SemBioSys announces second quarter 2009 financial and operational results



    CALGARY, Aug. 13 /CNW/ - SemBioSys Genetics Inc. (TSX:SBS), specializing
in the manufacture of high-value proteins and oils in plant seeds, today
announced its second quarter 2009 financial and operational results.
    "Successfully completing the $4.15 million public offering in difficult
capital markets, together with securing additional AVAC funding were
fundamental to strengthening our balance sheet and extending our development
runway into 2010," said James Szarko, Chief Executive Officer of SemBioSys.
"In addition, we are encouraged by the positive preclinical data that have
been obtained for Apo AI(Milano) in collaboration with Dr. Prediman K. Shah at
Cedars-Sinai Heart Institute and other leading experts in cardiovascular
research. Our top priorities are now advancing partnership discussions for our
Apo AI(Milano) and Biosimilar Insulin programs and executing on other
non-dilutive funding opportunities."

    
    Highlights

    Corporate

    -   Completed a public offering of 11,865,341 units at a price of $0.35
        per unit for total gross proceeds to SemBioSys of $4,152,869
        subsequent to the end of the quarter
    -   Completed a transaction with Botaneco and Avrio Ventures Limited
        Partnership where SemBioSys secured a 20% equity interest (on a fully
        converted basis) in Botaneco subsequent to the end of the quarter.
        The purpose of the transaction was to amend the capital structure of
        Botaneco to facilitate discussions that are underway related to a
        potential transaction between Botaneco and an independent third
        party.

    Apo AI(Milano)

    -   Received positive results from in vivo plaque remodelling and
        regression studies confirming the anti-atherosclerotic effects of
        plant-derived Apo AI(Milano). The results demonstrated the regulation
        of cholesterol mobilization from the arterial wall, decreasing lipid
        content of atherosclerotic plaques, and reduction of overall volume
        of atherosclerotic plaque after multiple injections. In all, seven
        different types of studies have been performed at four outside
        laboratories with each demonstrating the molecule to be biologically
        active.
    -   Completed a pre-IND (Investigational New Drug) meeting during which
        the U.S. Food and Drug Administration (FDA) confirmed SemBioSys'
        development plan necessary to file an IND application and addressed
        the proposed design of clinical trials for Apo AI(Milano)

    Insulin Program

    -   Presented the results of the Phase I/II study with its Biosimilar
        Human Insulin, demonstrating that SBS-1000 was bioequivalent to Eli
        Lilly's Humulin(R) R in a late-breaking scientific poster at the
        American Diabetes Association's (ADA) 69th Scientific Sessions
    -   Granted U.S. patent US 7,547,821 entitled "Methods for the Production
        of Insulin in Plants"

    Outlook

    The Company anticipates a number of milestone events in the coming months
including:

    -   Insulin: post-phase II meeting with the U.S. FDA regarding further
        development of SBS-1000;
    -   Apo AI(Milano): development of a pilot scale manufacturing process;
    -   Apo AI(Milano): completion of additional in vivo studies; and
    -   Further progress with the partnering of both insulin and Apo
        AI(Milano).
    

    Financials

    The second quarter financials compare SemBioSys and Botaneco's financial
and operating results for the three-month and six-month periods ended June 30,
2009 to SemBioSys and Botaneco's financial and operating results for the
three-month and six-month periods ended June 30, 2008. Due to the completion
of the divestiture of Botaneco on July 31, 2009, third quarter 2009 financials
will be presented such that Botaneco's financial results will be segregated
from SemBioSys' financial results.
    Net loss for the second quarter of 2009 was $3,886,112 or $0.13 per
share, compared to a net loss of $6,414,856 or $0.25 per share for the same
period last year. Net loss for the six-month period ended June 30, 2009 was
$7,714,565 or $0.27 per share, compared to a net loss of $11,431,911 or $0.44
per share for the same six-month period last year.
    Total revenue for the three-month and six-month periods ended June 30,
2009 was $489,530 and $1,788,994 respectively, compared with $62,207 and
$272,234 for the corresponding periods in 2008. The difference is due mainly
to the recognition of licensing option fees in the first half of 2009 from the
option agreement entered into with MannKind Corporation in the fourth quarter
of 2008. In addition, $252,048 of licensing fees were recognized in the second
quarter of 2009 related to the Company's GLA program.
    Total expenditures (net of cost recoveries) for the three-month and
six-month periods ended June 30, 2009 were $4,173,518 and $9,105,465
respectively, compared with $6,542,258 and $11,799,869 for the corresponding
periods in 2008. However, total expenditures excluding non-cash items
(stock-based compensation and amortization) and cost recoveries for the
three-month and six-month periods ended June 30, 2009 were $3,502,553 and
$7,618,814 respectively, compared with $5,826,373 and $10,942,616 for the
corresponding periods ended June 30, 2008. The decrease is primarily due to
the cost reductions implemented in the Biopharmaceuticals and Bioproducts
segment in the fourth quarter of 2008 and in 2009, 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 costs
of the Specialty Ingredients segment. The reduction in cost recoveries for the
three-month and six-month periods ended June 30, 2009 as compared to the
corresponding periods ended June 30, 2008 resulted from the achievement of all
outstanding milestones related to the agreement with AVAC Ltd. for the insulin
program in 2008.
    As of June 30, 2009 the Company had cash and cash equivalents of $850,780
and a net positive working capital balance of $807,933, compared to $3,819,796
and $3,730,413 respectively at December 31, 2008. Subsequent to the end of the
quarter, the Company completed a public offering which resulted in total gross
proceeds to SemBioSys of $4,152,869. Total long-term debt and convertible
debentures was $6,672,098 at June 30, 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 a result of the $500,000 of
funding received from AVAC in the first quarter of 2009 that is secured by
certain Botaneco assets, as well as the $950,000 of funding SemBioSys received
from AVAC in the second quarter of 2009 that is secured by certain SemBioSys
assets.
    As at August 13, 2009 the Company had 40,653,592 common shares
outstanding, 14,495,341 warrants and 2,900,691 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' 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.

    
    Financial results included below:

    SemBioSys Genetics Inc.
    CONSOLIDATED BALANCE SHEETS
    (Unaudited)
    (expressed in Canadian dollars)
    -------------------------------------------------------------------------
                                                       June 30,  December 31,
                                                          2009          2008
                                                             $             $
                                                   ------------  ------------

    ASSETS

    Current assets
    Cash and cash equivalents                          850,780     3,819,796
    Accounts receivable                                415,522       912,702
    Prepaid expenses, deposits and other               437,789       457,693
    Inventory                                        1,661,970     1,929,289
                                                   ------------  ------------
                                                     3,366,061     7,119,480

    Property and equipment                           6,999,702     8,009,624
                                                   ------------  ------------

                                                    10,365,763    15,129,104
                                                   ------------  ------------
                                                   ------------  ------------

    LIABILITIES

    Current liabilities
    Accounts payable and accrued liabilities         1,947,226     2,237,225
    Deferred revenue                                         -       612,295
    Short-term portion of long-term debt               378,520       539,547
    Short-term portion of convertible
     debenture interest                                232,381             -
                                                   ------------  ------------
                                                     2,558,127     3,389,067

    Deferred cost recoveries                             2,505        39,557
    Long-term debt                                   3,226,434     1,773,776
    Convertible debenture                            2,834,763     2,814,506
                                                   ------------  ------------
                                                     8,621,829     8,016,906
                                                   ------------  ------------
                                                   ------------  ------------

    SHAREHOLDERS' EQUITY

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

    Warrants                                         2,630,463     2,550,880

    Contributed surplus                             12,205,444    11,802,064

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

    Accumulated other comprehensive loss                13,557             -

    Deficit                                        (86,810,869)  (79,096,304)
                                                   ------------  ------------
                                                     1,743,934     7,112,198
                                                   ------------  ------------

                                                    10,365,763    15,129,104
                                                   ------------  ------------
                                                   ------------  ------------



    SemBioSys Genetics Inc.
    CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
    (Unaudited)
    (expressed in Canadian
     dollars, except shares)
    -------------------------------------------------------------------------
                        Three month period ended      Six month period ended
                           June 30,      June 30,      June 30,      June 30,
                              2009          2008          2009          2008
                                 $             $             $             $
    REVENUE

    Licensing option fees        -             -     1,161,495        50,110
    Licensing fees         252,048             -       252,048             -
    Contract research       38,151             -        38,151             -
    Product sales          199,331        62,207       337,300       222,124
                       ------------  ------------  ------------  ------------
                           489,530        62,207     1,788,994       272,234

    EXPENSES

    Research and
     development         1,592,033     3,357,683     3,506,889     6,151,786
    General and
     administration      1,014,723     1,666,323     2,320,180     3,061,598
    Intellectual
     property costs        333,270       504,690       632,277       847,020
    Cost of products
     sold                  252,366        45,534       502,100       317,279
    Sales and marketing    185,421        96,621       376,854       249,781
    Business development   124,740       155,522       280,514       315,152
    Stock-based
     compensation          126,907       175,947       403,381       355,850
    Amortization           567,808       580,733     1,138,575     1,074,567
    Cost recoveries        (23,750)      (40,795)      (55,305)     (573,164)
                       ------------  ------------  ------------  ------------
                         4,173,518     6,542,258     9,105,465    11,799,869
                       ------------  ------------  ------------  ------------

    Loss before
     the undernoted     (3,683,988)   (6,480,051)   (7,316,471)  (11,527,635)
                       ------------  ------------  ------------  ------------

    Interest income          3,617        96,649        12,230       267,507
    Interest expense      (241,590)      (43,412)     (408,493)     (105,076)
    Foreign exchange
     gain (loss)            35,849        11,958        (1,831)      (66,707)
                       ------------  ------------  ------------  ------------

                          (202,124)       65,195      (398,094)       95,724
                       ------------  ------------  ------------  ------------

    Net loss for
     the period         (3,886,112)   (6,414,856)   (7,714,565)  (11,431,911)

    Deficit - Beginning
     of period         (82,924,757)  (61,176,218)  (79,096,304)  (56,159,163)
                       ------------  ------------  ------------  ------------

    Deficit - End
     of period         (86,810,869)  (67,591,074)  (86,810,869)  (67,591,074)
                       ------------  ------------  ------------  ------------
                       ------------  ------------  ------------  ------------

    Loss per share -
     basic and diluted       (0.13)        (0.25)        (0.27)        (0.44)
                       ------------  ------------  ------------  ------------
                       ------------  ------------  ------------  ------------

    Weighted average
     shares
     outstanding        28,788,251    25,937,476    28,545,450    25,936,634
                       ------------  ------------  ------------  ------------
                       ------------  ------------  ------------  ------------



    SemBioSys Genetics Inc.
    CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
    (Unaudited)
    (expressed in Canadian dollars)

    -------------------------------------------------------------------------
                        Three month period ended      Six month period ended
                           June 30,      June 30,      June 30,      June 30,
                              2009          2008          2009          2008
                                 $             $             $             $
                       ------------  ------------  ------------  ------------

    Net loss for the
     period             (3,886,112)   (6,414,856)   (7,714,565)  (11,431,911)

    Other comprehensive
     loss
    Foreign currency
     translation
     adjustment            (19,063)            -        13,557             -
                       ------------  ------------  ------------  ------------

    Comprehensive
     loss               (3,905,175)   (6,414,856)   (7,701,008)  (11,431,911)
                       ------------  ------------  ------------  ------------
                       ------------  ------------  ------------  ------------



    ACCUMULATED OTHER COMPREHENSIVE LOSS
    (Unaudited)
    (expressed in Canadian dollars)

                                                                   Six month
                                                                period ended
                                                                     June 30,
                                                                        2009
                                                                           $
                                                                  -----------
    Accumulated other comprehensive income - beginning of period           -

    Change in accounting policy - foreign currency translation
     adjustment                                                       26,534
    Foreign currency translation adjustment                          (12,977)

    Accumulated other comprehensive income - end of period            13,557
                                                                  -----------
                                                                  -----------



    SemBioSys Genetics Inc.
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Unaudited)
    (expressed in
     Canadian dollars)
    -------------------------------------------------------------------------
                        Three month period ended      Six month period ended
                           June 30,      June 30,      June 30,      June 30,
                              2009          2008          2009          2008
                                 $             $             $             $
                       ------------  ------------  ------------  ------------

    Cash provided by (used in)

    Operating activities
    Net loss for
     the period         (3,886,112)   (6,414,856)   (7,714,565)  (11,431,911)
    Add items not
     affecting cash:
      Amortization         567,808       580,733     1,138,575     1,074,567
      Stock-based
       compensation        126,907       175,947       403,381       355,850
      Stock-based payments       -             -       152,985             -
      Unrealized foreign
       exchange
       (gain) loss         (40,800)        4,991       (12,730)       49,002
      Non-cash
       interest
       expense             210,244        18,288       356,035        37,068
                       ------------  ------------  ------------  ------------
                        (3,021,953)   (5,634,897)   (5,676,319)   (9,915,424)
                       ------------  ------------  ------------  ------------

    Change in non-cash
     working capital
     and other
     balances related
     to operations         122,776        88,886      (109,859)      298,802
                       ------------  ------------  ------------  ------------

    Cash used in
     operating
     activities         (2,899,177)   (5,546,011)   (5,786,178)   (9,616,622)
                       ------------  ------------  ------------  ------------

    Financing
     activities
    Issuance of
     capital stock               -             -     1,752,000             -
    Share issue costs      (26,411)            -       (69,724)      (57,884)
    Issuance of
     warrants                    -             -        81,600             -
    Warrant issue costs          -             -        (2,017)            -
    Exercise of stock
     options                     -             -             -        31,750
    Issuance of
     convertible
     debenture                   -     4,000,000             -     4,000,000
    Proceeds from
     long-term debt        970,000             -     1,470,000       634,900
    Repayment of
     long-term debt       (142,144)     (158,038)     (281,820)     (310,584)
                       ------------  ------------  ------------  ------------

    Cash provided by
     financing
     activities            801,445     3,841,962     2,950,039     4,298,182
                       ------------  ------------  ------------  ------------

    Investing
     activities
    Acquisition of
     property and
     equipment             (53,609)     (478,806)     (132,877)   (1,023,650)
                       ------------  ------------  ------------  ------------

    Cash used in
     investing
     activities            (53,609)     (478,806)     (132,877)   (1,023,650)
                       ------------  ------------  ------------  ------------

    Decrease in cash
     and cash
     equivalents        (2,151,341)   (2,182,855)   (2,969,016)   (6,342,090)

    Cash and cash
     equivalents -
     Beginning of
     period              3,002,121    16,284,778     3,819,796    20,444,013
                       ------------  ------------  ------------  ------------

    Cash and cash
     equivalents -
     End of period         850,780    14,101,923       850,780    14,101,923
                       ------------  ------------  ------------  ------------

    Supplemental
     Information
    Cash interest
     received                6,410       224,636        18,765       325,244
    Cash interest paid      46,588        25,123        67,795        53,878
    Non-cash
     transactions
      Capital items
       included in
       accounts
       payable                   -        24,831             -        24,831
      Share issue
       costs included
       in accounts
       payable             102,766             -       102,766             -
                       ------------  ------------  ------------  ------------
    





For further information:

For further information: SemBioSys Genetics Inc., Abby Garfunkel,
Investor Relations, Phone: (403) 717-4185, E-mail: garfunkela@sembiosys.com;
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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