Isotechnika reports second quarter financial results



    EDMONTON, Aug. 6 /CNW/ - Isotechnika Inc. announced today its financial
results for the three and six months ended June 30, 2008.
    Final results from the successfully completed six month PROMISE trial
were released upon receipt of the final study report in May of 2008. The
primary endpoint of the trial was achieved indicating that the incidence of
biopsy proven acute rejection was equivalent to the market leader, tacrolimus.
The data demonstrated key advantages of voclosporin such as a wider
therapeutic window; a significant reduction in New Onset Diabetes Mellitus and
reduced incidence of insomnia and tremors.
    A $13 million USD working capital term loan was secured on June 18, 2008.
Oxford Finance Corporation, the principal lender and Silicon Valley Bank, a
member company of SVB Financial Group provided the financing. Proceeds from
this financing will be used to fund the Company's research and development
programs and for general corporate purposes. The full amount of the loan, less
fees, was funded at closing.
    Our partner, Lux Biosciences, completed enrollment for the LUMINATE
pivotal clinical trial program on June 25, 2008. The clinical trial is
investigating the use of voclosporin (referred to as LUVENIQ(TM) by Lux) as a
corticosteroid-sparing agent for the treatment of patients with non-infectious
uveitis. The three randomized, placebo-controlled, double-masked studies
together enrolled approximately 560 patients at 58 sites in 7 countries.
    Our partner, Atrium Medical Corporation received approval from the
Belgian Competent Authority to commence their CONFIRM 1, First-in-Man (FIM)
drug eluting coronary stent clinical trial in May 2008 with the first patient
enrolled in the trial on June 9, 2008. This First-in-Man trial is a
prospective, multi-center, single blind, randomized, controlled study using
the CINATRA(TM) voclosporin coated coronary stent system, which will be
compared to Atrium's CINATRA(TM) bare metal coronary stent (BMS) platform.
This first use study of voclosporin on an implantable medical device will
enroll 100 patients, and will be conducted at seven hospitals in Belgium.
    During the second quarter, scientific presentations were made at the
American Transplant Congress, the Analytica conference, the American Society
for Clinical Pharmacology and Therapeutics Annual Conference, and the 2008
annual meeting of the Association for Research in Vision and Ophthalmology.
    On July 21, 2008, the Company announced that Roche did not exercise its
right to licence voclosporin for the solid organ transplant indications. This
now allows Isotechnika to focus its licensing efforts on companies with
strategic interests in both the transplant and autoimmune disease fields. This
is the first time since 2002 that the Company can offer a comprehensive
licensing package including both transplant and autoimmune to strong global
partners. Having a strong global commercial partner for voclosporin remains a
key priority for Isotechnika.

    Financial results
    -----------------
    At June 30, 2008, the Company's cash and cash equivalents position was
$30.3 million compared to $21.4 million at March 31, 2008, and $32.0 million
at December 31, 2007. Cash used for operating activities in the second quarter
of 2008 was $4.1 million.
    The Company believes it has sufficient funding to complete the
voclosporin Phase 2b kidney transplant extension trial and the Phase 3
European/Canadian psoriasis extension trial and conduct operations into the
second half of 2009 based on current committed expenditures.
    The Company reported a consolidated net loss of $5.4 million or $0.05 per
common share, as compared to a consolidated net loss of $9.9 million or $0.09
per common share for the same period in 2007. For the six months ended
June 30, 2008, the consolidated net loss was $10.8 million or $0.10 per common
share compared to $17.7 million or $0.18 per common share for the comparable
period in 2007. The consolidated net loss decreased primarily due to lower
research and development expenditures.
    Revenue increased slightly to $565,000 for the second quarter ended
June 30, 2008, compared to $457,000 for the second quarter ended June 30,
2007, on higher international diagnostic kit sales. The Company recorded
revenue of $1.1 million for the six months ended June 30, 2008, as compared to
$1.2 million for the same period in 2007.
    Research and development expenditures were $4.0 million in the second
quarter of 2008, compared to $8.8 million in the second quarter of 2007, a
decrease of $4.8 million. The Company incurred total research and development
expenditures of $7.8 million for the six months ended June 30, 2008, as
compared to $15.3 million for the same period in 2007.
    The lower research and development expenditures reflect reduced clinical
trial costs for both the voclosporin Phase 2b kidney transplant and Phase 3
European/Canadian psoriasis trials. Each of these trials had earlier in the
year completed the first six months of active patient treatment and are in the
extension phases of the trials. The extension phases of these trials are less
cost intensive than the initial six months as the first six months of
treatment had much greater levels of activity particularly for the Phase 2b
kidney transplant trial.
    Corporate, administration and marketing costs were consistent at
$1.6 million for the second quarter of 2008, compared to $1.5 million for the
second quarter of 2007. Isotechnika incurred a total corporate, administration
and marketing expenditure of $3.0 million for the six months ended June 30,
2008, as compared with $3.2 million for the same period in fiscal 2007.
    For further discussion of the Company's financial results for the three
and six months ended June 30, 2008, the unaudited interim consolidated
financial statements and the Management's Discussion and Analysis for the
second quarter ended June 30, 2008, are accessible on Isotechnika's Web site
at www.isotechnika.com or on SEDAR at www.sedar.com.

    About Isotechnika Inc.
    ----------------------
    Edmonton-based Isotechnika Inc. is an international 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 recently
completed a Phase 2b North American trial for the prevention of kidney
rejection following transplantation. An extension to the Phase 2b trial and a
combined Phase 3 European/Canadian trial for the treatment of moderate to
severe psoriasis are ongoing. Our partner, Lux Biosciences, is currently
conducting three separate Phase 2/3 pivotal trials investigating voclosporin
(referred to as LX211 by Lux) for the treatment of uveitis. 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 news 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)

                                                       June 30   December 31
                                                          2008          2007
                                                    (Unaudited)
                                                             $             $
    Assets

    Current assets
    Cash and cash equivalents                           30,317        32,025
    Accounts receivable                                    405           484
    Inventories                                          1,940         1,988
    Prepaid expenses and other assets                      398           483
    -------------------------------------------------------------------------

                                                        33,060        34,980
    Property and equipment                               3,742         4,308
    Patents                                              3,011         2,965
    -------------------------------------------------------------------------

                                                        39,813        42,253
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities

    Current liabilities
    Accounts payable and accrued liabilities             4,776         9,703
    Current portion of deferred revenue                    391           391
    Current portion of long-term debt                    2,522           527
    Current portion of deferred lease inducements           16            16
    -------------------------------------------------------------------------

                                                         7,705        10,637
    Deferred revenue                                     3,322         3,322
    Long-term debt                                      10,679            81
    Deferred lease inducements                              66            74
    -------------------------------------------------------------------------

                                                        21,772        14,114
    -------------------------------------------------------------------------

    Shareholders' Equity

    Share capital
    Common shares
      Authorized
        Unlimited number of common shares
         without par value
      Issued and outstanding
        106,243,492 (December 31, 2007 - 106,243,492)  192,706       192,706
    Warrants                                             3,293         3,122
    Contributed surplus                                  5,496         4,997
    Deficit                                           (183,454)     (172,686)
    -------------------------------------------------------------------------

                                                        18,041        28,139
    -------------------------------------------------------------------------

                                                        39,813        42,253
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

    (expressed in thousands of Canadian dollars)

                              Three Months Ended         Six Months Ended
                             June 30       June 30     June 30       June 30
                                2008          2007        2008          2007
                                   $             $           $             $

    Revenue
    Product sales and
     contract services           565           430       1,144           850
    Licensing revenue              -            27           -           306
    -------------------------------------------------------------------------

                                 565           457       1,144         1,156
    -------------------------------------------------------------------------

    Expenses
    Research and development   4,021         8,792       7,839        15,303
    Corporate, administration
     and marketing             1,583         1,457       3,067         3,160
    Amortization of property
     and equipment               294           370         622           785
    Cost of product sales and
     contract services           231           174         492           389
    Interest on long-term debt    52            40          60            94
    Amortization and
     write-down of patent costs   56            18          82            35
    Gain on disposal of
     equipment                    (2)            -          (5)           (4)
    -------------------------------------------------------------------------

                               6,235        10,851      12,157        19,762
    -------------------------------------------------------------------------

    Loss before the
     undernoted               (5,670)      (10,394)    (11,013)      (18,606)
    -------------------------------------------------------------------------

    Other income (expense)
    Investment income            157           549         417           973
    Foreign exchange
     translation gain (loss)      82           (79)       (172)          (45)
    -------------------------------------------------------------------------

                                 239           470         245           928
    -------------------------------------------------------------------------

    Net loss for the period   (5,431)       (9,924)    (10,768)      (17,678)

    Other comprehensive
     income (loss)                 -             -           -             -
    -------------------------------------------------------------------------

    Comprehensive loss
     for the period           (5,431)       (9,924)    (10,768)      (17,678)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic and diluted
     loss per share            (0.05)        (0.09)      (0.10)        (0.18)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    %SEDAR: 00010508E




For further information:

For further information: Dr. Robert Foster, Chairman & CEO, Isotechnika
Inc., (780) 487-1600 (247), (780) 484-4105 (fax), rfoster@isotechnika.com;
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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