Isotechnika reports second quarter results



    EDMONTON, Aug. 14 /CNW/ - Isotechnika Inc. announced today its financial
results for the second quarter ended June 30, 2007, and provided a review of
the Company's scientific progress for the second quarter to the current date.

    Scientific Highlights
    ---------------------
    On August 2, 2007, the Company announced that it had received permission
from the Food and Drug Administration of the United States (FDA) for the
long-term use of ISA247 in patients currently participating in the Phase 2b
kidney transplant (PROMISE) trial. Previously, on June 7, 2007, a No Objection
Letter was received from Health Canada for the long term use of ISA247 in
patients participating in the Canadian arm of the Company's Phase 2b kidney
transplant trial. Patients involved in the PROMISE trial will be allowed to
remain on ISA247 through to commercialization of the drug and beyond after
completion of the 12 month trial. Patients choosing to remain on ISA247
therapy will continue to have safety and efficacy parameters monitored on an
ongoing basis.
    On July 20, 2007, the Company completed recruitment of its pivotal Phase
3 European/Canadian psoriasis trial (ESSENCE) at 642 patients. The patient
population is made up of 231 Canadian patients, 295 patients from Germany and
116 patients from Poland. A second six month, placebo-controlled pivotal Phase
3 European psoriasis trial including approximately 360 patients is expected to
commence in the first quarter of 2008. This trial, in conjunction with the
ongoing ESSENCE trial, will provide sufficient patient numbers to file for
regulatory approval in Europe and Canada. Conducting this second trial is not
expected to have any significant impact on the psoriasis drug development
timelines.
    On June 27, 2007, the last patient was enrolled in the Phase 2b trial
assessing ISA247 for the prevention of kidney graft rejection following
transplantation. Of the 334 patients enrolled, 148 patients had already
completed the required six months of treatment. The Company expects to have
the last patient complete the six months of active treatment before the end of
the year. Furthermore, 43 patients had completed an additional 6 months of
treatment in the optional extension phase of this trial.
    On May 7, 2007, the Company announced the interim three month results,
reviewed by the Data Monitoring Committee (DMC), of the first third of the
patients treated in its Phase 2b de novo kidney transplant (PROMISE) trial for
the Company's lead immunosuppressive drug, ISA247.
    This interim analysis was based upon the assessment of the first 116
patients who had completed three months of treatment. There were 28 patients
treated with the low dose (0.4 mg/kg twice daily) resulting in 11% incidence
of acute rejection; 25 patients treated with the mid dose (0.6 mg/kg twice
daily) resulting in 8% incidence of acute rejection; and 29 patients treated
with the high dose (0.8 mg/kg twice daily) resulting in 3% incidence of acute
rejection, as compared to 34 patients treated with tacrolimus, resulting in 9%
incidence of acute rejection. All rejection episodes were appropriately
treated. No transplanted kidneys were lost. When all three of the ISA247
dosing groups were combined, there was a 7% rate of acute rejection in the
ISA247 groups compared to a 9% rate of acute rejection in the tacrolimus
group, which is being dosed optimally.
    As part of the trial, kidney function is being measured on an ongoing
basis by Glomerular Filtration Rate (GFR). Based on the data to May 7, 2007,
very good kidney function was observed in all of the ISA247 dosing groups.
Within the first month post-transplant, kidney function showed improvement
across all ISA247 dosing groups similar to that observed in the tacrolimus
group. Fewer incidences of hypomagnesemia, neurological side effects, and new
onset diabetes mellitus were observed with all ISA247 dosing groups as
compared to tacrolimus. There were no clinically significant differences noted
in blood pressure, lipids (cholesterol and triglycerides) or other laboratory
parameters examined to date. Additionally, the strong pharmacokinetic/
pharmacodynamic correlation seen with ISA247 remained consistent with previous
data reported which should facilitate ease of dosing to target concentrations
and effect.
    On May 6, 2007, an oral presentation on the latest interim results noted
above, was given at the American Transplant Congress by Dr. Stephan Busque,
one of the principal investigators involved in the PROMISE trial.
    On May 5, 2007, the Company hosted an evening education symposium at the
American Transplant Congress. The symposium highlighted the use of ISA247 for
the prevention of transplant organ rejection. The evening also focused on the
use of calcineurin inhibitors, the design of ISA247, and the potential for
this design to result in improvements in both safety and efficacy for
transplant and psoriasis patients. Interim results from the PROMISE trial were
also presented.
    During the second quarter, the Company also made corporate and scientific
presentations at the following conferences; The European Academy of
Dermatology and Venerology, BioFinance 2007 and the Canadian Dermatology
Annual Conference.
    On August 1, 2007, the Company announced that its partner, Lux
Biosciences (Lux) had received a positive opinion from the European Agency for
the Evaluation of Medicinal Products (EMEA) committee for Orphan Medicinal
Products on orphan medicinal product designation for ISA247 for the treatment
of chronic, non-infectious uveitis. The EMEA forwards their opinion to the
European Commission. The Decision will be adopted by the Commission within 30
days of it receipt. Orphan Drug designation provides a variety of incentives,
including market exclusivity for up to 10 years following approval, fee
reductions and free scientific advice. Lux, previously in January 2007, had
been granted orphan drug status for ISA247 for non-infectious posterior,
intermediate and pan uveitis by the FDA in the United States.
    Furthermore, on August 7, 2007, the Company announced that Lux received
Fast-Track designation from the FDA for ISA247 for the treatment of uveitis.
Fast Track designation will provide various means to expedite the development
and review of ISA247. The process could be facilitated through meetings and
other correspondence with the FDA reviewers, consideration for priority
review, and the ability to submit portions of the New Drug Application (NDA)
early for review as part of a "rolling" submission.

    Financial results
    -----------------
    At June 30, 2007, cash, cash equivalents and short-term investments
totalled $48.1 million, compared to $55.5 million at March 31, 2007, and
$25.7 million at December 31, 2006.
    For the second quarter ended June 30, 2007, the Company reported a
consolidated net loss of $9.9 million or $0.09 per common share, as compared
to a consolidated net loss of $6.7 million or $0.08 per common share for the
same period in 2006. For the six months ended June 30, 2007, the consolidated
net loss was $17.7 million or $0.18 per common share compared to $12.0 million
or $0.14 per common share for the comparable period in 2006.
    The consolidated net loss increased primarily as a result of higher
research and development expenditures due to the ISA247 Phase 2b kidney
transplant and the Phase 3 European/Canadian psoriasis trials currently
underway and a decrease in licensing fee revenue.
    Revenue decreased to $457,000 for the second quarter ended June 30, 2007,
compared to $1.0 million for the second quarter ended June 30, 2006. Revenue
in the second quarter of 2007 was comprised of $27,000 for licensing fees and
$430,000 for diagnostic product sales, as compared to $703,000 for licensing
fees and $341,000 for diagnostic product sales for the second quarter of 2006.
Licensing fees represented the amortization of deferred revenue related to
upfront payments the Company has received from its out-licensing agreement
with Atrium. On a year-to-date basis, revenue for the six months ended
June 30, 2007, was $1.2 million compared to $ 2.6 million for the same period
in fiscal 2006.
    Research and development expenditures were $8.8 million in the second
quarter of 2007, compared to $5.4 million in the second quarter of 2006, an
increase of $3.4 million. The Company incurred total research and development
expenditures of $15.3 million for the six months ended June 30, 2007, as
compared to $10.4 million for the same period in 2006.
    Research and development expenditures for the second quarter of 2007 were
comprised primarily of clinical and drug supply costs for the ISA247 Phase 2b
kidney transplant and Phase 3 European psoriasis trials.
    Corporate, administration and marketing costs totalled $1.5 million for
the second quarter of 2007, compared to $1.9 million for the second quarter of
2006. Isotechnika incurred a total corporate, administration and marketing
expenditure of $3.2 million for the six months ended June 30, 2007, as
compared with $3.6 million for the same period in fiscal 2006. The decrease in
corporate, administration and marketing costs reflected reduced infrastructure
costs as a result of consolidating the corporate office with the lab site in
Edmonton and closing the Arizona operations in 2006, and reduced stock-based
compensation expense.
    For further discussion of the Company's financial results for the three
and six months ended June 30, 2007, the unaudited interim consolidated
financial statements and the Management's Discussion and Analysis for the
second quarter ended June 30, 2007, are accessible on Isotechnika's Web site
at www.isotechnika.com or on SEDAR at www.sedar.com.

    About Isotechnika Inc.
    ----------------------
    Edmonton-based Isotechnika Inc. is an international biopharmaceutical
company focused on the discovery and development of novel immunosuppressive
therapeutics that are designed to offer advantages over other currently
available treatments while offering therapeutic choices to clinicians.
Isotechnika looks to become the market leader of drug therapies for
indications such as transplantation of solid organs (with Hoffman La Roche)
and treatment of autoimmune disorders such as uveitis (with Lux Biosciences)
and psoriasis.
    There is a significant unmet medical need in the treatment of both solid
organ transplantation and autoimmune disease. It is estimated that the market
potential exceeds $2 billion annually in sales for calcineurin inhibitors such
as ISA247.
    Isotechnika's lead drug, ISA247, has successfully completed a Phase 3
Canadian trial for the treatment of moderate to severe psoriasis. ISA247 is
currently being investigated in a Phase 3 European/Canadian psoriasis trial
and a Phase 2b North American trial for the prevention of kidney graft
rejection subsequent to transplantation.
    Isotechnika Inc. is a publicly traded company on the Toronto Stock
Exchange under the symbol "ISA". More information on Isotechnika can be found
at www.isotechnika.com.

    Partnerships with Isotechnika Inc.
    ----------------------------------
    Isotechnika Inc. signed a collaboration agreement with Hoffman La Roche
on April 9, 2002, which licensed the worldwide rights to develop and
commercialize ISA247 for all transplant indications.
    On September 29, 2005, Isotechnika Inc. entered into an exclusive
worldwide licensing agreement with Atrium for the use of ISA247 and TAFA93
specifically with drug eluting devices for the non-systemic treatment of
vascular, cardiovascular, target vessel and tissue disorders.
    Isotechnika and Cellgate signed an option agreement on April 24, 2006,
granting Isotechnika the option to obtain an exclusive license to develop and
commercialize conjugates consisting of Cellgate's patented transporter
technology for the topical delivery of ISA247 in patients suffering from mild
to moderate psoriasis.
    On May 24, 2006, Isotechnika signed an agreement with Lux granting Lux
worldwide rights to develop and commercialize Isotechnika's lead drug, ISA247
for the treatment and prophylaxis of all ophthalmic diseases. Lux uses the
code name LX211 for ISA247 for the ophthalmic indications.

    Forward-Looking Statements
    --------------------------
    This press release may contain forward-looking statements. Forward
looking statements, including the Company's belief as to the potential of its
products, the Company's expectations regarding the issuance of additional
patents and the Company's ability to protect its intellectual property,
involve known and unknown risks and uncertainties, which could cause the
Company's actual results to differ materially from those in the forward
looking statements. Such risks and uncertainties include, among others, the
availability of funds and resources to pursue research and development
projects, the ability to economically manufacture its products, the potential
of its products, the success and timely completion of clinical studies and
trials, the Company's ability to successfully commercialize its products, the
ability of the Company to defend its patents from infringement by third
parties, and the risk that the Company's patents may be subsequently shown to
be invalid or infringe the patents of others. Investors should consult the
Company's quarterly and annual filings with the Canadian commissions for
additional information on risks and uncertainties relating to the
forward-looking statements. Investors are cautioned against placing undue
reliance on forward-looking statements.


    
    Isotechnika Inc.
    Balance Sheet
    -------------------------------------------------------------------------

    (expressed in thousands of Canadian dollars)

                                                        June 30  December 31
                                                           2007         2006
                                                     (Unaudited)
                                                              $            $

    Assets

    Current assets
    Cash and cash equivalents                            42,978       15,574
    Short-term investments                                5,095       10,174
    Accounts receivable                                     380          463
    Inventories                                             324          299
    Prepaid expenses and other deposits                     843        1,035
                                                     ------------------------

                                                         49,620       27,545
    Property and equipment                                4,899        5,561
    Patents                                               2,775        2,604
                                                     ------------------------

                                                         57,294       35,710
                                                     ------------------------
                                                     ------------------------

    Liabilities

    Current liabilities
    Accounts payable and accrued liabilities              8,060        5,305
    Current portion of deferred revenue                     444          750
    Current portion of long-term debt                     1,398        2,007
    Current portion of deferred lease inducements            16           16
                                                     ------------------------

                                                          9,918        8,078
    Deferred revenue                                      3,322        3,322
    Long-term debt                                          170          714
    Deferred lease inducements                               82           90
                                                     ------------------------

                                                         13,492       12,204
                                                     ------------------------

    Shareholders' Equity

    Share capital
    Common shares
      Authorized
        Unlimited number of common shares without
         par value
      Issued and outstanding
        106,243,492 (December 31, 2006 - 84,333,492)    192,706      158,276
    Warrants                                              3,122            -
    Contributed surplus                                   4,844        4,422
    Deficit                                            (156,870)    (139,192)
                                                     ------------------------

                                                         43,802       23,506
                                                     ------------------------

                                                         57,294       35,710
                                                     ------------------------
                                                     ------------------------



    Isotechnika Inc.
    Statement of Changes in Shareholders' Equity
    (Unaudited)
    -------------------------------------------------------------------------

    (expressed in thousands of Canadian dollars, except numbers of shares
     and warrants)

                                     Common shares                  Warrants

                               Number       Amount       Number       Amount
                                  No.            $          No.            $

    Balance -
     December 31, 2005     84,108,492      157,812    1,293,147        1,094

    Exercise of stock
     options                  200,000          442            -            -
    Stock-based
     compensation                   -            -            -            -
    Net loss for the period         -            -            -            -
    -------------------------------------------------------------------------

    Balance -
     June 30, 2006         84,308,492      158,254    1,293,147        1,094
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Balance -
     December 31, 2006     84,333,492      158,276            -            -
    Issue of common
     shares and warrants   21,850,000       34,366   10,925,000        3,122
    Exercise of stock
     options                   60,000           64            -            -
    Stock-based
     compensation                   -            -            -            -
    Net loss for the
     period                         -            -            -            -
    -------------------------------------------------------------------------

    Balance -
     June 30, 2007        106,243,492      192,706   10,925,000        3,122
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                          Contributed              Shareholders'
                              surplus      Deficit       equity
                                    $            $            $

    Balance -
     December 31, 2005          2,843     (112,555)      49,194

    Exercise of stock
     options                     (108)           -          334
    Stock-based
     compensation                 459            -          459
    Net loss for the period         -      (12,028)     (12,028)
    ------------------------------------------------------------

    Balance -
     June 30, 2006              3,194     (124,583)      37,959
    ------------------------------------------------------------
    ------------------------------------------------------------

    Balance -
     December 31, 2006          4,422     (139,192)      23,506
    Issue of common
     shares and warrants            -            -       37,488
    Exercise of stock
     options                        -            -           64
    Stock-based
     compensation                 422            -          422
    Net loss for the
     period                         -      (17,678)     (17,678)
    ------------------------------------------------------------

    Balance -
     June 30, 2007              4,844     (156,870)      43,802
    ------------------------------------------------------------
    ------------------------------------------------------------



    Isotechnika Inc.
    Statement of Operations and Comprehensive Loss
    (Unaudited)
    -------------------------------------------------------------------------

    (expressed in thousands of Canadian dollars, except per share amounts)

                                      Three Months Ended    Six Months Ended
                                       June 30   June 30   June 30   June 30
                                          2007      2006      2007      2006
                                             $         $         $         $


    Revenue
    Licensing revenue                       27       703       306     1,964
    Product sales and contract
     analysis                              430       341       850       677
                                     ----------------------------------------

                                           457     1,044     1,156     2,641
                                     ----------------------------------------

    Expenses
    Research and development             8,792     5,369    15,303    10,357
    Corporate, administration and
     marketing                           1,457     1,893     3,160     3,604
    Amortization of property and
     equipment                             370       420       785       842
    Product sales and contract
     analysis                              174       143       389       305
    Interest on long-term debt              40        82        94       177
    Amortization of patent costs            18         8        35        16
    Loss (gain) on disposal of
     equipment                               -        29        (4)       29
                                     ----------------------------------------

                                        10,851     7,944    19,762    15,330
                                     ----------------------------------------

    Loss before the undernoted         (10,394)   (6,900)  (18,606)  (12,689)
                                     ----------------------------------------

    Other income (expense)
    Investment income                      549       392       973       837
    Foreign exchange translation
     gain (loss)                           (79)     (158)      (45)     (176)
                                     ----------------------------------------

                                           470       234       928       661
                                     ----------------------------------------

    Net loss for the period             (9,924)   (6,666)  (17,678)  (12,028)
                                     ----------------------------------------
                                     ----------------------------------------

    Other comprehensive income               -         -         -         -
                                     ----------------------------------------
                                     ----------------------------------------

    Comprehensive loss for the
     period                             (9,924)   (6,666)  (17,678)  (12,028)
                                     ----------------------------------------
                                     ----------------------------------------

    Basic and diluted loss
     per share                           (0.09)    (0.08)    (0.18)    (0.14)
                                     ----------------------------------------
                                     ----------------------------------------

    Weighted average number of
     outstanding common shares
     (in thousands)                    106,232    84,296   100,751    84,251
                                     ----------------------------------------
                                     ----------------------------------------



    Isotechnika Inc.
    Consolidated Statement of Cash Flows
    (Unaudited)
    -------------------------------------------------------------------------

                                      Three Months Ended    Six Months Ended
                                       June 30   June 30   June 30   June 30
                                          2007      2006      2007      2006
                                             $         $         $         $
    Cash provided by (used in)
    Operating activities
    Net loss for the period             (9,924)   (6,666)  (17,678)  (12,028)
    Items not affecting cash
      Amortization of deferred revenue     (27)     (703)     (306)   (1,964)
      Amortization of property and
       equipment                           370       420       785       842
      Amortization of patent costs          18         8        35        16
      Loss (gain) on disposal of
       equipment                             -        29        (4)       29
      Amortization of deferred lease
       inducements                          (4)      (15)       (8)      (31)
      Recovery in value of short-term
       investments                         (16)      (28)      (58)      (81)
      Stock-based compensation             108       414       422       460
      Unrealized foreign exchange
       translation loss (gain) related
       to non-operating activities          76       198       106       179
                                     ----------------------------------------

                                        (9,399)   (6,343)  (16,706)  (12,578)
    Licensing fee proceeds received          -     3,322         -     3,322
    Net change in other operating
     assets and liabilities              2,678    (1,867)    3,005    (3,198)
                                     ----------------------------------------

                                        (6,721)   (4,888)  (13,701)  (12,454)
                                     ----------------------------------------

    Investing activities
    Decrease in short-term
     investments                         2,383     5,304     4,930    11,025
    Purchase of property and
     equipment                             (25)     (264)     (126)     (322)
    Proceeds on sale of equipment            2        35         7        38
    Patent costs                           (83)      (77)     (206)     (285)
                                     ----------------------------------------

                                         2,277     4,998     4,605    10,456
                                     ----------------------------------------

    Financing activities
    Repayment of long-term debt           (481)     (472)     (986)     (920)
    Issuance of common shares and
     warrants - net of share issue
     costs                                  64        64    37,552       334
                                     ----------------------------------------

                                          (417)     (408)   36,566      (586)
                                     ----------------------------------------

    Effect of foreign exchange rate
     fluctuations on cash and cash
     equivalents                           (56)      (27)      (66)      (23)
                                     ----------------------------------------

    Increase (decrease) in cash and
     cash equivalents                   (4,917)     (325)   27,404    (2,607)

    Cash and cash equivalents -
     Beginning of period                47,895    17,120    15,574    19,402
                                     ----------------------------------------

    Cash and cash equivalents -
     End of period                      42,978    16,795    42,978    16,795
                                     ----------------------------------------
                                     ----------------------------------------

    Cash and cash equivalents are
     comprised of:
    Cash on deposit                      4,032     3,671     4,032     3,671
    Money market securities and
     investment deposits                38,946    13,124    38,946    13,124
                                     ----------------------------------------

                                        42,978    16,795    42,978    16,795
                                     ----------------------------------------
                                     ----------------------------------------
    





For further information:

For further information: Dr. Randall Yatscoff, President & CEO,
Isotechnika Inc., (780) 487-1600 (224), 780-484-4105 (fax),
ryatscoff@isotechnika.com; Dennis Bourgeault, Chief Financial Officer,
Isotechnika Inc., (780) 487-1600 (226), (780) 484-4105 (fax),
dbourgeault@isotechnika.com

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ISOTECHNIKA PHARMA INC.

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