRIMA device, which delivers
        the Complex Neural Pulse (CNP(TM)).
    -   Ongoing progress of the RELIEF trial, which is being conducted under
        an Investigational Device Exemption (IDE) from the FDA and an
        Investigational Testing Authorization (ITA) from Health Canada. The
        Company expects to enrol 200 subjects at clinical sites in the US and
        Canada.

    Further Updates

    -   Initiated one additional RELIEF trial site, bringing the total to
        14 in the US and Canada.
    -   Recruitment increased to 51 patients enrolled, with 31 patients
        currently in screening.
    

    "We are pleased to have obtained CE marking for the PRIMA device on
schedule," said Avi Grewal, President and CEO of Fralex. "In addition our
pivotal trial, RELIEF, for the treatment of chronic pain associated with
fibromyalgia continues to progress steadily. Since our last quarter, we have
seen a substantial increase in enrolment numbers and this can be attributed to
measures implemented by our Management team."
    "We recognize that fibromyalgia is a serious problem for millions of
individuals, and we are delighted to be involved in a program that may provide
benefit to sufferers."

    Financial Review

    For the three months ended September 30, 2007, the Company reported a
loss of $1,407,026 or ($0.07) per share, compared with a loss of $632,906 or
($0.08) per share, for the corresponding period in 2006, an increase in loss
of $774,120. For the nine months ended September 30, 2007, the Company
reported a loss of $4,180,894 or ($0.22) per share, compared with a loss of
$2,331,001 or ($0.33) per share for the same period in 2006, an increase in
loss of $1,849,893.
    For the three months ended September 30, 2007, research and development
expenses increased by $761,502 and research and development expenses increased
by $1,678,342 for the nine months ended September 30, 2007. The increase was
primarily due to the patient enrolment expenses associated with the clinical
sites for the Company's RELIEF trial and the associated CROs.
    For the three months ended September 30, 2007, general and administrative
expenses increased by $84,294 and increased by $234,939 for the nine months
ended September 30, 2007. The increase reflects the investment by the Company
in the infrastructure support for public company requirements which were put
in place with the Company's February 13, 2007 IPO.
    As at September 30, 2007, Fralex had cumulative losses of
$10,975,012 while holding cash and cash equivalents and short-term investments
in the amount of $8,779,797. Fralex's principal capital needs in the near term
are for completing the planned RELIEF trial, PRIMA Device development,
supporting ongoing research and development and general corporate expenses.
The Company expects that its holdings of cash and cash equivalents and
short-term investments, together with management's estimate of approximately
$700,000 refundable investment tax credits relating to the December 31, 2006
and February 12, 2007 taxation periods, should be sufficient for the Company
to complete its planned operations through to the end of the fourth quarter of
2008. Based on average enrolment rates, the Company may need to raise
additional capital as the date for the final patient to complete treatment in
the RELIEF trial is not projected to occur until the first half of 2009.
Management will continue to execute its measures to improve recruitment in
order to meet or exceed these revised deadlines. If the enrolment rates are
similar to the levels achieved for the last two months, then the Company will
complete its trial in 2008 as forecasted. Further, the Company expects that it
will need to raise substantial additional funds to finance its research and
development program, including funds to expand the study to 300 subjects if
necessary, and to initiate a product launch if the RELIEF trial is successful.
There is no assurance that additional funding will be available or, if
available, that it will be on acceptable terms.
    Detailed financial statements and the MD&A are available at
www.fralex.com or www.sedar.com.

    About FRALEX:

    FRALEX is a medical technology company focused on developing and
commercializing Complex Neural Pulse or CNP(TM), a novel neuromodulation
therapeutic technology for chronic pain, which utilizes specifically designed,
low-frequency electromagnetic pulses. FRALEX is proceeding with its FDA and
Health Canada-approved pivotal clinical trial (the "RELIEF" trial) to evaluate
the safety and effectiveness of this technology in the treatment of chronic
pain associated with fibromyalgia. The trial is to be conducted in 2007 and
2008 at leading medical centres within the US and Canada. For more information
on FRALEX, please visit www.fralex.com; further details on the RELIEF trial
are posted on www.clinicaltrials.gov.

    Certain statements contained in this release containing words like
"believe", "intend", "may", "expect", and other similar expressions, are
forward-looking statements that involve a number of risks and uncertainties.
Factors that could cause actual results to differ materially from those
projected in the Company's forward-looking statements include the following:
market acceptance of Company's technologies and products; the ability to
obtain financing; Company's financial and technical resources relative to
those of its competitors; Company's ability to keep up with rapid
technological change; government regulation of therapeutic technologies; the
Company's ability to enforce its intellectual property rights and protect its
proprietary technologies; the ability to obtain and develop partnership
opportunities; the timing of commercial product launches; the ability to
achieve key technical milestones in key products and other risk factors
identified from time to time in the Company's filings.

    
    Fralex Therapeutics Inc.
    (A development stage company)
    Interim Balance Sheets
    Unaudited
    -------------------------------------------------------------------------

                                                  September 30,  December 31,
                                                  -------------  ------------
                                                          2007          2006
                                                             $             $
    Assets

    Current assets
    Cash and cash equivalents                          175,992       174,372
    Short-term investments                           8,603,805     3,186,705
    Investment tax credits receivable                        -        72,769
    Receivables - other                                 18,323        47,175
    Prepaid expenses                                   154,233        40,071
                                                  ---------------------------
                                                     8,952,353     3,521,092

    Deferred share issue costs                               -       508,417
    Property and equipment                              95,474       148,213
                                                  ---------------------------
                                                     9,047,827     4,177,722
                                                  ---------------------------
                                                  ---------------------------
    Liabilities

    Current liabilities
    Accounts payable and accrued liabilities           597,398       948,624
    Convertible promissory note                              -        21,785
                                                  ---------------------------
                                                       597,398       970,409
                                                  ---------------------------
    Shareholders' equity

    Common Shares                                   18,027,262     1,332,737
    Class A Common Shares                                    -         3,375
    Class A Preferred Shares                                 -     7,928,961
    Conversion feature of promissory note                    -       132,357
    Warrants                                         1,064,777             -
    Stock options                                      337,138       604,000
    Shares to be issued                                      1             1
    Deficit                                        (10,975,012)   (6,794,118)
    Accumulated other comprehensive loss                (3,737)            -
                                                  ---------------------------
                                                     8,450,429     3,207,313
                                                  ---------------------------
                                                     9,047,827     4,177,722
                                                  ---------------------------
                                                  ---------------------------



    Fralex Therapeutics Inc.
    (A development stage company)
    Interim Statements of Operations
    Unaudited
    -------------------------------------------------------------------------

                                  Three months ended       Nine months ended
                                        September 30,           September 30,
                              ----------------------- -----------------------
                                    2007        2006        2007        2006
                                       $           $           $           $

    Expenses
    Research and development   1,001,080     239,578   2,648,854     970,512
    General and administrative   306,252     221,958   1,049,022     814,083
    Stock-based compensation      57,138     190,000     391,138     576,000
    Amortization                  18,484      12,947      55,310      36,058
    Foreign exchange loss
     (gain)                      126,251       3,620     327,704       5,174
                              ----------------------- -----------------------

    Loss before the
     undernoted               (1,509,205)   (668,103) (4,472,028) (2,401,827)


    Interest income - net        102,179      35,197     291,134      70,826
                              ----------------------- -----------------------

    Net loss for the period   (1,407,026)   (632,906) (4,180,894) (2,331,001)
                              ----------------------- -----------------------
                              ----------------------- -----------------------

    Other comprehensive income
     (loss)
    Unrealized income (loss)
     on available-for-sale
     short-term investments         (600)          -      (3,737)          -

    Comprehensive loss for
     the period               (1,407,626)   (632,906) (4,184,631) (2,331,001)
                              ----------------------- -----------------------
                              ----------------------- -----------------------

    Basic and diluted loss per
      Common Share and
       Class A Common Share        (0.07)      (0.08)      (0.22)      (0.33)
                              ----------------------- -----------------------
                              ----------------------- -----------------------
    

    %SEDAR: 00024447E




For further information:

For further information: Avi Grewal, President and Chief Executive
Officer, Fralex Therapeutics Inc., (416) 213-8118 ext. 210,
agrewal@fralex.com; Christina Bessant, Investor Relations, The Equicom Group
Inc., (416) 815-0700 ext. 269, cbessant@equicomgroup.com

Organization Profile

FRALEX THERAPEUTICS INC.

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