SemBioSys announces first quarter 2010 financial and operational results

CALGARY, May 13 /CNW/ - SemBioSys Genetics Inc. (TSX:SBS), a leader in the development of Biosimilars, proprietary pharmaceuticals and high value proteins utilizing plants for their production, today reported its operational and unaudited financial results for the first quarter ended March 31, 2010.

"We have experienced significant new interest in our drug development programs and platform technologies during the quarter. Additional strategic discussions for our Biosimilar insulin program were spurred on by a rapidly growing need for affordable sources of insulin in developing pharmaceutical markets, most notably China and India." stated James Szarko, Chief Executive Officer of SemBioSys. He continued, "The acquisition of Pfizer's Apo program by the Medicines Company earlier in the year, has served as a catalyst in furthering our Apo AI(Milano) program discussions with several candidate partner organizations. I remain very confident in the progress we are making on a number of fronts."

Highlights

    
    Corporate

    -   SemBioSys' GLA Program licensing partner, Arcadia Biosciences Inc.,
        completed U.S. Food and Drug Administration (FDA) registration for a
        GLA-rich safflower oil and successfully completed the manufacturing
        of its first commercial batch. Pursuant to our partnership agreement
        with Arcadia, SemBioSys is due to receive royalty payments on future
        GLA product sales.

    -   Completed a non-brokered private placement for gross proceeds to the
        Company of $1,778,595

    Apo AI(Milano)

    -   SemBioSys/Cedars-Sinai Heart Institute Research collaboration: Dr.
        Prediman K. Shah, presented a poster illustrating the results of a
        highly successful preclinical study involving SemBioSys' Apo
        AI(Milano). (being developed for acute treatment of arterial plaque
        build up) at the American College of Cardiology's (ACC) 59th
        Scientific Sessions in Atlanta.

    Biosimilar Insulin

    -   CTV National News and Canada AM ran a "prime time" story on
        SemBioSys' game changing plant-based Biosimilars production platform.
        Story documented SemBioSys' Biosimilar Insulin (SBS-1000), which can
        be made in plants, in high volumes at potentially lower cost than
        current production methods.
    

Financials

SemBioSys has historically operated in two reportable segments: (i) Biopharmaceuticals and Bioproducts and (ii) Specialty Ingredients. Effective July 29, 2009, the Company divested its majority interest in Botaneco Specialty Ingredients Inc. and Botaneco Inc. (collectively referred to as "Botaneco"), and, therefore, it no longer has control nor significant influence over these entities. As a result, the Specialty Ingredients segment is no longer being consolidated and its operating results are included in discontinued operations.

Net loss for the three months ended March 31, 2010 compared to the same period last year:

    
    -   $2,063,751 or $0.05 per share from continuing operations compared to
        $2,457,677 or $0.09 per share;
    -   $nil from discontinued operations compared to $1,370,776 or $0.05 per
        share; and
    -   $2,063,751 or $0.05 per share in total net loss compared to
        $3,828,453 or $0.14 per share.
    

Net loss decreased in 2010 as a result of completing the insulin clinical trials in the first quarter of 2009, combined with the savings realized from the cost reduction programs implemented in the third quarter of 2009.

Revenue for the three months ended March 31, 2010 compared to the same period last year:

    
    -   $356,465 in revenue from continuing operations compared to
        $1,161,495;
    -   $nil in revenue from discontinued operations compared to $137,969;
        and
    -   $356,465 in total revenue compared to $1,299,464.
    

The decrease in revenue in 2010 for continuing operations is due mainly to the recognition of licensing option fees in 2009 from an option agreement entered into with MannKind in the fourth quarter of 2008, offset by licensing fees in 2010 related to the Company's GLA program.

Expenditures (net of cost recoveries in each case) for the three months ended March 31, 2010 compared to the same period last year:

    
    -   $2,315,892 in expenditures from continuing operations compared to
        $3,589,252;
    -   $nil in expenditures from discontinued operations compared to
        $1,342,694; and
    -   $2,315,892 in total expenses net of cost recoveries compared to
        $4,931,946.
    

The overall decrease in expenditures is primarily due to the cost reductions implemented in the third quarter of 2009, in addition to decreased post-clinical costs as the majority of the post-clinical work for the insulin clinical trial was completed in the first quarter of 2009.

As of March 31, 2010 the Company had cash and cash equivalents from continuing operations of $3,011,583 and a net positive working capital balance of $1,672,624, compared to $3,687,548 and $1,595,217 respectively at December 31, 2009 The short-term portion of long-term debt was $1,605,409 at March 31, 2010 compared to $1,534,535 at December 31, 2009.

As at May 12, 2010 the Company had 51,259,536 common shares outstanding, 12,655,341 warrants, 2,088,198 options, 1,423,840 broker warrants and 519,857 deferred stock units.

About SemBioSys

Calgary, Alberta-based SemBioSys is focused on leveraging its unique proprietary platform to manufacture high-value proteins and oils. SemBioSys' seed-based protein production system can provide for its partners product enablement, exceptionally low cost and unprecedented scalability. SemBioSys is applying the platform with high selectivity to products with tremendous clinical promise and value potential. 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' proprietary safflower-derived Apo AI(Milano) is a des-1,2- variant of Apo AI(Milano) as previously described in the literature. 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

    (unaudited)
    (expressed in Canadian dollars)
    -------------------------------------------------------------------------

                                                      March 31,  December 31,
                                                          2010          2009
                                                             $             $
                                                  ------------- -------------
    ASSETS

    Current assets
    Cash and cash equivalents                        3,011,583     3,687,548
    Investment                                         326,229       380,601
    Accounts receivable                                458,979       124,083
    GST receivable                                      82,380        52,649
    Prepaid expenses, deposits and other               292,125       175,894
                                                  ------------- -------------
                                                     4,171,296     4,420,775

    Property and equipment                           3,329,424     3,683,462
                                                  ------------- -------------

                                                     7,500,720     8,104,237
                                                  ------------- -------------
                                                  ------------- -------------

    LIABILITIES

    Current liabilities
    Accounts payable and accrued liabilities           893,263     1,291,023
    Short-term portion of long-term debt             1,605,409     1,534,535
                                                  ------------- -------------
                                                     2,498,672     2,825,558
                                                  ------------- -------------
                                                  ------------- -------------
    SHAREHOLDERS' EQUITY

    Capital stock                                   75,444,408    73,726,414
    Warrants                                         3,527,425     3,527,425
    Contributed surplus                             13,887,896    13,764,398
    Accumulated other comprehensive loss              (108,744)      (54,372)
    Deficit                                        (87,748,937)  (85,685,186)
                                                  ------------- -------------
                                                     5,002,048     5,278,679
                                                  ------------- -------------

                                                     7,500,720     8,104,237
                                                  ------------- -------------
                                                  ------------- -------------



    SemBioSys Genetics Inc.
    CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT

    (unaudited)
    (expressed in Canadian dollars, except shares)
    -------------------------------------------------------------------------
                                                    Three month period ended
                                                      March 31,     March 31,
                                                          2010          2009
                                                             $             $
                                                  ------------- -------------
    REVENUE

    Licensing option fees                                    -     1,161,495
    Licensing fees                                     315,789             -
    Contract research                                   40,676             -
                                                  ------------- -------------
                                                       356,465     1,161,495

    EXPENSES

    Research and development                         1,098,065     2,022,908
    General and administration                         373,323       561,399
    Intellectual property costs                        231,673       265,231
    Business development                               139,462       155,774
    Stock-based compensation                           123,498       230,646
    Amortization                                       354,038       373,599
    Cost recoveries                                     (4,167)      (20,305)
                                                  ------------- -------------
                                                     2,315,892     3,589,252
                                                  ------------- -------------

    Loss before the undernoted                      (1,959,427)   (2,427,757)
                                                  ------------- -------------
                                                  ------------- -------------

    Interest income                                         22         5,416
    Interest expense                                   (97,406)      (20,128)
    Foreign exchange loss                               (6,940)      (15,208)
                                                  ------------- -------------
                                                  ------------- -------------

                                                      (104,324)      (29,920)
                                                  ------------- -------------

    Net loss from continuing operations             (2,063,751)   (2,457,677)

    Discontinued operations                                  -    (1,370,776)
                                                  ------------- -------------

    Net loss                                        (2,063,751)   (3,828,453)

    Deficit - Beginning of the period              (85,685,186)  (79,096,304)
                                                  ------------- -------------

    Deficit - End of the period                    (87,748,937)  (82,924,757)
                                                  ------------- -------------
                                                  ------------- -------------

    Loss per share
    Basic and diluted from continuing operations         (0.05)        (0.09)
    Basic and diluted from discontinued operations           -         (0.05)
    Basic and diluted                                    (0.05)        (0.14)
                                                  ------------- -------------
                                                  ------------- -------------

    Weighted average shares outstanding             43,913,882    28,299,952
                                                  ------------- -------------
                                                  ------------- -------------



    SemBioSys Genetics Inc.
    CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

    (unaudited)
    (expressed in Canadian dollars)
    -------------------------------------------------------------------------
                                                    Three month period ended
                                                      March 31,     March 31,
                                                          2010          2009
                                                             $             $
                                                  ------------- -------------

    Net loss for the period                         (2,063,751)   (3,828,453)

    Other comprehensive loss
      Foreign currency translation adjustment                -        32,620
      Foreign currency translation adjustment
       transferred to net income from discontinued
       operations during the year                            -       (32,620)
      Unrealized loss on investment                    (54,372)            -
                                                  ------------- -------------

    Comprehensive loss                              (2,118,123)   (3,828,453)
                                                  ------------- -------------
                                                  ------------- -------------



    CONSOLIDATED STATEMENTS OF ACCUMULATED OTHER COMPREHENSIVE LOSS

    (Unaudited)
    (expressed in Canadian dollars)
    -------------------------------------------------------------------------
                                                    Three month period ended
                                                      March 31,     March 31,
                                                          2010          2009
                                                             $             $
                                                  ------------- -------------

    Accumulated other comprehensive loss
      - beginning of the period                        (54,372)            -

    Foreign currency translation adjustments
      Change in accounting policy                            -        26,534
      Adjustments during the year                            -         6,086
      Transferred to net income from discontinued
       operations during the year                            -       (32,620)
                                                  ------------- -------------
                                                       (54,372)            -

    Unrealized loss on Investment                      (54,372)            -
                                                  ------------- -------------

    Accumulated other comprehensive loss
      - end of the period                             (108,744)            -
                                                  ------------- -------------
                                                  ------------- -------------



    SemBioSys Genetics Inc.
    CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                    Three month period ended
                                                      March 31,     March 31,
    (unaudited)                                           2010          2009
    (expressed in Canadian dollars)                          $             $
    -------------------------------------------------------------------------

    Cash provided by (used in)

    Operating activities
    Net loss for the year from continuing
     operations                                     (2,063,751)   (2,457,677)
    Add items not affecting cash:
      Amortization                                     354,038       373,599
      Stock-based compensation                         123,498       230,646
      Shares issued for services                        92,935       152,985
      Unrealized foreign exchange loss                  21,500         3,379
      Non-cash interest expense                         97,172             -
                                                  ------------- -------------
                                                    (1,374,608)   (1,697,068)
                                                  ------------- -------------
                                                  ------------- -------------

    Change in non-cash working capital and other
     balances related to operations                   (717,477)     (269,415)
                                                  ------------- -------------

    Cash used in operating activities               (2,092,085)   (1,966,483)
                                                  ------------- -------------
                                                  ------------- -------------

    Financing activities
    Issuance of capital stock                        1,778,595     1,752,000
    Share issue costs                                 (147,043)      (43,312)
    Issuance of warrants                                     -        81,600
    Warrant issue costs                                 (6,340)       (2,017)
    Costs related to the corporate reorganization     (182,794)            -
    Repayment of long-term debt                        (26,298)     (135,463)
                                                  ------------- -------------

    Cash provided by financing activities            1,416,120     1,652,808
                                                  ------------- -------------
                                                  ------------- -------------

    Investing activities
    Acquisition of property and equipment                    -       (17,311)
                                                  ------------- -------------

    Cash used in investing activities                        -       (17,311)
                                                  ------------- -------------
                                                  ------------- -------------

    Net change in cash from continuing operations     (675,965)     (330,986)

    Cash flow from discontinued operations

    Operating activities                                     -      (920,520)
    Financing activities                                     -       495,788
    Investing activities                                     -       (61,957)
                                                  ------------- -------------

    Net change in cash from discontinued
     operations                                              -      (486,689)
                                                  ------------- -------------

    Decrease in cash and cash equivalents             (675,965)     (817,675)

    Cash and cash equivalents
     - Beginning of period                           3,687,548     3,819,796
                                                  ------------- -------------
                                                  ------------- -------------

    Cash and cash equivalents - End of period        3,011,583     3,002,121
                                                  ------------- -------------
                                                  ------------- -------------

      Cash and cash equivalents - discontinued
       operations                                            -     1,406,139

    Cash and cash equivalents
     - from continuing operations                    3,011,583     1,595,982
                                                  ------------- -------------
                                                  ------------- -------------

    Supplemental Information
     (continuing operations)
    Cash interest received                                 133         6,979
    Cash interest paid                                     234        20,033
    Non-cash transactions
      Capital items included in accounts payable             -             -
      Share issue costs included in accounts
       payable                                          11,247        11,892
                                                  ------------- -------------
                                                  ------------- -------------
    

SOURCE SemBioSys Genetics Inc.

For further information: For further information: SemBioSys Genetics Inc., Abby Garfunkel, Investor Relations, Phone: (403) 717-4185, E-mail: garfunkela@sembiosys.com; The Equicom Group Inc., Ross Marshall, Vice President, Phone: (416) 815-0700 ext. 238, E-mail: rmarshall@equicomgroup.com

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