Bioniche Life Sciences Inc. Reports Q2, Fiscal 2012 Results

- Animal Health quarterly product sales increase by 21% over same period in Fiscal 2011 -

(all figures are in Canadian dollars unless otherwise noted)

BELLEVILLE, ON, Feb. 8, 2012 /CNW/ - Bioniche Life Sciences Inc. (TSX: BNC) (ASX: BNC), a research-based, technology-driven Canadian biopharmaceutical company, today announced financial results for the second quarter of its 2012 fiscal year (ended December 31, 2011).

"We are pleased to see the increase in sales revenues related to our Animal Health products in the second quarter as compared to the same period last year, as well as on a year-to-date basis," said Mr. Graeme McRae, Chairman, President & CEO of Bioniche Life Sciences Inc.

"This reflects double-digit increases in sales of key products in Australia and South America, and stabilizing sales in North America and Europe, notwithstanding a stronger Canadian dollar. Our reproductive franchise continues to be an important part of our business focus."

Fiscal 2012 Second Quarter Financial Results Highlights

Revenues associated with Animal Health product sales increased in the quarter by $1.3 million as compared to the same quarter in Fiscal 2011 (revenues increased from $6.1 million to $7.4 million), with gross margins of 52.4% in the period (vs. 51.4% in Fiscal 2011).

Consolidated revenues for the quarter were $8.1 million, as compared to $11.0 million in the same period in Fiscal 2011. On a year-to-date basis, consolidated revenues are $14.9 million as compared to $18.5 million for the first six months in Fiscal 2011. It should be noted that certain non-recurring licensing revenue was included for the Fiscal 2011 reporting period.

Cash and cash equivalents, including other current financial assets as of June 30, 2011, amounted to $6.9 million at December 31, 2011, as compared to $16.9 million at June 30, 2011. This does not include the $2.75 million outstanding receivable from the Business Development Bank of Canada that was received subsequent to quarter end, bringing the cash and cash equivalents to $9.65 million.

"Shareholders will note the return of a going concern uncertainty note in our Q2 financial statements, which indicates that the Company has insufficient cash resources on hand for a 12-month operating runway," said Mr. Brian Ford, Chief Financial Officer of Bioniche Life Sciences Inc. "What the going concern note does not reflect is the concerted efforts by the Company to curtail non-core expenditures going forward which will enable our cash resources to last longer, nor does it reflect our seeking of non-dilutive financing, such as a revolving credit facility or royalty stream debt financing, in upcoming months."

The Company has $22.9 million in current assets at December 31, 2011, compared with $33.2 million in current assets at June 30, 2011. At December 31, 2011, the Company's net working capital totalled $15.6 million, as compared to $22.9 million at June 30, 2011.

The Company's burn rate (cash used in operations) was approximately $1.0 million per month during the second quarter of Fiscal 2012 as compared to an average of $1.2 million per month during the first quarter.

The Company continues to make efforts to reduce its burn rate and a number of cost containment and revenue-generating initiatives are expected to have a positive impact in the second half of Fiscal 2012. These include a strengthening of Animal Health product sales, the deferment of certain Research and Development projects, and continued scrutiny around administrative expenditures. The Company remains committed to steadily decreasing its burn rate with a goal of eliminating the burn rate altogether and showing sustainable profitability by the end of Fiscal 2013.

Research and Development expenditures for the quarter ended December 31, 2011 were $4.7 million, as compared to $5.0 million for the same period in Fiscal 2011. On a year-to-date basis, these expenditures amount to $9.5 million in Fiscal 2012, as compared to $9.6 million in Fiscal 2011. The reduction in R&D expenditures in Fiscal 2012 relates to the reduction of certain Human Health pre-clinical development activities.

Administrative expenditures for the quarter ended December 31, 2011 were $2.5 million, as compared to $3.5 million in the same period in Fiscal 2011. Year-to-date expenditures total $5.0 million, as compared to $5.5 million in Fiscal 2011. Marketing and selling expenditures were $1.6 million in the second quarter, as compared to $1.9 million in the same period in Fiscal 2011. Year-to-date expenditures in this category amounted to $3.3 million, as compared to $3.5 million for the same six months in Fiscal 2011. The expenditure reductions in administration, marketing and selling relate to cost-containment initiatives being undertaken, as well as the recording in Fiscal 2011 of a non-recurring future employee benefit of $1.6 million. It should be noted that the original actuarial valuation of this defined benefit plan obligation was overstated and this was corrected in the second quarter. This resulted in restatements of certain figures which are reflected in Note 13i of the Company's second quarter unaudited condensed interim consolidated financial statements.

The basic and fully-diluted net loss for the three-month period ending December 31, 2011 was $(0.04) per share, as compared to $(0.03) in the same period of Fiscal 2011. The year-to-date basic and fully diluted net loss is $(0.08) per share, compared to $(0.06) in the same period last year.

The weighted average number of Common Shares outstanding for the six-month period ended December 31, 2011 is 102,443,797. This compares to 77,460,755 in 2010. The completion of concurrent Share Offers in Canada and Australia in December 2010/January 2011 contributed to this change.

Vaccine Manufacturing Centre Validation/Commissioning

The Company's Animal Health and Food Safety Vaccine Manufacturing Centre (VMC) in Belleville, Ontario has been undergoing validation and commissioning to meet North American production standards for the past several months. This process has proceeded according to plan. Production scale-up is now getting underway. This involves moving the Company's EconicheTM cattle vaccine against E. coli O157 from the production laboratory into the VMC fermentors. It is expected that a first commercial batch of EconicheTM will be made in the VMC by mid-2012.

About Bioniche Life Sciences Inc.

Bioniche Life Sciences Inc. is a research-based, technology-driven Canadian biopharmaceutical company focused on the discovery, development, manufacturing, and marketing of proprietary and innovative products for human and animal health markets worldwide. The fully-integrated company employs more than 200 skilled personnel and has three operating divisions: Human Health, Animal Health, and Food Safety. The Company's primary goal is to develop and commercialize products that advance human or animal health and increase shareholder value.

Except for historical information, this news release may contain forward-looking statements that reflect the Company's current expectation regarding future events. These forward-looking statements involve risk and uncertainties, which may cause, but are not limited to, changing market conditions, the successful and timely completion of clinical studies, the establishment of corporate alliances, the impact of competitive products and pricing, new product development, uncertainties related to the regulatory approval process, and other risks detailed from time to time in the Company's ongoing quarterly and annual reporting.

Bioniche Life Sciences Inc.
Amalgamated under the laws of Ontario


(thousands of Canadian dollars)
(Unaudited - see going concern uncertainty)

As at   December 31,
    June 30,
Cash and cash equivalents   6,854     15,353
Other current financial assets       1,493
Trade and other receivables   5,515     6,460
Income taxes receivable   279     254
Inventories   8,824     8,523
Prepayments   1,388     1,067
    22,860     33,150
Property, plant and equipment   39,433     37,582
Intangible assets   5,714     6,306
Goodwill   456     456
Other non-current receivables   1,788     1,756
Deferred tax assets   760     540
Total assets   71,011     79,790
Trade and other payables   5,978     8,520
Current portion of long-term debt and
   obligations under finance leases
Current portion of repayable government assistance   366     1,049
    7,215     10,269
Long-term debt   1,913     2,171
Obligations under finance leases   592     546
Repayable government assistance   29,737     27,456
Employee benefit liability   1,866     1,808
    41,323     42,250
Shareholders' equity          
Share capital   125,890     125,630
Other paid-in capital   9,180     8,771
Deficit   (104,234)     (95,687)
Foreign currency translation reserve   (1,148)     (1,174)
Total shareholders' equity   29,688     37,540
Total liabilities and shareholders' equity   71,011     79,790

Bioniche Life Sciences Inc.


(thousands of Canadian dollars, except share and per share amounts)
(Unaudited - see going concern uncertainty)

    Three months ended
December 31
  Six months ended
December 31
    2011   2010   2011   2010
        [Restated]       [Restated]
Sales   7,358   6,110   13,480   12,802
Licensing     4,045     4,046
Research collaborations   757   854   1,451   1,644
    8,115   11,009   14,931   18,492
Cost of sales   3,504   2,973   6,577   6,237
Administrative   2,461   3,632   4,954   5,712
Marketing and selling   1,562   1,920   3,334   3,497
Financial expenses   (2)   261   225   510
Foreign exchange gain   (93)   (50)   (526)   (1,031)
    7,432   8,736   14,564   14,925
Income before research and development expenses and income taxes   683   2,273   367   3,567
Research and development expenses, gross   4,679   5,004   9,499   9,648
Less: government assistance   (173)   (530)   (372)   (1,034)
Loss before income taxes   (3,823)   (2,201)   (8760)   (5,047)
Provision (recovery) of income tax   208   138   (213)   (76)
Net loss for the period   (4,031)   (2,339)   (8,547)   (4,971)
Exchange difference on translation of foreign operations
Total comprehensive loss for the period   (4,272)   (2,557)   (8,521)   (5,901)
Basic and diluted net loss per share   (0.04)   (0.03)   (0.08)   (0.06)
Weighted-average number of Common Shares outstanding   102,613,484   81,897,104   102,443,797   77,466,755

Bioniche Life Sciences Inc.


(thousands of Canadian dollars)
(Unaudited - see going concern uncertainty)

    Six months ended
December 31,
Six months ended
December 31,
    2011 2010
Net loss for the period   (8,547) (4,971)
Items not affecting cash and other reconciling items:      
  Depreciation of property, plant and equipment   734 655
  Amortization of intangible assets   486 407
  Unrealized foreign exchange gain   (331) (16)
  Accreted interest on discounted receivables and
       interest-free loans 

  Stock-based compensation expense   404 156
  Employee share ownership plan   419 407
  Employee future benefit   58 1,748
  Deemed government assistance   (7) (31)
  Amortization of deferred government incentives   - (516)
  Write off of intangible asset   143 -
  Deferred income taxes   (153) (76)
  Other   1 1
    (6,598) (1,781)
Net change in non-cash working capital balances   (384) (61)
Cash used in operating activities   (6,982) (1,842)
Purchases of property, plant and equipment   (3,672) (10,178)
Proceeds on settlement of other non-current receivables   - 100
Proceeds on sale of other current financial asset   1,493 -
Proceeds on disposal of property, plant and equipment   7 6
Purchases of intangible assets   (36) (386)
Cash used in investing activities   (2,208) (10,458)
Proceeds from government assistance   1,230 9,070
Proceeds from deferred government incentives   - 690
Proceeds from long-term debt   - 500
Proceeds from exercise of warrants   - 302
Proceeds on exercise of stock options   1 184
Proceeds from shares issued   - 16,675
Payment of share issuance costs   - (2,198)
Redemption of shares   (156) (173)
Repayment of finance lease obligations   (210) (228)
Repayment of long-term debt   (174) (6)
Cash provided by financing activities   691 24,816
Net increase (decrease) in cash and cash equivalents during the period   (8,499) 12,516
Cash and cash equivalents, beginning of period   15,353 11,070
Cash and cash equivalents, end of period   6,854 23,586





SOURCE Bioniche Life Sciences Inc.

For further information:

Jennifer Shea, Vice-President, Communications, Investor & Government Relations
Bioniche Life Sciences Inc.
Telephone: (613) 966-8058; from Australia: 0011 1 613-966-8058
Cell: (613) 391-2097; from Australia: 0011 1 613-391-2097

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