Isotechnika reports first quarter 2009 financial results



    EDMONTON, May 14 /CNW/ - Isotechnika Inc. (TSX:ISA) today announced its
financial results for the first quarter ended March 31, 2009.
    Isotechnika Inc. announced on May 7, 2009 a strategic investment and
collaboration with Paladin Labs Inc. (TSX: PLB), a leading Canadian specialty
pharmaceutical company. Pursuant to this agreement, Isotechnika has entered
into a plan of arrangement with Paladin Labs, which will provide Isotechnika
with $7.0 million of cash immediately and $4.35 million in supported Research
and Development funding over the next 12 months. The successful completion of
this arrangement is required to provide the Company with funding to continue
operations and carry out its business plans.
    Under the proposed plan of arrangement, current shareholders of
Isotechnika will own 81% of a new company, Isotechnika Pharma Inc., with the
remaining 19% owned by Paladin Labs. Isotechnika Pharma will maintain a
listing on the Toronto Stock Exchange and senior management of Isotechnika
will continue with Isotechnika Pharma.
    Given these challenging markets, Isotechnika's Board of Directors
evaluated a number of options for the company. Based on this assessment, a
fairness opinion from Isotechnika's financial advisors for the transaction,
and other considerations, the Board of Directors unanimously recommended that
Isotechnika security holders approve the transaction. The strategic
relationship with Paladin is expected to build on the strengths of each
organization. Paladin is recognized for its business development acumen and
pharmaceutical commercialization expertise, which perfectly complements
Isotechnika's significant expertise in drug discovery and development.
Combining the strengths of these two companies, it is expected that additional
late-stage clinical assets will be brought into Isotechnika Pharma to
strengthen the product pipeline, while Paladin will be granted the rights to
these products in its territories of interest.
    The restructuring will be completed by way of a plan of arrangement to be
approved by the Court of Queen's Bench of Alberta, the TSX and Isotechnika
security holders (by a majority of at least 66.6% of the security holders
voting). Completion of the transaction is expected to occur in June 2009.

    
    Other 2009 Scientific and Operating Highlights to the current date:

        -  Partner Atrium completed patient enrollment for their CONFIRM 1,
           First-in-Man drug coated coronary stent clinical trial evaluating
           their voclosporin coated coronary stent system.

        -  Announced cost saving measures, including staff reductions.

        -  Partner Lux began treating patients in a First-in-Man (Phase 1)
           study with LX214, a proprietary topical ophthalmic solution
           containing voclosporin as the active ingredient.

        -  Repayment of 70 percent of the balance outstanding on March 6,
           2009 of the $13 million USD loan issued by Oxford Finance
           Corporation and Silicon Valley Bank. Repayment results in interest
           savings to Isotechnika of approximately $920,000 USD over the
           remaining life of the loan.

        -  Partner Lux announced the successful results of their LUMINATE
           Phase 2/3 clinical trial program showing that voclosporin had a
           positive effect on ocular inflammation and a safety profile
           consistent with its expected use in this indication.

        -  Announced positive 12 month follow up data from the Phase 2b
           PROMISE trial evaluating its lead drug, voclosporin, in de novo
           kidney transplant patients. As a dose ranging study, the Phase 2b
           trial was successful in meeting the primary endpoint demonstrating
           non-inferiority in biopsy proven acute rejection (BPAR) episodes
           as compared to tacrolimus control in all three dose groups at six
           months and also demonstrated an improved safety profile versus
           tacrolimus.

        -  Announced positive Phase 3 ESSENCE trial data evaluating its lead
           drug, voclosporin, in moderate to severe psoriasis patients.
           ESSENCE successfully met the primary endpoint of superiority to
           placebo in the proportion of patients achieving a score of
           "clear" or "almost clear" in the Static Physician's Global
           Assessment (SPGA) at 12 weeks of treatment. The full data set will
           be presented in more detail at the upcoming Canadian Dermatology
           Association 84th Annual Conference in Vancouver, B.C., July 1 - 5,
           2009.
    

    Financial Results

    At March 31, 2009, the Company had $5.83 million in cash and cash
equivalents. At March 31, 2009, other financial assets and liabilities were
composed of a restricted term deposit in the amount of $4.48 million, accounts
receivable of $316,000, accounts payable and accrued liabilities of $3.89
million and long term debt of $4.44 million.
    For the three months ended March 31, 2009, the Company reported a
consolidated net loss of $4.13 million or $0.04 per common share, as compared
to a consolidated net loss of $5.34 million or $0.05 per common share for same
period in 2008. The decrease in the consolidated loss was primarily due to
reduced clinical trial expenditures for both the voclosporin Phase 2b renal
transplant and the Phase 3 European/Canadian psoriasis trials.
    Revenue increased to $817,000 for the three months ended March 31, 2009,
compared to $579,000 for the three months ended March 31, 2008. Revenue in the
first quarter of 2009 was comprised of $560,000 for product sales from the
diagnostic division, $78,000 of contract services and product sales from the
therapeutic division and $179,000 for licensing revenue as compared to
$507,000 for product sales from the diagnostic division, $72,000 of contract
services and product sales from the therapeutic division and $Nil for
licensing fees for the same period in 2008.
    Research and development expenditures were $2.42 million in the first
quarter of 2009, compared to $3.82 million in the first quarter of 2008, a
decrease of $1.4 million. The decrease in research and development
expenditures was primarily due to reduced clinical trial costs for both the
voclosporin Phase 2b renal transplant and the Phase 3 European/Canadian
psoriasis trials. Both of these trials were at the data analysis and close out
stage during the first quarter of 2009.
    Corporate, administration and marketing costs were $1.04 million for the
first quarter of 2009, compared to $1.48 million for the first quarter of
2008. The decrease was primarily the result of a significant reduction in
stock-based compensation and deferred share unit expense as no stock options
were issued in the first quarter of 2009.
    For further discussion of the Company's financial results for the three
months ended March 31, 2009, the unaudited interim consolidated financial
statements and the Management's Discussion and Analysis are accessible on
Isotechnika's Web site at www.isotechnika.com or at www.sedar.com.

    About Isotechnika

    Edmonton-based Isotechnika Inc. is a biopharmaceutical company focused on
the discovery and development of novel immunosuppressive therapeutics that are
designed to offer advantages over other currently available treatments. There
is a significant unmet medical need in the treatment of both solid organ
transplantation and autoimmune disease. It is estimated that the market
potential will exceed $4 billion annually in sales for calcineurin inhibitors
such as voclosporin by 2010.
    Voclosporin is a next generation calcineurin inhibitor, which completed a
Phase 2b North American trial for the prevention of kidney rejection following
transplantation. Extensions to the Phase 2b trial and a combined Phase 3
European/Canadian trial for the treatment of moderate to severe psoriasis have
also been completed. Our partner, Lux BioSciences, Inc., has recently
completed three separate Phase 2/3 pivotal trials investigating voclosporin
(referred to as LUVENIQTM by Lux) for the treatment of uveitis. In addition to
the uveitis trials, Lux BioSciences Inc. has also commenced a Phase 1 trial
using their proprietary voclosporin ophthalmic solution (LX214) as a candidate
for dry eye syndrome. Voclosporin has also entered First-in-Man trials as the
drug utilized in the CINATRA(TM) Drug Coated Coronary Stent system developed
by the Company's partner, Atrium Medical Corporation.
    Isotechnika Inc. is a publicly traded company on the Toronto Stock
Exchange under the symbol "ISA". More information on Isotechnika can be found
at www.isotechnika.com or www.SEDAR.com.

    Forward-Looking Statements

    This press release may contain forward-looking statements. Forward
looking statements, including the Company's belief as to the potential of its
products, the Company's expectations regarding the issuance of additional
patents and the Company's ability to protect its intellectual property,
involve known and unknown risks and uncertainties, which could cause the
Company's actual results to differ materially from those in the forward
looking statements. Such risks and uncertainties include, among others, the
availability of funds and resources to pursue research and development
projects, the ability to economically manufacture its products, the potential
of its products, the success and timely completion of clinical studies and
trials, the Company's ability to successfully commercialize its products, the
ability of the Company to defend its patents from infringement by third
parties, and the risk that the Company's patents may be subsequently shown to
be invalid or infringe the patents of others. Investors should consult the
Company's quarterly and annual filings with the Canadian commissions for
additional information on risks and uncertainties relating to the forward-
looking statements. Investors are cautioned against placing undue reliance on
forward-looking statements.



    
    Isotechnika Inc.
    Consolidated Interim Balance Sheets
    -------------------------------------------------------------------------
    (expressed in thousands of Canadian dollars)


                                                      March 31
                                                          2009   December 31
                                                    (Unaudited)         2008
                                                             $             $

    Assets

    Current assets
    Cash and cash equivalents                            5,832        25,701
    Restricted term deposit                              4,481             -
    Accounts receivable                                    316           495
    Inventories                                            229           146
    Prepaid expenses                                       361           124
                                                    -------------------------

                                                        11,219        26,466
    Property and equipment                               2,957         3,206
    Patents                                              2,634         2,771
                                                    -------------------------

                                                        16,810        32,443
                                                    -------------------------
                                                    -------------------------

    Liabilities

    Current liabilities
    Accounts payable and accrued liabilities             3,892         3,984
    Current portion of deferred revenue                    875         1,330
    Current portion of long-term debt                    2,105         5,781
    Current portion of deferred lease inducements           16            16
                                                    -------------------------

                                                         6,888        11,111
    Deferred revenue                                     2,077         1,801
    Long-term debt                                       2,334         9,895
    Deferred lease inducements                              54            58
                                                    -------------------------

                                                        11,353        22,865
                                                    -------------------------
    Nature of operations and going concern

    Shareholders' Equity

    Share capital
    Common stock
    Authorized
      Unlimited number of common shares without
       par value
    Issued and outstanding
      106,243,492 shares (December 31, 2008 -
       106,243,492)                                    192,706       192,706
    Warrants                                               171         3,293
    Contributed surplus                                  8,723         5,593
    Deficit                                           (196,143)     (192,014)
                                                    -------------------------

                                                         5,457         9,578
                                                    -------------------------

                                                        16,810        32,443
                                                    -------------------------
                                                    -------------------------




    Isotechnika Inc.
    Consolidated Interim Statements of Operations and Comprehensive Loss
    (Unaudited)
    -------------------------------------------------------------------------

                                                          Three months ended
                                                      March 31      March 31
                                                          2009          2008
                                                             $             $

    Revenue
    Product sales and contract services                    638           579
    Licensing revenue                                      179             -
                                                    -------------------------

                                                           817           579
                                                    -------------------------

    Expenses
    Research and development                             2,420         3,818
    Corporate, administration and marketing              1,044         1,484
    Product sales and contract services                    251           261
    Amortization of property and equipment                 249           328
    Interest and pre-payment penalty on long-term
     debt                                                  852             8
    Amortization and write-down of patent costs            178            26
    Gain on disposal of equipment                          (55)           (3)
                                                    -------------------------

                                                         4,939         5,922
                                                    -------------------------

    Loss before the undernoted                          (4,122)       (5,343)
                                                    -------------------------

    Other income (expense)
    Investment income                                       25           260
    Foreign exchange gain (loss)                           (32)         (254)
                                                    -------------------------

                                                            (7)            6
                                                    -------------------------

    Net loss for the period                             (4,129)       (5,337)

    Other comprehensive income                               -             -
                                                    -------------------------

    Comprehensive loss for the period                   (4,129)       (5,337)
                                                    -------------------------
                                                    -------------------------

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

    %SEDAR: 00010508E




For further information:

For further information: Dr. Robert Foster, President & CEO, Isotechnika
Inc., (780) 487-1600 (247), (780) 484-4105 (fax), rfoster@isotechnika.com; Mr.
Dennis Bourgeault, Chief Financial Officer, Isotechnika Inc., (780) 487-1600
(226), (780) 484-4105 (fax), dbourgeault@isotechnika.com

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ISOTECHNIKA PHARMA INC.

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