SemBioSys announces 2007 third quarter results



    - Canadian Biotechnology Company demonstrates the technical feasibility
    of a second high-value biopharmaceutical in safflower -

    TSX symbol: SBS

    CALGARY, Nov. 1 /CNW/ - SemBioSys Genetics Inc. (TSX:SBS), a
biotechnology company developing a portfolio of therapeutic proteins for
metabolic and cardiovascular diseases, today announced its 2007 third quarter
operational and financial results.

    
    Highlights

    -   Successfully developed commercially viable levels of both
        apolipoprotein AI (Apo AI) Milano variant and, subsequent to the end
        of the quarter, native Apo AI accumulation in safflower seed.
    -   Continued the preclinical work necessary to submit an Investigational
        New Drug application (IND) to the United States Food and Drug
        Administration (FDA) in early 2008 to initiate a Phase II trial for
        safflower-produced insulin.
    -   Established Botaneco, a separate business unit dedicated to the
        commercialization of SemBioSys' oilbody products for the cosmetics,
        personal care and prescription topical dermatology markets.
    -   Commissioned the Company's commercial scale manufacturing operation
        for the Botaneco business and subsequent to the end of the quarter
        launched Hydresia(TM), Botaneco's first branded line of oilbody-based
        ingredients.
    -   Obtained $2.4 million in non-dilutive development funding from AVAC
        Ltd. to develop the Botaneco business, subsequent to quarter end.
    -   Entered into an agreement to complete a private placement financing
        for total gross proceeds of approximately $9,568,000, of which
        $6,500,000 was completed on a bought deal basis, subsequent to
        quarter end.
    -   Appointed Mr. Ian S. Brown to the Board of Directors, subsequent to
        quarter end. Mr. Brown is an independent businessman with over
        25 years of financial and capital markets experience who presently
        sits on the Boards of several public and private companies.
    

    "We continue to demonstrate momentum across both our pharmaceutical and
non-pharmaceutical pipeline products, highlighted by our two successful
announcements on the commercial levels of native Apo AI and Apo AIMilano
accumulation in safflower. Additionally, we continue to work on the
preclinical development of safflower-produced insulin in preparation for our
IND submission and our planned Phase II trial which we expect to initiate in
2008," said Andrew Baum, President and CEO of SemBioSys Genetics Inc. "We have
now clearly established the technical viability of our oilbody-oleosin
technology to produce commercial biopharmaceuticals that target large markets
in diabetes and cardiovascular disease management. On the non-pharmaceutical
side, we have commissioned the commercial manufacturing for our oilbody
product and expect to generate modest revenue in the fourth quarter of 2007."

    Financials

    Please note that prior to the third quarter of 2007, SemBioSys operated
under one segment. During the quarter, Botaneco completed the construction of
its manufacturing facility and SemBioSys began operating in two reportable
segments: (i) the Biopharmaceutical, Animal Health, and Nutritional Oils
segment focused on the Company's lead pharmaceutical candidates, recombinant
human insulin and Apo AI, in addition to its animal health product,
ImmunoSphere(TM) and nutritional oils, DHA and GLA and (ii) the Specialty
Ingredients segment which will manufacture and market branded lines of
naturally derived base emulsions and delivery systems used in the development
of cosmetics, personal care, prescription topical/dermatology, and food
products through the Botaneco business unit.
    Total revenue for the three-month and nine-month periods ended
September 30, 2007 were $38,629 and $1,045,467 respectively, compared with
$123,039 and $390,570 for the corresponding periods in 2006. The difference in
revenue relates primarily to the recognition of an upfront license fee payment
received from Martek in the first quarter of 2007 as well as contract research
revenue recognized in the first half of 2007 and three-month and nine-month
periods ended September 30, 2006.
    Total expenditures for the three-month and nine-month periods ended
September 30, 2007 were $4,022,642 and $12,017,416 respectively, compared with
$2,949,791 and $10,706,226 for the corresponding periods last year.
    Research and development expenses for the three-month and nine-month
periods ended September 30, 2007 were $1,892,224 and $5,560,941 respectively,
compared with $1,360,045 and $3,843,207 for the corresponding periods last
year. The difference is primarily from increased personnel and outsourcing
related to preclinical costs and the related support costs in all areas of
research and development with an expanded focus on insulin and Apo AI. As
SemBioSys prepares to enter clinical trials, all lab related activities
continue to substantially increase resulting in a higher overall cost. The
Company has also expanded the plant growth team and infrastructure both
indoors and in the field as its programs further progress.
    General and administrative expenses for the three-month and nine-month
periods ended September 30, 2007 were $1,041,949 and $3,152,426 respectively,
compared with $903,753 and $2,695,669 for the corresponding periods last year.
The difference is mainly due to newly added staff to support expanded
operations and increased investor relations activities as the Company broadens
its exposure to U.S. and European markets.
    Intellectual property costs for the three-month and nine-month periods
ended September 30, 2007 were $237,430 and $1,073,093 respectively, compared
with $217,269 and $2,561,564 for the corresponding periods last year. This
difference in the nine-month period is primarily attributable to a $1,516,906
non-cash license fee incurred in the second quarter of 2006 for the
acquisition of technology from Syngenta Crop Protection AG in exchange for
warrants.
    Business development costs for the three-month and nine-month periods
ended September 30, 2007 were $396,481 and $1,115,033 respectively, compared
with $134,182 and $586,279 for the corresponding periods last year. The
difference is primarily related to the commercialization activities of
Botaneco.
    Net loss for the three-month period ended September 30, 2007 was
$3,680,950 or ($0.17) per share, compared to a net loss of $2,659,025 or
($0.16) per share for the same period last year. Net loss for the nine-month
period ended September 30, 2007 was $10,134,732 or ($0.48) per share compared
with $9,771,546 or ($0.59) for the same nine-month period last year.
    As at September 30, 2007 the Company had cash and cash equivalents
totaling $17,329,814 compared to $22,877,784 at June 30, 2007.
    Subsequent to the end of the quarter the Company entered into an
agreement to issue 2,500,000 units of the Company at a price of $2.60 per
unit, on a bought deal private placement basis to a syndicate of underwriters.
The Company also granted the underwriters an over-allotment option to purchase
up to an additional 1,180,000 units on the same terms as the initial amount
which, if exercised in full, would raise the total gross proceeds to the
Company to $9,658,000. The offering is expected to close on or about
November 14, 2007 and is subject to the receipt of all necessary regulatory
and stock exchange approvals, as well as completion of standard documentation
and other customary terms and conditions. Each unit will consist of one common
share of the Company and one-half of one common share purchase warrant.

    Outlook

    The Company has completed a number of the major scientific milestones
necessary to proceed into human clinical trials of safflower-produced insulin
in the first half of 2008. Additional upcoming insulin milestone events
include:

    
    -   Complete the preclinical testing of safflower-produced insulin
    -   Complete the technology transfer and scale-up of insulin processing
        and formulation to the Company's contract manufacturer for Phase II
        clinical material and production of clinical grade material for early
        stage human trials
    -   Submit an IND to the FDA and prepare for Phase II clinical trial
    -   Continue business development activities toward an insulin
        partnership

    With the Company's recent achievement of successfully developing
commercial levels of Apo AI, the upcoming Apo AI milestone events include:

    -   Functional equivalence of Arabidopsis-produced Apo AI and serum-
        derived Apo AI in animal trials
    -   Functional equivalence of safflower-produced Apo AI and serum-derived
        Apo AI in animal trials

    In addition to its pharmaceutical milestones, the Company is also
advancing the development of its non-pharmaceutical products. The upcoming
milestone events expected from these programs include:

    -   Establish commercial distribution channels for its personal care
        topical oilbody products through the Botaneco business unit
    -   Establish Botaneco as a separate legal entity
    -   Initiate pond trials for the Company's shrimp feed additive,
        ImmunoSphere(TM)
    

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

    Calgary, Alberta-based SemBioSys Genetics Inc. is a biotechnology company
developing protein-based pharmaceuticals for metabolic and cardiovascular
diseases. The Company's lead pharmaceutical candidates, produced in the plant
host safflower, are recombinant human insulin to serve the rapidly expanding
global diabetes market and Apo AI, a next generation cardiovascular drug. In
addition to its pharmaceutical products, SemBioSys is developing a series of
non-pharmaceutical products addressing human topical, nutritional oils and
animal health 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 and market size, the acceptance of an
IND by the FDA in respect of clinical studies and the successful and timely
completion of clinical studies, the fact that Apo AI is currently a
development stage drug, 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.

    Financials results included below:


    
    SemBioSys Genetics Inc.
    Consolidated Balance Sheets
    (Unaudited)
    As at September 30, 2007 and December 31, 2006
    -------------------------------------------------------------------------

    (expressed in Canadian dollars)

                                                  September 30,  December 31,
                                                       2007          2006
                                                  ------------- -------------
                                                         $             $
    Assets
    Current assets
    Cash and cash equivalents                       17,329,814    16,328,459
    Accounts receivable                                407,139       526,002
    Interest receivable                                117,378       504,551
    Prepaid expenses and deposits                      345,811       392,094
    Inventory                                           63,239        13,365
                                                  ------------- -------------
                                                    18,263,381    17,764,471

    Property and equipment                           8,964,965     5,157,163
                                                  ------------- -------------

                                                    27,228,346    22,921,634
                                                  ------------- -------------
                                                  ------------- -------------

    Liabilities
    Current liabilities
    Accounts payable and accrued liabilities         1,476,720     1,356,018
    Repayable advances                                       -        85,640
    Short-term portion of long-term debt               626,984       746,658
                                                  ------------- -------------
                                                     2,103,704     2,188,316

    Deferred cost recoveries                           285,408        84,203

    Long-term debt                                     673,683     1,337,445
                                                  ------------- -------------
                                                     3,062,795     3,609,964
                                                  ------------- -------------
                                                  ------------- -------------

    Shareholders' Equity

    Capital stock                                   62,739,610    48,302,036

    Warrants                                         6,274,716     6,274,716

    Contributed surplus                              6,026,443     5,475,404

    Deficit                                        (50,875,218)  (40,740,486)
                                                  ------------- -------------
                                                    24,165,551    19,311,670
                                                  ------------- -------------

                                                    27,228,346    22,921,634
                                                  ------------- -------------
                                                  ------------- -------------



    SemBioSys Genetics Inc.
    Consolidated Statements of Loss, Comprehensive Loss and Deficit
    (Unaudited)
    -------------------------------------------------------------------------

    (expressed in Canadian dollars)

                             Three month period         Nine month period
                             ended September 30,       ended September 30,
                          ------------------------- -------------------------
                              2007         2006         2007         2006
                          ------------ ------------ ------------ ------------
                                $            $            $            $
    Revenue
    Licensing fees                  -            -      874,024            -
    Contract research               -      123,039      122,304      390,570
    Product sales              38,629            -       49,139            -
                          ------------ ------------ ------------ ------------
                               38,629      123,039    1,045,467      390,570

    Expenses
    Research and
     development            1,892,224    1,360,045    5,560,941    3,843,207
    General and
     administration         1,041,949      903,753    3,152,426    2,695,669
    Intellectual
     property costs           237,430      217,269    1,073,093    2,561,564
    Business development      396,481      134,182    1,115,033      586,279
    Stock-based
     compensation             185,335      189,925      551,039      536,368
    Amortization              328,684      209,978      798,629      610,500
    Cost recoveries           (59,461)     (65,361)    (233,745)    (127,361)
                          ------------ ------------ ------------ ------------
                            4,022,642    2,949,791   12,017,416   10,706,226
                          ------------ ------------ ------------ ------------

    Loss before the
     undernoted            (3,984,013)  (2,826,752) (10,971,949) (10,315,656)
                          ------------ ------------ ------------ ------------

    Interest income           216,090      217,495      691,285      668,100
    Interest expense          (43,406)     (41,158)    (153,949)    (135,511)
    Loss on sale of
     property and equipment         -            -       (1,483)     (16,802)
    Foreign exchange
     gain (loss)              130,379       (8,610)     301,364       28,323
                          ------------ ------------ ------------ ------------

                              303,063      167,727      837,217      544,110
                          ------------ ------------ ------------ ------------

    Net loss and
     comprehensive loss
     for the period        (3,680,950)  (2,659,025) (10,134,732)  (9,771,546)

    Deficit - Beginning
     of period            (47,194,268) (33,725,921) (40,740,486) (26,613,400)
                          ------------ ------------ ------------ ------------

    Deficit - End
     of period            (50,875,218) (36,384,946) (50,875,218) (36,384,946)
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------

    Loss per share -
     basic and diluted          (0.17)       (0.16)       (0.48)       (0.59)
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------

    Weighted average
     shares outstanding    22,167,171   16,775,190   21,069,493   16,674,148
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------



    SemBioSys Genetics Inc.
    Consolidated Statements of Cash Flows
    (Unaudited)
    -------------------------------------------------------------------------

    (expressed in Canadian dollars)

                             Three month period         Nine month period
                             ended September 30,       ended September 30,
                          ------------------------- -------------------------
                              2007         2006         2007         2006
                          ------------ ------------ ------------ ------------
                                $            $            $            $
    Cash provided by
     (used in)
    Operating activities
    Net and comprehensive
     loss for the period   (3,680,950)  (2,659,025) (10,134,732)  (9,771,546)
    Add items not
     affecting cash:
      Amortization            328,684      209,978      798,629      610,500
      Acquisition of
       intellectual property
       for warrants                 -            -            -    1,516,906
      Loss on sale of
       property and equipment       -            -        1,483       16,802
      Stock-based
       compensation           185,335      189,925      551,039      536,368
      Unrealized foreign
       exchange loss (gain)   (70,220)       6,378     (219,764)     (44,452)
                          ------------ ------------ ------------ ------------
                           (3,237,151)  (2,252,744)  (9,003,345)  (7,135,422)

    Change in non-cash
     working capital and
     other balances related
     to operations            (54,034)    (348,804)     741,263     (590,830)
                          ------------ ------------ ------------ ------------

    Cash used in operating
     activities            (3,291,185)  (2,601,548)  (8,262,082)  (7,726,252)
                          ------------ ------------ ------------ ------------

    Financing activities
    Issuance of
     capital stock                  -            -   15,904,488            -
    Share issue costs               -            -   (1,525,478)           -
    Exercise of stock options  48,250            -       62,750      167,914
    Proceeds from
     long-term debt                 -      777,811            -      777,811
    Repayment of
     long-term debt          (171,305)    (147,183)    (547,117)    (437,992)
    Repayment of repayable
     advances                       -            -      (85,640)           -
                          ------------ ------------ ------------ ------------
    Cash provided by
     (used in) financing
     activities              (123,055)     630,628   13,809,003      507,733

    Investing activities
    Proceeds on sale of
     property and equipment         -        7,000        6,000        7,000
    Acquisition of property
     and equipment         (2,133,730)    (295,940)  (4,551,566)    (686,902)
                          ------------ ------------ ------------ ------------

    Cash used in investing
     activities            (2,133,730)    (288,940)  (4,545,566)    (679,902)
                          ------------ ------------ ------------ ------------

    Increase (decrease)
     in cash and cash
     equivalents           (5,547,970)  (2,259,860)   1,001,355   (7,898,421)

    Cash and cash
     equivalents
     - Beginning
     of period             22,877,784   22,874,534   16,328,459   28,513,095
                          ------------ ------------ ------------ ------------

    Cash and cash
     equivalents
     - End of period       17,329,814   20,614,674   17,329,814   20,614,674
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------

    Supplemental Information
    Cash interest received    166,065       77,421    1,078,458      324,804
    Cash interest paid         39,842       37,304      139,048      123,950
    Non-cash transactions
      Capital items included
       in accounts payable    424,956      221,773      424,956      221,773
    

    %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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SemBioSys Genetics Inc.

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