Fralex Announces Fiscal 2007 Second Quarter Results



    TORONTO, Aug. 9 /CNW/ - Fralex Therapeutics Inc. (TSX: FXI) ("Fralex" or
the "Company"), a medical technology company developing a non-pharmacologic
therapy for the treatment of chronic pain associated with fibromyalgia using a
non-invasive neuromodulation device, announced today its financial results for
the second quarter ended June 30, 2007.

    
    Highlights

    -   Enrolled first patient in RELIEF trial, a pivotal study for the
        treatment of chronic pain associated with fibromyalgia. The trial
        will evaluate the safety and effectiveness of the Company's in-home
        therapy, Complex Neural Pulse(TM) (CNP(TM)). The RELIEF trial is
        being conducted under an Investigational Device Exemption (IDE) from
        the FDA and an Investigational Testing Authorization (ITA) from
        Health Canada. The Company expects to enrol 200 subjects at clinical
        sites in the US and Canada.
    -   At this early stage of the trial, there are currently 12 patients
        enrolled and 10 patients in the screening process.
    -   Initiated a total of 13 clinical sites, including thought-leading
        centers such as the McMaster Pain Clinic.
    -   Allowance of three US patents for their neuromodulation technology
        bringing the number of issued patents to 15.
    -   Strengthened management team with the appointment of Leslie Auld as
        Chief Financial Officer.
    

    "We have achieved significant progress on our pivotal trial for CNP with
the initiation of 13 clinical sites and the enrolment of our first patient."
said Avi Grewal, President and CEO of Fralex. "The ability to attract
thought-leading centres such as the McMaster Pain Clinic is a testament to our
belief that this trial will confirm the potential of CNP as a safe and
effective treatment for pain associated with fibromyalgia."

    Financial Review

    For the three months ended June 30, 2007, the Company reported a loss of
$1,320,571 or ($0.06) per share, compared with a loss of $892,210 or
($0.13) per share, for the corresponding period in 2006, an increase in loss
of $428,361. For the six months ended June 30, 2007, the Company reported a
loss of $2,773,868 or ($0.15) per share, compared with a loss of $1,696,498 or
($0.25) per share for the same period in 2006, an increase in loss of
$1,077,370.
    For the three months ended June 30, 2007, research and development
expenses increased by $452,685 and research and development expenses increased
by $916,840 for the six months ending June 30, 2007. The increase was
primarily due to the initiation of the RELIEF clinical trial which began in
the first quarter of 2007.
    For the three months ended June 30, 2007, general and administrative
expenses increased by $48,784, and increased by $150,645 for the six months
ending June 30, 2007. The increase reflects the investment by the Company in
the infrastructure support for public company requirements which were put in
place with the Company's February 13, 2007 IPO.
    Total expenses for the three-month period ended June 30, 2007 increased
by $527,324 to $1,434,489 as compared with $907,165 in the same period in
2006. Year-to-date total expenses increased by $1,230,696 to $2,962,823 from
$1,732,127 in the same period in 2006. These increases are driven by the
Q1 2007 initiation of the RELIEF trial as reflected in the Company's research
and development expenses which have increased by $452,685 and $916,840 for the
three month and six month periods ended June 30, 2007, respectively.
Specifically, in the second quarter of 2007 the Company completed the
production of the CNP(TM) Device, initiated eleven clinical sites, observed
the enrolment of the RELIEF trial's first patient and increased research and
development headcount from eight employees at June 30, 2006 to ten employees
at June 30, 2007. An additional expense incurred in the first quarter of 2007
but not repeated in the second quarter of 2007 was the issuance of
50,000 Common Shares, valued at $2.64 per share, to Lawson Research Institute
as an endowment of a research chair in Bioelectromagnetic Studies.
    General and administrative expenses grew by $48,784 for the three months
ended June 30, 2007 to $370,482 in 2007 from $321,698 in 2006 and by $150,645
for the six months ended June 30, 2007 to $742,770 in 2007 from $592,125 in
2006. Since the second half of 2006, the Company has been building the
infrastructure to support its newly acquired public company status by adding
contractors for its investor relations and legal needs, by compensating the
Board of Directors and by contracting Directors and Officers Liability
insurance. Contributing to the increase in these expenses in 2007 was the
addition of facilities in the fourth quarter of 2006 as an expansion to the
existing office space to support the Company's growth in infrastructure and
headcount.
    As of June 30, 2007, the company held cash, cash equivalents and
short-term investment of $9.8 million. These funds are expected to provide
sufficient funding for the Company to complete its planned operation through
to the end of the fourth quarter of 2008, based on a plan of treating
200 patients in the RELIEF study.
    Detailed financial statements and the MD&A are available at
www.fralex.com or www.sedar.com.

    About FRALEX:

    FRALEX is a medical technology company focused on developing and
commercializing Complex Neural Pulse(TM) or CNP(TM), a novel neuromodulation
therapeutic technology for chronic pain, which utilizes specifically designed,
low-frequency electromagnetic pulses. FRALEX is proceeding with its FDA and
Health Canada-approved pivotal clinical trial (the "RELIEF" trial) to evaluate
the safety and effectiveness of this technology in the treatment of chronic
pain associated with fibromyalgia. The trial is to be conducted in 2007 and
2008 at leading medical centres within the US and Canada. For more information
on FRALEX, please visit www.fralex.com; further details on the RELIEF trial
are posted on www.clinicaltrials.gov.

    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:
market acceptance of Company's technologies and products; the ability to
obtain financing; Company's financial and technical resources relative to
those of its competitors; Company's ability to keep up with rapid
technological change; government regulation of therapeutic technologies; the
Company's ability to enforce its intellectual property rights and protect its
proprietary technologies; the ability to obtain and develop partnership
opportunities; the timing of commercial product launches; the ability to
achieve key technical milestones in key products and other risk factors
identified from time to time in the Company's filings.

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

                                                     June 30,    December 31,
                                                 ------------    ------------
                                                         2007           2006
                                                            $              $

    Assets

    Current assets
    Cash and cash equivalents                         42,613         174,372
    Short-term investments                         9,729,232       3,186,705
    Investment tax credits receivable                      -          72,769
    Receivables - other                               32,579          47,175
    Prepaid expenses                                 183,422          40,071
                                                 ----------------------------
                                                   9,987,846       3,521,092

    Deferred share issue costs                             -         508,417
    Property and equipment                           113,958         148,213
                                                 ----------------------------

                                                  10,101,804       4,177,722
                                                 ----------------------------
                                                 ----------------------------

    Liabilities

    Current liabilities
    Accounts payable and accrued liabilities         300,887         948,624
    Convertible promissory note                            -          21,785
                                                 ----------------------------

                                                     300,887         970,409
                                                 ----------------------------

    Shareholders' equity

    Common Shares                                 18,027,262       1,332,737
    Class A Common Shares                                  -           3,375
    Class A Preferred Shares                               -       7,928,961
    Conversion feature of promissory note                  -         132,357
    Warrants                                       1,064,777               -
    Stock options                                    280,000         604,000
    Shares to be issued                                    1               1
    Deficit                                       (9,567,986)     (6,794,118)
    Accumulated other comprehensive loss              (3,137)              -
                                                 ----------------------------

                                                   9,800,917       3,207,313
                                                 ----------------------------

                                                  10,101,804       4,177,722
                                                 ----------------------------
                                                 ----------------------------



    Fralex Therapeutics Inc.
    (A development stage company)
    Interim Statements of Operations
    Unaudited
    -------------------------------------------------------------------------
                                       Three months               Six months
                                      ended June 30,           ended June 30,
                             -----------------------  -----------------------
                                   2007        2006         2007        2006
                                      $           $            $           $

    Expenses
    Research and
     development                833,504     380,819    1,647,774     730,934
    General and
     administrative             370,482     321,698      742,770     592,125
    Stock-based
     compensation                50,000     193,000      334,000     386,000
    Amortization                 18,485      11,689       36,826      23,111
    Foreign exchange
     loss (gain)                162,018         (41)     201,453         (43)
                             -----------------------  -----------------------
    Loss before
     the undernoted          (1,434,489)   (907,165)  (2,962,823) (1,732,127)

    Interest income - net       113,918      16,955      188,955      35,629
                             -----------------------  -----------------------

    Net loss for the period  (1,320,571)   (890,210)  (2,773,868) (1,696,498)

    Other comprehensive
     income (loss)
    Unrealized income (loss)
     on available-for-sale
     short-term investments       2,211      (1,942)      (3,137)     (1,597)
                             -----------------------  -----------------------

    Comprehensive loss
     for the period          (1,318,360)   (892,152)  (2,777,005) (1,698,095)
                             -----------------------  -----------------------

    Basic and diluted loss
     per Common Share and
     Class A Common Share         (0.06)      (0.13)       (0.15)      (0.25)
                             -----------------------  -----------------------
                             -----------------------  -----------------------
    

    %SEDAR: 00024447E




For further information:

For further information: Avi Grewal, President and Chief Executive
Officer, Fralex Therapeutics Inc., (416) 213-8118 ext. 210,
agrewal@fralex.com; Christina Bessant, Investor Relations, The Equicom Group
Inc., (416) 815-0700 ext. 269, cbessant@equicomgroup.com

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FRALEX THERAPEUTICS INC.

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