SemBioSys announces 2006 results



    TSX symbol: SBS

    
             - Canadian Biotechnology Company provides update on
          Pharmaceutical and Non-pharmaceutical Pipeline Products -
    

    CALGARY, March 15 /CNW/ - SemBioSys Genetics Inc. (TSX:SBS), a
biotechnology company developing insulin and other metabolic and
cardiovascular protein-based pharmaceuticals and a series of
non-pharmaceutical products, today announced its operational and financial
results for the fiscal year which ended on December 31, 2006.

    2006 Highlights

    
    Pharmaceutical Products
    -   Commercial viability achieved by exceeding the Company's commercial
        target levels of human insulin (insulin) accumulation in safflower by
        20% with 1.2 percent of total seed protein.
    -   Functional equivalence results demonstrated the Company's proprietary
        safflower-produced insulin is functionally equivalent to U.S. pharma
        grade human insulin in animal models, subsequent to the end of the
        fiscal year. The Company also announced in vitro and in vivo assay
        results that demonstrate the Company's safflower-produced insulin is
        chemically, structurally and physiologically indistinguishable from
        U.S. pharma grade human insulin.
    -   Regulatory path confirmed as the Company is eligible to pursue a
        Section 505(b)(2) regulatory path for safflower-produced insulin
        after meeting with the U.S. Food and Drug Administration (FDA),
        subsequent to the end of the fiscal year.
    -   Preclinical and clinical material processing secured through a
        Technology Transfer and Manufacturing Agreement with Cangene
        Corporation to prepare batches of the Company's safflower-produced
        insulin in preparation for the preclinical and early stage clinical
        development.
    -   Increased levels of Apo AI expression in Arabidopsis, the Company's
        model plant system, and continued development progress in safflower,
        the commercial plant system.

    Non-Pharmaceutical Products
    -   Continued the commercial scale-up of the Company's proprietary
        transgenic safflower-produced ImmunoSphere(TM) Feed Additive in the
        U.S. and Chile in preparation for product launch expected in late
        2007 or early 2008.
    -   Announced the completion of key milestones in its gamma linolenic
        acid (GLA)-rich safflower oil project with Arcadia Biosciences, Inc.
        with the delivery of safflower seeds from plant lines containing GLA
        transformed utilizing Arcadia's proprietary genes.
    -   Announced an agreement to acquire technology assets and in-license
        intellectual property from Syngenta Crop Protection AG related to the
        manufacture of biopharmaceuticals in safflower, which allows
        SemBioSys to further increase its efficiency in the development of
        transgenic safflower.
    -   Announced the Company will continue to manufacture and supply
        DermaSphere(R) to its customers in the personal care market after
        reaching an agreement to conclude the distribution relationship with
        Lonza Inc.
    -   Amended the collaboration agreement with Martek Biosciences
        Corporation, subsequent to the end of the fiscal year. SemBioSys has
        received a one-time license fee payment in relation to the amended
        agreement and agreed to a potential additional license fee and
        royalty payments from Martek, which in return is entitled to select
        an alternative seed oil production system to meet its future
        docosahexaenoic acid (DHA) supply.
    

    "Over the course of 2006 and into 2007 we have delivered on four critical
scientific, operational and regulatory milestones within our insulin program.
In our view the insulin expression and the insulin equivalence results
represent an important achievement and position us to address a large and
growing market for insulin. While other projects have produced pharmaceutical
proteins in plant systems, no one, to our knowledge, has been able to develop
plant-produced insulin at commercially viable levels," said Andrew Baum,
President and CEO of SemBioSys Genetics Inc. "We believe that with these
scientific results in hand and the outcome of our meeting with the FDA that
clarified the regulatory path for our plant-produced insulin, the risks
associated with our insulin program have decreased significantly. Our team is
now scaling-up our insulin production and completing the preclinical work
necessary to file an Investigational New Drug Application (IND) later this
year. We intend to initiate a Phase II trial for our safflower-produced
insulin in late 2007 or early 2008 with pharmacokinetics and pharmacodynamics
as the primary endpoints."

    Financials

    Total revenue for the fiscal year ended December 31, 2006 was $523,258
compared to $2,459,202 for the corresponding period in 2005.
    The $523,258 of revenue for the fiscal year period ended December 31,
2006 consisted entirely of contract research revenue compared with contract
research revenue of $1,696,171 in 2005. The difference in contract research is
a result of the completion of collaboration agreements with Arcadia
Biosciences Inc. and Dow AgroSciences LLC in late 2006, such that the contract
research revenue from the 2006 fiscal year relates solely to the ongoing
collaboration agreement with Martek Biosciences Corporation. In 2006 there
were no license fees earned, as a result of the agreements with Lonza Inc. and
Arcadia moving from a research and development stage to a commercialization
stage, compared with license fees of $763,031 generated during the 2005 fiscal
year.
    Total expenditures for the year ended December 31, 2006 were $15,082,560
compared with $9,734,220 for the year ended December 31, 2005.
    Research and development expenses for the fiscal year ended December 31,
2006 were $5,480,972, an increase of $1,060,086 from $4,420,886 for the 2005
fiscal year. This difference is primarily from increased personnel and the
related support costs in all areas of research and development with an
expanded focus on insulin. This included an enhanced quality control and
assurance program and further development of a stronger preclinical and
clinical team.
    General and administrative expenses for the year ended December 31, 2006
were $4,013,653 compared with $3,516,871 for the 2005 fiscal year. The
difference is due mainly to the expansion of the Company's indoor plant growth
facilities resulting in increased operating costs such as utilities. Increases
also resulted from increased staff costs, including additional support costs.
    Intellectual property costs for the year ended December 31, 2006 were
$3,467,045 compared with $1,586,788 for the year ended December 31, 2005. The
difference is primarily due to the $1,516,906 non-cash expense in the second
quarter of 2006 for the acquisition of intellectual property from Syngenta
Crop Protection AG in exchange for warrants to purchase 550,000 common shares
of the Company, and the US$500,000 payment to re-acquire the rights to the
DermaSphere(R) Oleosome Technology from Lonza at the end of the fourth quarter
of 2006. Excluding these one-time items, intellectual property costs decreased
modestly.
    Net loss for the year ended December 31, 2006 was $14,127,086 or ($0.85)
per share, compared to a net loss of $6,824,545 or ($0.54) per share for 2005.
    As at December 31, 2006 the Company had cash and cash equivalents
totaling $16,328,459 compared to $28,513,095 at December 31, 2005. Total
long-term debt at December 31, 2006 was $2,084,103 compared with $1,877,330 at
December 31, 2005.
    As at December 31, 2006 the Company had 16,781,890 common shares
outstanding, 3,102,796 warrants, and 1,056,144 options.
    Subsequent to the end of the year, on February 20, 2007 the Company
completed an underwritten public offering of 4,251,496 common shares at a
price of $3.00 per share, for total gross proceeds to SemBioSys of
approximately $12,750,000. Concurrent with the public offering, certain
shareholders of the Company sold 2,748,504 previously issued common shares of
the Company at a price of $3.00 per share by way of a secondary offering. On
March 7, 2007, the underwriters of the public offering exercised the entire
over-allotment option and purchased an additional 1,050,000 common shares from
treasury at $3.00 per common share, resulting in an additional $3,150,000 in
gross proceeds to SemBioSys, raising the total gross proceeds to the Company
from the transaction to $15,900,000.

    Outlook

    The Company has completed the major scientific milestones necessary to
proceed into first-in-man clinical trials of safflower-produced insulin in
late 2007 or early 2008. Upcoming milestone events expected in 2007 include:

    
    -   Complete scale-up and preclinical work of safflower-produced insulin
    -   Complete the technology transfer and production of clinical grade
        material for early stage human trials
    -   Initiate business development activities toward an insulin
        partnership
    -   Submit insulin IND to FDA and initiate Phase II trial
    -   Achieve commercial levels of Apo AI expression in safflower
    -   Increase production capacity of personal care topical oilbody
        products and establish distribution channels for commercialization
    -   Complete scale-up of ImmunoSphere(TM) product for commercial launch
    -   Achieve key DHA proof-of-concept milestone
    -   Initiate a new pharmaceutical product development program
    

    Additional information about the Company, including the MD&A and
financial results may be found on SEDAR at www.sedar.com.

    About SemBioSys Genetics Inc. (www.sembiosys.com)

    Calgary, Alberta-based SemBioSys Genetics Inc. is a biotechnology company
developing insulin and other protein-based pharmaceuticals for metabolic and
cardiovascular diseases. The Company's lead candidate is recombinant human
insulin derived from genetically engineered safflower to serve the expanding
diabetes market in the developed and developing world and to facilitate the
commercialization of inhalation and other alternative insulin delivery
technologies. The Company's other protein-based pharmaceutical candidate is a
cardiovascular drug called Apo AI. SemBioSys is also developing a series of
non-pharmaceutical products addressing animal and aquaculture health,
nutritional oils and human topical markets.

    This press release contains certain forward-looking statements,
including, without limitation, statements containing the words "believe",
"may", "plan", "will", "estimate", "continue", "anticipate", "intend",
"expect" and other similar expressions which constitute "forward-looking
information" within the meaning of applicable Canadian securities laws.
Forward-looking statements reflect the Company's current expectation and
assumptions, and are subject to a number of risks and uncertainties that could
cause actual results to differ materially from those anticipated. These
forward-looking statements involve risks and uncertainties including, but not
limited to, changing market conditions, the successful and timely completion
of clinical studies, the establishment of corporate alliances, the impact of
competitive products and pricing, new product development, uncertainties
related to the regulatory approval process and other risks detailed from
time-to-time in the Company's ongoing filings with the Canadian securities
regulatory authorities which filings can be found at www.sedar.com. Given
these risks and uncertainties, readers are cautioned not to place undue
reliance on such forward-looking statements. The Company undertakes no
obligation to publicly update or revise any forward-looking statements either
as a result of new information, future events or otherwise, except as required
by applicable Canadian securities laws.

    Financial results included below:

    
    SemBioSys Genetics Inc.
    Consolidated Balance Sheets
    As at December 31, 2006 and 2005

    (expressed in Canadian dollars)
                                                          2006          2005
                                                             $             $

    Assets

    Current assets
    Cash and cash equivalents                       16,328,459    28,513,095
    Accounts receivable                                526,002     1,272,523
    Interest receivable                                504,551        91,018
    Prepaid expenses, deposits and other               405,459       265,062
                                                   --------------------------

                                                    17,764,471    30,141,698

    Property and equipment                           5,157,163     4,497,190
                                                   --------------------------

                                                    22,921,634    34,638,888
                                                   --------------------------
                                                   --------------------------

    Liabilities

    Current liabilities
    Accounts payable and accrued liabilities         1,356,018     1,368,276
    Repayable advances                                  85,640        85,640
    Current portion of long-term debt                  746,658       590,243
                                                   --------------------------

                                                     2,188,316     2,044,159

    Deferred cost recoveries                            84,203        76,535

    Deferred revenue                                         -       195,259

    Long-term debt                                   1,337,445     1,287,087
                                                   --------------------------

                                                     3,609,964     3,603,040
                                                   --------------------------

    Shareholders' Equity

    Capital Stock                                   48,302,036    48,103,709

    Warrants                                         6,274,716     9,414,155

    Contributed surplus                              5,475,404       131,384

    Deficit                                        (40,740,486)  (26,613,400)
                                                   --------------------------

                                                    19,311,670    31,035,848
                                                   --------------------------

                                                    22,921,634    34,638,888
                                                   --------------------------
                                                   --------------------------
    Contingencies and commitments



    SemBioSys Genetics Inc.
    Consolidated Statements of Operations and Deficit
    For the years ended December 31, 2006 and 2005

    (expressed in Canadian dollars)
                                                          2006          2005
                                                             $             $

    Revenue
    Contract research                                  523,258     1,696,171
    Licensing fees                                           -       763,031
                                                   --------------------------

                                                       523,258     2,459,202
                                                   --------------------------

    Expenses
    Research and development                         5,480,972     4,420,886
    General and administration                       4,013,653     3,516,871
    Intellectual property                            3,467,045     1,586,788
    Business development                               745,964       480,022
    Stock-based compensation                           713,902       131,384
    Amortization                                       832,845       568,595
    Cost recoveries                                   (171,821)     (899,018)
    Investment tax credits                                   -       (71,308)
                                                   --------------------------

                                                    15,082,560     9,734,220
                                                   --------------------------

    Loss before the undernoted                     (14,559,302)   (7,275,018)
                                                   --------------------------

    Interest income                                    857,595       421,091
    Interest expense                                  (182,440)      (31,410)
    Foreign exchange gain (loss)                       (64,405)       52,028
    Write-down of property and equipment              (161,732)            -
    Gain (loss) on sale of property and equipment      (16,802)        8,764
                                                   --------------------------

                                                       432,216       450,473
                                                   --------------------------

    Net loss for the year                          (14,127,086)   (6,824,545)

    Deficit - Beginning of year                    (26,613,400)  (19,788,855)
                                                   --------------------------

    Deficit - End of year                          (40,740,486)  (26,613,400)
                                                   --------------------------
                                                   --------------------------

    Loss per share - basic and diluted                   (0.85)        (0.54)
                                                   --------------------------
                                                   --------------------------



    SemBioSys Genetics Inc.
    Consolidated Statements of Cash Flows
    For the years ended December 31, 2006 and 2005

    (expressed in Canadian dollars)
                                                          2006          2005
                                                             $             $

    Cash provided by (used in)

    Operating activities
    Net loss for the year                          (14,127,086)   (6,824,545)
    Add items not affecting cash
      Amortization                                     832,845       568,595
      Acquisition of intellectual property
       for warrants                                  1,516,906             -
      Write-down of property and equipment             161,732             -
      (Gain) loss on sale of property and equipment     16,802        (8,764)
      Stock-based compensation                         713,902       131,384
      Unrealized foreign exchange (gain) loss           41,900       (36,975)
                                                   --------------------------

                                                   (10,842,999)   (6,170,305)

    Change in non-cash working capital and
     other balances related to operations             (251,140)   (1,147,959)
                                                   --------------------------

                                                   (11,094,139)   (7,318,264)
                                                   --------------------------

    Financing activities
    Issuance of units                                        -    18,081,000
    Share issue costs                                  (20,284)   (1,193,031)
    Exercise of stock options                          167,914        63,361
    Proceeds from long-term debt                       777,811     1,658,122
    Repayment of long-term debt                       (612,938)     (173,826)
                                                   --------------------------

                                                       312,503    18,435,626
                                                   --------------------------

    Investing activities
    Proceeds on sale of property and equipment           7,000        12,300
    Acquisition of property and equipment           (1,410,000)   (1,452,963)
                                                   --------------------------

                                                    (1,403,000)   (1,440,663)
                                                   --------------------------

    Increase (decrease) increase in cash
     and cash equivalents                          (12,184,636)    9,676,699

    Cash and cash equivalents
     - Beginning of year                            28,513,095    18,836,396
                                                   --------------------------

    Cash and cash equivalents - End of year         16,328,459    28,513,095
                                                   --------------------------
                                                   --------------------------

    Supplemental information
    Cash interest received                             444,063       341,510
    Cash interest paid                                 167,026        16,802
    Non-cash transactions
      Share issue costs included in
       accounts payable                                      -        20,284
      Capital items included in accounts payable       362,608        94,256
      Proceeds from issuance of common shares
       included in accounts receivable                   4,186             -
    



    %SEDAR: 00020947E




For further information:

For further information: SemBioSys Genetics Inc., Mr. Andrew Baum,
President and Chief Executive Officer, Phone: (403) 717-8767, Fax: (403)
250-3886, E-mail: bauma@sembiosys.com, Internet: www.sembiosys.com; Investor
Relations, Ross Marshall, The Equicom Group Inc., Phone: (416) 815-0700 (Ext.
238), Fax: (416) 815-0080, E-mail: rmarshall@equicomgroup.com

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