Pacgen reports third quarter financial and operating results



    TSX-V: PGA

    VANCOUVER, March 1 /CNW/ - Pacgen Biopharmaceuticals Corporation
("Pacgen") (TSX-V: PGA) today reported financial results for the third quarter
ended December 31, 2006. Amounts unless specified otherwise, are expressed in
Canadian dollars and in accordance with Canadian Generally Accepted Accounting
Principles.

    Third Quarter Highlights & Achievements:
    ----------------------------------------

    
    -  During the third quarter, we made significant progress toward the
       achievement of our corporate goal to establish ourselves in North
       America as an emerging biotechnology company. Our efforts were
       concentrated on funding our company, driving our Phase I/II program
       forward and building a team with solid biopharmaceutical leadership
       and experience to support our operational and development goals.

    -  In October 2006, we obtained approval from the Medicine Control
       Counsel Republic of South Africa to expand recruitment of HIV patients
       into the PAC-113 Phase I/II clinical trial. As a result of this
       initiative, we project to complete patient recruitment for this study
       in the first quarter of calendar year 2007 and report preliminary
       efficacy results in the second quarter of calendar year 2007.

    -  In December 2006, we successfully completed an initial public offering
       (the "IPO"), raising gross proceeds of approximately $7.1 million.
       Canaccord Capital Corporation acted as lead agent of a syndicate that
       also included Jennings Capital Inc. We also listed on the TSX Venture
       Exchange, as a Tier 1 issuer, and commenced trading our common shares
       under the trading symbol "PGA" on December 11, 2006.

    -  More recently we announced the appointment of three world renowned
       experts in inflammatory diseases, Dr. J. Mark FitzGerald,
       Dr. William Nauseef, and Dr. Brian Rowe, to our scientific advisory
       board. Going forward we will continue to build on our team with solid
       biopharmaceutical leadership and experience.
    

    Financial Results:
    ------------------

    For the three months ended December 31, 2006 ("Q3-2007"), we recorded a
net loss of $1,259,293 ($0.06 per common share), compared to a net loss of
$522,223 ($0.03 per common share) for the three months ended December 31, 2005
("Q3-2006"). For the nine months ended December 31, 2006 ("YTD-2007"), we
recorded a net loss of $2,380,281 ($0.13 per common share), compared to a net
loss of $1,064,817 ($0.13 per common share) for the same period in the
preceding fiscal year ("YTD-2006"). The increase in net loss for each of
Q3- 2007 and YTD-2007, as compared to the same period in the preceding year,
was largely due to the increased operational expenditures associated with our
expanded operations and the adoption of an incentive stock option plan.
    During the current fiscal period, we expanded our PAC-113 Phase I/II
clinical trial to South Africa, acquired a new pre-clinical program, PAC-G31P,
and brought the Company public. We also added new personnel to support our
expanded operations. In addition, following the adoption of a new incentive
stock option plan, we started recording for stock based compensation in
Q3- 2007. The total stock based compensation recorded in Q3-2007 was $414,149.

    Research and Development Expenditures

    Research and development expenses for Q3-2007 were $625,221 as compared
to $255,631 for Q3-2006. On a year to date basis, research and development
expenses increased to $1,006,632 for YTD-2007 as compared to $499,347 for
YTD- 2006. The increase was primarily due to the clinical development cost
associated with the PAC-113 Phase I/II clinical trial which was initiated in
the United States in March 2006, and subsequently expanded into South Africa
in October 2006. The research cost associated with the newly acquired PAC-G31P
program and the adoption of a new stock option plan also contributed to the
increased research and development expenditures.
    Specifically, we incurred higher consulting fees, patent related
expenditures, salaries and benefits, stock-based compensation and pre-clinical
research contract cost during the interim periods in the current fiscal year,
as compared to same periods in the preceding fiscal year. We also incurred
higher clinical development cost as our Phase I/II clinical trial of PAC-113
progressed from clinical trial preparation stage to patient recruitment stage;
however, this increase was offset by a decline in drug supply manufacturing
costs.

    General and Administration Expenditures

    General and administration expenses for Q3-2007 were $606,762 compared to
$274,499 for Q3-2006. On a year to date basis, general and administration
expenses increased to $1,258,158 for YTD-2007 compared to $566,335 for
YTD- 2006. These increases were attributable to the consulting and
professional fees associated with the IPO preparation, the added personnel to
support the expanded operations, and the stock based compensation following
the adoption of our new stock option plan in August 2006.

    Amortization

    Amortization costs for Q3-2007 were $60,871 compared to $3,288 for
Q3- 2006. On a year to date basis, amortization costs increased to $183,758
for YTD-2007 compared to $7,950 for YTD-2006. These increases were primarily
due to the technology licenses and rights we obtained from the ILT
Acquisition.

    Other

    We recorded $17,561 of other income in Q3-2007 compared to $11,195 in
Q3- 2006. On a year to date basis, we recorded $36,267 of other income in
YTD- 2007 compared to $8,815 in YTD-2006. These increases in other income were
primarily due to the increased interest income generated from the higher cash
balances. These increases were offset by higher foreign exchange loss as a
result of the weakening Canadian dollar, in comparison to the U.S. dollar, on
our U.S. dollar denominated foreign currency transactions.

    Liquidity and Share Capital Position

    At December 31, 2006, we had available cash reserves comprised of cash
and cash equivalents of $7,451,271 compared to $727,064 at March 31, 2006.
    As of December 31, 2006, we had 30,521,960 common shares issued and
outstanding. We also had 7,936,401 common shares issuable upon exercise of
outstanding share purchase warrants at a weighted average price of $1.21 per
share, 500,000 common shares issuable upon exercise of outstanding share
purchase options at $2.25 per share, and 1,802,000 common shares issuable upon
exercise of outstanding incentive stock options at a weighted average price of
$1.11 per share.

    About Pacgen
    Pacgen is a life sciences company focused on the development of peptide
therapeutics for the treatment of infectious and inflammatory diseases. The
Company's lead product, PAC-113, is an antifungal in a phase Ib/IIa clinical
trial in the United States and South Africa. Preliminary efficacy data from
this study is expected during the second quarter of calendar year 2007. Pacgen
also plans to file investigational new drug application or clinical trial
application in North America in late 2007 for PAC-G31P which is currently
being investigated in pre-clinical studies for its potential to treat
inflammatory diseases such as acute respiratory distress syndrome. For
additional information, please visit www.pacgenbiopharm.com.

    NO REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED THE CONTENT OF THIS
    RELEASE. THE TSX VENTURE EXHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE
    ADEQUACY OR ACCURACY OF THIS RELASE.

    Forward-looking Statements
    Certain statements included in this press release may be considered
forward-looking. Such statements involve known and unknown risks,
uncertainties and other factors that may cause actual results, performance or
achievements to be materially different from those implied by such statements,
and therefore these statements should not be read as guarantees of future
performance or results. All forward-looking statements are based on Pacgen's
current beliefs as well as assumptions made by and information currently
available to Pacgen and relate to, among other things, anticipated financial
performance, business prospects, strategies, regulatory developments, market
acceptance and future commitments. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
of this press release. Due to risks and uncertainties, including the risks and
uncertainties identified by Pacgen in its Final Prospectus dated November 28,
2006, actual events may differ materially from current expectations. Pacgen
disclaims any intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise. For all forward-looking statements, Pacgen claims the safe harbour
for forward-looking statements within the meaning of the Private Securities
Legislation Reform.


    
                    Pacgen Biopharmaceuticals Corporation
                       (a development stage enterprise)
     Incorporated under the Business Corporations Act (British Columbia)

                         CONSOLIDATED BALANCE SHEETS
                 (Unaudited - Expressed in Canadian dollars)

                                                    December 31,  March 31,
                                                       2006         2006
                                                         $            $
    -------------------------------------------------------------------------

    ASSETS
    Current
      Cash and cash equivalents                       7,451,271      727,064
      Amounts receivable                                104,451       28,899
      Prepaid expenses and other                        121,262       49,986
    -------------------------------------------------------------------------
    Total current assets                              7,676,984      805,949
    Deferred acquisition costs                                -       20,903
    Property and equipment                               90,305       35,253
    Intangible assets                                 1,221,497      557,243
    -------------------------------------------------------------------------
                                                      8,988,786    1,419,348
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
      Accounts payable and accrued liabilities          562,840      102,051

    Future income tax liability                         110,000            -
    -------------------------------------------------------------------------
    Total liabilities                                   672,840      102,051
    -------------------------------------------------------------------------

    Shareholders' equity
    Share capital
      Issued and outstanding:
        Common shares                                12,471,210    2,374,836
        Preferred shares                                      -    1,131,593
    Contributed surplus                                 444,149       30,000
    Deficit                                          (4,599,413)  (2,219,132)
    -------------------------------------------------------------------------
    Total shareholders' equity                        8,315,946    1,317,297
    -------------------------------------------------------------------------
                                                      8,988,786    1,419,348
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                    Pacgen Biopharmaceuticals Corporation
                       (a development stage enterprise)

                 CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
                 (Unaudited - Expressed in Canadian dollars)

                            For the Three Months      For the Nine Months
                              Ended December 31         Ended December 31
                           --------------------------------------------------
                              2006         2005          2006        2005
                                $            $             $           $
    -------------------------------------------------------------------------

    EXPENSES
    Research and
     development              625,221      255,631    1,006,632      499,347
    General and
     administration           606,762      274,499    1,285,158      566,335
    Amortization               60,871        3,288      183,758        7,950
    -------------------------------------------------------------------------
    Loss from operations    1,292,854      533,418    2,475,548    1,073,632

    OTHER
    Interest and other
     income                    21,376        5,311       41,697       13,531
    Foreign exchange gain
     (loss)                    (3,815)       5,884       (5,430)      (4,716)
    -------------------------------------------------------------------------
                               17,561       11,195       36,267        8,815
    -------------------------------------------------------------------------

    Loss before income
     taxes                 (1,275,293)    (522,223)  (2,439,281)  (1,064,817)
    Future income tax
     recovery                  16,000            -       59,000            -
    -------------------------------------------------------------------------
    Loss for the period    (1,259,293)    (522,223)  (2,380,281)  (1,064,817)
    Deficit, beginning of
     period                (3,340,120)  (1,193,669)  (2,219,132)    (651,075)
    -------------------------------------------------------------------------
    Deficit, end of
     period                (4,599,413)  (1,715,892)  (4,599,413)  (1,715,892)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted loss
     per common share           (0.06)       (0.03)       (0.13)       (0.13)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted average number
     of common shares
     outstanding           21,686,733   15,382,554   19,005,770    8,489,999
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    





For further information:

For further information: Fred Salari, Manager, Investor Relations,
Pacgen Biopharmaceuticals Corporation, Phone: (604) 629-3380, Email:
fsalari@pacgenbiopharm.com

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PACGEN BIOPHARMACEUTICALS CORPORATION

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