BioSyntech announces 2008 year-end financial results and the adoption of a new strategic plan


    LAVAL, QC, June 27 /CNW/ - BioSyntech, Inc. ("BioSyntech" or the
"Company") (TSX: BSY), a biotechnology company developing biotherapeutic
thermogels for regenerative medicine, today announced its financial and
operational results for the year and the fourth quarter ended March 31, 2008.
    "The past year has been a challenging one for the Company. Our efforts to
negotiate a favourable revenue generating licensing agreement, which could
have provided the Company with additional non-dilutive resources, were not
forthcoming and we eventually decided to suspend this process given that the
gradual weakening in the Company's financial position left us vulnerable.
Therefore, we made significant efforts to strengthen our cash position and
focus our resources going forward. We have now been able to secure, in an
especially difficult market for biotech companies, a $11 million convertible
debenture financing which will provide us with the resources to go forward,"
said Claude LeDuc, President and CEO of BioSyntech.
    "While we were disappointed with the slow rate of enrolment for our
BST-CarGel(R) clinical trial, our adherence to stringent patient enrolment
criteria and maintenance of the highest quality standards yielded positive
interim results during the quarter. We were able to establish the safety of
our approach to cartilage repair and also demonstrated strong trends for the
ability of BST-CarGel(R) to produce more quality cartilage than the standard
of care. These results will be submitted to the U.S. FDA as pilot data in
preparation for a pre-IDE meeting and IDE submission. The Company expects to
meet with the U.S. FDA in the coming months. With patient enrolment now more
than 65% completed, we are confident this trial will establish that
BST-CarGel(R) can repair cartilage damage in a minimally-invasive and
cost-sensitive manner. As such, the advancement of our BST-CarGel(R) pivotal
Canadian-European trial continues to be our primary focus, while we explore
various strategic options for our platform technology and product pipeline,"
continued Mr. Leduc.

    Recent Highlights:

    -   Enrolled more than 65% of patients in the Canadian-European multi-
        center pivotal trial of BST-CarGel(R), a minimally invasive, cost-
        effective, surgical alternative for cartilage repair

    -   Increased the number of active centers recruiting into the
        BST-CarGel(R) pivotal trial to 23

    -   Received positive preliminary interim data from the BST-CarGel(R)
        pivotal trial which showed evidence of a positive effect of
        BST-CarGel(R) on both the quantity and quality of regenerated

    -   Presented the clinical development of BST-CarGel(R) to US orthopaedic
        surgeons at the 2008 Cartilage Innovation Summit in Ohio

    -   Presented recent scientific findings regarding BST-CarGel(R) combined
        with an arthroscopic probe, the Arthro-BST(TM), at the 7th World
        Congress of the International Cartilage Repair Society in Warsaw,

    -   Achieved international certification under the stringent and globally
        recognized ISO 13485:2003 Medical Devices Quality Management System

    -   Completed the BST-DermOn(TM) open pilot study. Positive results were
        summarized in a poster presentation at the 3rd Congress of the World
        Union of Wound Healing Societies (WUWHS) held in Toronto on
        June 4-8, 2008

    -   Entered into an underwriting agreement and filed a short form
        preliminary prospectus with respect to a bought deal, which will
        result in gross aggregate proceeds of $11,000,000 to the Company

    Liquidity and Strategic Changes

    As at March 31, 2008, the Company had cash, cash equivalents and
short-term investments of $2,835,806, compared to $11,925,979 as at March 31,
    Subsequent to year-end, the Company entered into a bought deal agreement
with Dundee Securities Corporation as lead underwriter, pursuant to which the
syndicate led by Dundee, and including Macquarie Capital Markets Canada Ltd,
Versant Partners Inc. and Laurentian Bank Securities Inc. have agreed to
purchase a total of 11,000 Units, each comprised of $1,000 principal amount of
convertible debentures and 2,500 warrants, representing gross aggregate
proceeds of $11,000,000 to the Company. The Company has also granted to the
underwriters an over-allotment option, exercisable from time to time in the
60 days following closing of the offering, to purchase up to an additional
1,650 Units to cover over-allotments, for additional gross proceeds of up to
$1,650,000. The offering is expected to close on or about July 8, 2008 and is
subject to certain conditions, including the receipt of all TSX and other
regulatory approvals.
    The net proceeds of the offering will be used to (i) implement a
streamlined business plan focused on maximizing value for all shareholders;
(ii) complete the pivotal European and Canadian clinical trial for
BST-CarGel(R); (iii) hire a consultant to augment the management team in their
exploration of strategic alternatives, such as partnerships and M&A
transactions; and (iv) support working capital and general corporate purposes.
    In light of limited cash resources and as part of a streamlined business
plan, the Company will suspend enrolment in the BST-DermOn(TM) clinical trial
and suspend work on BST-InPod(TM). BioSyntech will continue to focus on the
goals of completing the Canadian-European pivotal trial for BST-CarGel(R) and
obtaining clarity regarding its U.S. regulatory pathway. The Company believes
that BST-CarGel(R) will serve to validate the company's platform technology
and other related pipeline products, which in turn will allow the Company to
explore additional strategic, non-dilutive funding opportunities. This plan,
along with other cost reducing measures in areas not related to BST-CarGel(R),
is expected to result in a reduction in the Company's burn rate.

    Financial Review

    For the three-month period ended March 31, 2008, revenues totalled
$148,568, compared to revenues of $77,380 for the same period in the previous
year. For the year-ended March 31, 2008, revenues totaled $273,925 compared to
revenues of $243,475 for the same period a year ago. The increase in sales is
primarily due to the increase in sales of purified chitosan (Ultrasan) and
instrumentation products.
    Research and development ("R&D") expenses totalled $1,619,995 for the
fourth quarter of 2008, compared to R&D expenses of $1,599,392 for the
comparable quarter a year ago. R&D expenses amounted to $6,024,121 for the
twelve-month period ended March 31, 2008, compared to $4,958,358 for the same
period last year. The increase in R&D expenses for the year-ended
March 31, 2008, is primarily attributable to the increase in expenses incurred
for BST-CarGel(R) and BST-DermOn(TM) multi-center clinical trials and the
hiring of new employees related to clinical development activities.
    Net loss for the fourth quarter of 2008, was $2,415,816 or ($0.03) per
share, compared to a net loss of $2,472,841 or ($0.03) per share for the same
period last year. Net loss for the fiscal 2008 was $9,237,208 or ($0.10) per
share, compared to a net loss of $8,113,553 or ($0.09) per share in the same
period of 2007.
    The Company's Management's Discussion and Analysis is available on the
BioSyntech website at and with the Company's regulatory
filings at

    About the Canadian-European BST-CarGel(R) trial

    The ongoing pivotal BST-CarGel(R) clinical trial is a randomized,
comparative study of the treatment of focal cartilage lesions located on the
medial femoral condyle in 80 subjects (40/group) from 18 to 55 years of age.
Treatment with BST-CarGel(R) applied to a microfractured cartilage lesion
under 10 cm(2), is being compared to microfracture alone applied to similar
lesions. Subjects are randomized to treatment with either BST-CarGel(R) or
microfracture, and then further stratified to their lesion type which is
either characterized as acute (i.e. traumatic) or chronic (i.e. degenerative).
The primary endpoint for this trial is cartilage repair at 12 months, defined
through the quantity and quality of the repair tissue measured with
quantitative magnetic resonance imaging (MRI). Secondary endpoints are safety
and knee-related pain, stiffness and function measured using the Western
Ontario and McMaster Universities (WOMAC) osteoarthritis index questionnaire.
    Subject enrolment currently stands at more than 65% for this pivotal
trial and extensive efforts are underway to complete enrolment.

    About BioSyntech

    BioSyntech is a medical device company specialized in the development,
manufacturing and commercialization of advanced biotherapeutic thermogels for
regenerative medicine (tissue repair) and therapeutic delivery. Biosyntech's
platform technology is a family of hydrogels called BST-Gel(R), some of which
are liquid at low temperature and solid at human body temperature. These gels
can be injected or applied to a specific local site and offer beneficial
properties for the local repair of damaged tissue such as cartilage, bone and
chronic wounds and provide the benefit of avoiding invasive surgery. For
additional information, visit

    Forward-Looking Statements

    This press release contains forward-looking statements and information
which are subject to material risks and uncertainties. Such statements are not
historical facts and are based on the current expectations of management. You
are cautioned that such statements are subject to a multitude of risks and
uncertainties that could cause actual results, future circumstances, or events
to differ materially from those projected in the forward-looking information.
These risks include, but are not limited to, those associated with our
capacity to finance our activities, the adequacy, timing, and results of our
clinical trials, the regulatory approval process, competition, securing and
maintaining corporate alliances, market acceptance of the Company's products,
the availability of government and insurance reimbursements for the Company's
products, the strength of intellectual property, the success of research and
development programs, reliance on subcontractors and key personnel, and other
risks and uncertainties detailed from time-to-time in our filings with the
Canadian securities commissions. There is no guarantee that the above
described financing will be completed.
    Readers should not place undue reliance on the forward-looking
information, given that (i) our actual results could differ materially from a
conclusion, forecast or projection in the forward-looking information, and
(ii) certain material factors or assumptions which were applied in drawing a
conclusion or making a forecast or projection as reflected in the
forward-looking information, could prove to be inaccurate. Additional
information about (i) the material factors that could cause actual results to
differ materially from the conclusion, forecast or projection in the
forward-looking information, and (ii) the material factors or assumptions that
were applied in drawing a conclusion or making a forecast or projection as
reflected in the forward-looking information, is contained in the Company's
annual report and other documents filed from time to time with the Canadian
securities commissions which are available at These statements
speak only as of the date they are made, and we assume no obligation to revise
such statements as a result of any event, circumstance or otherwise, except in
accordance with law.
    %SEDAR: 00020217EF

For further information:

For further information: BioSyntech, Inc., Yvonne Kramer Ph.D., Sr.
Director Corporate & Business Development, Tel: (450) 686-2437, ext. 315,; BioSyntech, Inc., François Michaud, Chief
Financial Officer, Tel: (450) 686-2437, ext. 260,; The Equicom Group, Arianna Vanin, Investor
Relations, Tel: (514) 844-4680,

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