Fralex announces first quarter 2009 results

    TORONTO, May 7 /CNW/ - Fralex Therapeutics Inc. (TSXV: FXI.H) ("Fralex"
or the "Company"), a medical technology company, announced today its financial
results for the first quarter ended March 31, 2009.

    Operating highlights for first quarter of 2009

    -   Company entered into an arrangement agreement and certain other
        agreements providing for:
           -  the transfer of all non-core assets, including all cash and all
              liabilities to Fralex's wholly-owned subsidiary 2201761 Ontario
              Inc., or "Newco";
           -  the exchange by Fralex shareholders of their Fralex common
              shares for common shares of Newco (and nominal cash
           -  the sale by Newco of Fralex, including the core CNP assets of
              Fralex, to Baylis Medical Company Inc., a privately-owned
              developer and supplier of medical devices for net proceeds of
              approximately $650,000 (gross proceeds of $900,000 less
              estimated transaction costs of $250,000); and
           -  closing in early June after applicable court and shareholder
              approvals have been received.
    -   Full-time staff reduced to three.
    -   Warrants expired unexercised on February 13, 2009.
    -   All outstanding stock options were cancelled with the approval of the
    -   Fralex had $2,048,625 in cash and short-term investments, and working
        capital of $2,152,315, as at March 31, 2009.

    Events subsequent to quarter end

    -   Company was accepted for a listing on the NEX board of the TSX
        Venture Exchange.
    -   Information circular relating to the arrangement transaction was
        mailed to shareholders on April 30, 2009.

    "In 2009, our Management team has focused on efficiently closing out the
RELIEF trial and negotiating the sale of Fralex and its core assets to
Baylis," said Avi Grewal, President and CEO of Fralex. "The sale to Baylis is
a key step in monetizing the value of the Fralex assets and maximizing the
capital base for all activities going forward. I would encourage all
shareholders to support this transaction via proxy or in person at the
shareholders meeting."
    The board of directors of Fralex has unanimously approved the transaction
and shareholders holding approximately 69% of the common shares have signed
support agreements indicating their intention to vote in favour of this
transaction. A special meeting of the shareholders will take place at the
offices of Lang Michener LLP, Suite 2500, Brookfield Place, 181 Bay Street,
Toronto, Ontario on May 26, 2009 at 10:00 a.m. to formally vote on the
arrangement transaction.

    Financial review

    For the three months ended March 31, 2009, the Company reported a
decrease in consolidated loss of $1,264,956 to $485,224 (or $0.02 loss per
share) as compared with the same period in 2008 of $1,750,180 (or $0.08 loss
per share). This was primarily due a decline in research and development costs
from the termination of the RELIEF trial.
    Management believes that the Company's cash and short-term investments of
$2,048,625 and working capital of $2,152,315, as at March 31, 2009, are
sufficient to fund current liabilities and business exploratory activities
beyond March 31, 2010.
    Detailed financial statements and the MD&A are available at or

    About FRALEX:

    For more information on FRALEX, please visit

    Certain statements contained in this release containing words like
"believe", "intend", "may", "expect", and other similar expressions, are
forward-looking statements that involve a number of risks and uncertainties.
Factors that could cause actual results to differ materially from those
projected in the Company's forward-looking statements include the following:
dependence on key personnel; business projections; additional financing
requirements and access to capital; legal product liability and availability
of insurance; risks related to the proposed arrangement including but not
limited to its completion being subject to a number of conditions precedent
and possible failure to complete the arrangement; risk relating to
post-arrangement tax indemnification of the Company and Baylis and other risk
factors identified from time to time in the Company's filings.

    Fralex Therapeutics Inc.
    (A development stage company)
    Interim Consolidated Balance Sheets

                                                      March 31,  December 31,
                                                          2009          2008
                                                             $             $

    Current assets
    Cash                                                69,578       184,064
    Short-term investments                           1,979,047     3,566,280
    Investment tax credits receivable                  290,000       290,000
    Receivables - other                                 26,576        35,089
    Prepaid expenses and deposits                       31,958        31,563
                                                     2,397,159     4,106,996

    Property and equipment                              27,981        35,579

                                                     2,425,140     4,142,575


    Current liabilities
    Accounts payable and accrued liabilities           244,844     1,356,096

    Shareholders' equity

    Share capital                                   18,030,787    18,030,787
    Warrants                                                 -     1,064,777
    Other equity                                     1,654,458       584,068
    Deficit                                        (17,564,215)  (17,078,991)
    Accumulated other comprehensive income              59,266       185,838

                                                     2,180,296     2,786,479

                                                     2,425,140     4,142,575

    Fralex Therapeutics Inc.
    (A development stage company)
    Interim Consolidated Statements of Operations and Comprehensive Loss

                                                 Three months ended March 31,
                                                          2009          2008
                                                             $             $
    Research and development                           250,091     1,376,236
    General and administrative                         373,514       379,042
    Stock-based compensation                           183,963        58,338
    Amortization                                         6,623        18,534
    Foreign exchange gain                             (141,940)       (2,730)

    Loss before the undernoted                        (672,251)   (1,829,420)

    Interest income                                      8,677        79,240

    Loss before income taxes                          (663,574)   (1,750,180)
    Income tax recovery                                178,350             -

    Loss for the period                               (485,224)   (1,750,180)

    Other comprehensive (loss) income
    Unrealized (loss) income on available-for-sale
     short-term investments                           (126,572)       84,743

    Comprehensive loss for the period                 (611,796)  (1,665,437)

    Basic and diluted loss per common share              (0.02)       (0.08)

For further information:

For further information: Avi Grewal, President and Chief Executive
Officer, Fralex Therapeutics Inc., (416) 213-8118 ext. 210,

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