SemBioSys announces first quarter 2009 financial and operational results



    CALGARY, May 15 /CNW/ - SemBioSys Genetics Inc. (TSX:SBS), specializing
in the manufacture of high-value proteins and oils in plant seeds, today
announced its first quarter 2009 financial and operational results.
    "SemBioSys continues to meet key milestones, and most importantly we
achieved the successful completion of the Phase I/II clinical trial of
safflower-produced insulin," said James Szarko, Chief Executive Officer of
SemBioSys. "The positive results of the insulin study are a validation of
SemBioSys' enabling technology for protein expression: we have now firmly
established that our proprietary safflower seed platform is capable of making
a biopharmaceutical that is equivalent to currently marketed drugs. In
addition, we expect preclinical remodeling and regression results shortly for
our Apo AI(Milano) product candidate. Data from both of these programs should
further enhance the partnership discussions that are ongoing."
    Szarko continued, "Strengthening our balance sheet and extending our
runway remain our top priorities. Subsequent to quarter end, we reached an
agreement with AVAC for a non-dilutive investment of up to $1.5 million for
the development of our Apo AI(Milano) candidate and we continue to pursue a
number of other funding opportunities."

    
    Highlights

    Insulin Program

    -   Announced in March 2009 the preliminary results of a single-dose
        three-arm Phase I/II clinical trial of SBS-1000 in the United Kingdom
        wherein safflower-produced insulin was shown to be bioequivalent to
        Humulin(R) R.
    -   Received a US$500,000 option payment from MannKind Corporation
        (MannKind) in January 2009 together with a US$2,000,000 investment in
        return for 2,400,000 units of SemBioSys comprising one common share
        of SemBioSys and one-tenth of one common share purchase warrant of
        SemBioSys. The option for MannKind to license rights to SemBioSys'
        plant-produced insulin for AFRESA(TM) expired on March 31, 2009.

    Apo AI(Milano)

    -   Announced that an agreement was reached with AVAC Limited, subsequent
        to the end of the quarter, where AVAC will provide a non-dilutive
        investment of up to $1.5 million for the development of the Apo
        AI(Milano) candidate.
    -   Successfully completed the harvest of approximately 15 tonnes of Apo
        AI(Milano) seed, subsequent to the end of the quarter, which should
        provide sufficient material to conduct toxicology studies and the
        filing of an investigational new drug application (IND) to the US
        Food and Drug Administration (FDA).
    -   Continued to carry out the in vivo plaque remodeling and regression
        studies initiated in the third quarter of 2008 at Cedars Sinai
        Hospital at UCLA.

    Botaneco

    -   Subsequent to the end of the quarter, Botaneco launched its third
        product, Hydresia(TM) Dulcé, a natural emulsion base isolated from
        sweet almonds that retains all of the functional properties of
        Hydresia(TM) and Hydresia(TM) G2 while offering the skin benefits of
        sweet almond oil. Hydresia(TM) Dulcé has been authorized by
        ECOCERT(R) as an approved raw material, complying with the standards
        for ecological and organic cosmetics.
    -   Continued to expand the formulation of new products and customer
        base, including the launch of a product line by a multinational
        consumer healthcare company.
    -   Received milestone payments of a non-dilutive investment of a total
        of CDN$1,173,000 from AVAC.

    Outlook

    The Company anticipates a number of upcoming milestone events including:

    -   Insulin: post Phase II meeting with the US FDA regarding further
        development of SBS-1000
    -   Apo AI(Milano): in vivo plaque remodeling and regression data in the
        first half of 2009
    -   In-house manufacture of Apo AI(Milano) material for toxicology
        studies
    -   Further progress with the partnering of both insulin and Apo AI
        (Milano)
    -   Botaneco: further expansion of the customer/product base (currently
        more than 30 customers and approximately 40 Hydresia(TM) SKUs)
    -   Financing activities to extend cash runway
    

    Financials

    Net loss for the three-month period ended March 31, 2009 was $3,828,453
or $0.14 per share, compared to a net loss of $5,017,055 or $0.19 per share
for the three-month period ended March 31, 2008.
    Total revenue for the three-month period ended March 31, 2009 was
$1,299,464 compared with $210,027 for the corresponding period in 2008. The
difference is due mainly to the recognition of licensing option fees in the
first quarter of 2009 from the option agreement entered into with MannKind in
the fourth quarter of 2008. The increase is partially offset by the 2008
licensing option fee payment received from The Instituto de Agrobiotecnologia
Roasario S.A.
    Total expenditures (net of cost recoveries) for the three-month period
ended March 31, 2009 were $4,931,946 compared with $5,257,611 for the
three-month period ended March 31, 2008. However, total expenditures excluding
non-cash items (stock-based compensation, amortization) and cost recoveries
for the three-month period ended March 31, 2009 were $4,116,260 compared with
$5,116,243 for the three-month period ended March 31, 2008. The decrease is
primarily due the cost reductions implemented in the Biopharmaceuticals and
Bioproducts segment in the fourth quarter of 2008 and decreased preclinical
costs as the majority of the preclinical work for the insulin clinical trial
was completed in 2008. This decrease was offset by a modest increase in the
Specialty Ingredients segment due to the growth of the business. The reduction
in cost recoveries for the three month period ended March 31, 2009 as compared
to the three month period ended March 31, 2008 resulted from the achievement
of all outstanding milestones related to the agreement with AVAC Ltd. for the
insulin program in 2008.
    As of March 31, 2009 the Company had cash and cash equivalents of
$3,002,121 and a net positive working capital balance of $3,049,417, compared
to $3,819,796 and $3,730,413 respectively at December 31, 2008. Total
long-term debt and convertible debentures was $5,650,858 at March 31, 2009
compared to $5,127,829 at December 31, 2008.
    The decrease in cash and working capital during the period resulted
primarily from net cash burn, which includes significant costs for the insulin
clinical trial that was completed in the first quarter of 2009. The increase
in long-term debt and convertible debentures is primarily a result of the
$500,000 of a non-dilutive investment received from AVAC in the first quarter
of 2009 that is secured by certain Botaneco assets.
    Further information surrounding the Company's financial results and
Management's discussion of those results can be found in the Company's
unaudited consolidated financial statements and related notes for the three
month period ended March 31, 2009 as well as Management's Discussion and
Analysis for the same period. These documents are available by accessing the
SEDAR website at www.sedar.com.
    As at May 15, 2009 the Company had 28,788,251 common shares outstanding,
2,630,000 warrants and 3,046,086 options.

    About SemBioSys

    Calgary, Alberta-based SemBioSys is a world leader in manufacturing
high-value proteins and oils in plant seeds. With its unique, proprietary
platform, SemBioSys provides partners with product enablement, exceptionally
low cost and unprecedented scalability. The Company applies this platform with
high selectivity to opportunities where it has a unique competitive advantage.
Since its inception, SemBioSys has produced more than 50 non-native proteins
and oils using its patented seed technology, demonstrating applicability
across a broad range of industries such as pharmaceuticals, personal care and
industrial products. The Company's current pharmaceutical development programs
include insulin (SBS-1000, regulated as a biosimilar in Europe) and Apo
AI(Milano), a next-generation cardiovascular therapy. SemBioSys is listed on
the Toronto Stock Exchange under the ticker SBS. More information is available
at www.sembiosys.com.

    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 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, the submission of a CTA to the appropriate European
authorities, the successful initiation and timely and successful completion of
clinical studies, the fact that Apo AI(Milano) 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.

    
    SemBioSys Genetics Inc.
    CONSOLIDATED BALANCE SHEETS

                                                     March 31,   December 31,
    (Unaudited)                                          2009           2008
    (expressed in Canadian dollars)                         $              $
    -------------------------------------------------------------------------

    ASSETS

    Current assets
    Cash and cash equivalents                       3,002,121      3,819,796
    Accounts receivable                               177,528        912,702
    Prepaid expenses and deposits                     290,199        457,693
    Inventory                                       1,737,844      1,929,289
                                                -----------------------------
                                                    5,207,692      7,119,480

    Property and equipment                          7,535,993      8,009,624
                                                -----------------------------

                                                   12,743,685     15,129,104
                                                -----------------------------
                                                -----------------------------

    LIABILITIES

    Current liabilities
    Accounts payable and accrued liabilities        1,561,365      2,237,225
    Deferred revenue                                        -        612,295
    Short-term portion of long-term debt              477,709        539,547
    Short-term portion of convertible
     debenture interest                               119,201              -
                                                -----------------------------
                                                    2,158,275      3,389,067

    Deferred cost recoveries                            9,259         39,557
    Long-term debt                                  2,237,838      1,773,776
    Convertible debenture                           2,816,110      2,814,506
                                                -----------------------------
                                                    7,221,482      8,016,906
                                                -----------------------------
                                                -----------------------------

    SHAREHOLDERS' EQUITY

    Capital stock                                  72,278,212     70,428,431

    Warrants                                        2,630,463      2,550,880

    Contributed surplus                            12,078,538     11,802,064

    Equity component of convertible debenture       1,427,127      1,427,127

    Accumulated other comprehensive loss               32,620              -

    Deficit                                       (82,924,757)   (79,096,304)
                                                -----------------------------
                                                    5,522,203      7,112,198
                                                -----------------------------

                                                   12,743,685     15,129,104
                                                -----------------------------
                                                -----------------------------



    SemBioSys Genetics Inc.
    CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT

                                                    Three month period ended
                                                     March 31,      March 31,
    (Unaudited)                                          2009           2008
    (expressed in Canadian dollars, except shares)          $              $
    -------------------------------------------------------------------------

    REVENUE

    Licensing option fees                           1,161,495         50,110
    Product sales                                     137,969        159,917
                                                -----------------------------
                                                    1,299,464        210,027

    EXPENSES

    Research and development                        1,914,856      2,794,103
    General and administration                      1,305,456      1,395,275
    Intellectual property costs                       299,007        342,330
    Cost of products sold                             249,734        271,745
    Sales and marketing                               191,433        153,160
    Business development                              155,774        159,630
    Stock-based compensation                          276,474        179,903
    Amortization                                      570,767        493,834
    Cost recoveries                                   (31,555)      (532,369)
                                                -----------------------------
                                                    4,931,946      5,257,611
                                                -----------------------------

    Loss before the undernoted                     (3,632,482)    (5,047,584)
                                                -----------------------------
                                                -----------------------------

    Interest income                                     8,612        170,858
    Interest expense                                 (166,903)       (61,664)
    Foreign exchange loss                             (37,680)       (78,665)
                                                -----------------------------
                                                -----------------------------

                                                     (195,971)        30,529
                                                -----------------------------

    Net loss for the period                        (3,828,453)    (5,017,055)

    Deficit - Beginning of period                 (79,096,304)   (56,159,163)
                                                -----------------------------

    Deficit - End of period                       (82,924,757)   (61,176,218)
                                                -----------------------------
                                                -----------------------------

    Loss per share - basic and diluted                  (0.14)         (0.19)
                                                -----------------------------
                                                -----------------------------

    Weighted average shares outstanding            28,299,952     25,935,792
                                                -----------------------------
                                                -----------------------------



    SemBioSys Genetics Inc.
    CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

                                                    Three month period ended
                                                     March 31,      March 31,
    (Unaudited)                                          2009           2008
    (expressed in Canadian dollars)                         $              $
    -------------------------------------------------------------------------

    Net loss for the period                        (3,828,453)   (5,017,055)

    Other comprehensive loss
    Foreign currency translation adjustment            32,620             -
                                                -----------------------------

    Comprehensive loss                             (3,795,833)   (5,017,055)
                                                -----------------------------
                                                -----------------------------



    ACCUMULATED OTHER COMPREHENSIVE LOSS
                                                                 Three month
                                                                period ended
                                                                    March 31,
    (Unaudited)                                                         2009
    (expressed in Canadian dollars)                                        $
    -------------------------------------------------------------------------

    Accumulated other comprehensive income
     - beginning of period                                                 -

    Change in accounting policy - foreign currency
     translation adjustment                                           26,534
    Foreign currency translation adjustment                            6,086
                                                -----------------------------
    Accumulated other comprehensive income
     - end of period                                                  32,620
                                                -----------------------------
                                                -----------------------------



    SemBioSys Genetics Inc.
    CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                    Three month period ended
                                                     March 31,      March 31,
    (Unaudited)                                          2009           2008
    (expressed in Canadian dollars)                         $              $
    -------------------------------------------------------------------------

    Cash provided by (used in)

    Operating activities
    Net loss for the period                        (3,828,453)    (5,017,055)
    Add items not affecting cash:
      Amortization                                    570,767        493,834
      Stock-based compensation                        276,474        179,903
      Stock-based payments                            152,985              -
      Unrealized foreign exchange loss                 28,070         44,011
      Non-cash interest expense                       145,610         18,780
                                                -----------------------------
                                                   (2,654,547)    (4,280,527)
                                                -----------------------------
                                                -----------------------------

    Change in non-cash working capital
     and other balances related to operations        (232,456)       209,916
                                                -----------------------------

    Cash used in operating activities              (2,887,003)    (4,070,611)
                                                -----------------------------
                                                -----------------------------

    Financing activities
    Issuance of capital stock                       1,752,000              -
    Share issue costs                                 (43,312)       (57,884)
    Issuance of warrants                               81,600              -
    Warrant issue costs                                (2,017)             -
    Exercise of stock options                               -         31,750
    Proceeds from long-term debt                      500,000        634,900
    Repayment of long-term debt                      (139,675)      (152,546)
                                                -----------------------------

    Cash provided by financing activities           2,148,596        456,220
                                                -----------------------------
                                                -----------------------------

    Investing activities
    Acquisition of property and equipment             (79,268)      (544,844)
                                                -----------------------------

    Cash used in investing activities                 (79,268)      (544,844)
                                                -----------------------------
                                                -----------------------------

    Decrease in cash and cash equivalents            (817,675)    (4,159,235)

    Cash and cash equivalents -
     Beginning of period                            3,819,796     20,444,013
                                                -----------------------------
                                                -----------------------------

    Cash and cash equivalents -
     End of period                                  3,002,121     16,284,778
                                                -----------------------------
                                                -----------------------------

    Supplemental Information
    Cash interest received                             12,355        100,607
    Cash interest paid                                 21,207         28,755
    Non-cash transactions
      Capital items included in accounts
       payable                                          8,106        112,838
      Share issue costs included in accounts
       payable                                         11,892              -
                                                -----------------------------
                                                -----------------------------
    





For further information:

For further information: The Trout Group, Christine Labaree, Managing
Director, Phone: (617) 583-1307, E-mail: clabaree@troutgroup.com; The Equicom
Group Inc., Ross Marshall, Vice President, Phone: (416) 815-0700 ext. 238,
E-mail: rmarshall@equicomgroup.com

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