SemBioSys announces 2007 second quarter results



    Canadian Biotechnology Company achieves commercially viable levels of
    second recombinant protein in plants

    CALGARY, Aug. 2 /CNW/ - SemBioSys Genetics Inc. (TSX:SBS), a
biotechnology company developing a portfolio of therapeutic proteins for
metabolic and cardiovascular diseases, today announced its 2007 second quarter
operational and financial results.

    
    Highlights

    -   Successfully developed commercially viable levels of apolipoprotein
        AI and its variant apolipoprotein AIMilano (collectively referred to
        as Apo AI) in safflower seed lines, subsequent to quarter end.
    -   Presented positive preclinical data supporting the development of
        recombinant human insulin produced in safflower at the 67th
        Scientific Sessions of the American Diabetes Association in Chicago.
    -   Construction of the full-scale commercial manufacturing facility for
        the Company's topical oilbody business is on schedule and on budget
        and commercial scale production will begin in the third quarter.
    

    "With the recent announcement from our Apo AI program, we are now
actively scaling-up production and conducting the necessary preclinical work
to start clinical trials for two large-market protein products, insulin and
Apo AI," said Andrew Baum, President and CEO of SemBioSys Genetics Inc. "We
expect to receive data on the functional equivalence of Arabidopsis-produced
Apo AI to serum-derived Apo AI from animal trials later this year. We also
intend to scale-up production and initiate functional equivalence studies in
animals of safflower-produced Apo AI immediately. With respect to the insulin
program, we expect to initiate a Phase II clinical trial in early 2008 and
anticipate data from that trial toward the middle of 2008. In addition to our
progress on our pharmaceutical programs, we have also increased our production
capacity for our topical oilbody product, DermaSphere(R), and are scaling-up
production of our shrimp feed additive, ImmunoSphere(TM), in preparation for
its commercial launch in early 2008."

    
    Outlook

    The Company has completed the major scientific milestones necessary to
proceed into human clinical trials of safflower-produced insulin in early
2008. Additional insulin milestone events expected in 2007 include:

    -   Complete the preclinical testing of safflower-produced insulin
    -   Complete the technology transfer and scale-up of insulin processing
        and formulation to the Company's contract manufacturer for Phase II
        clinical material and production of clinical grade material for early
        stage human trials
    -   Continue business development activities toward an insulin
        partnership
    -   Submit an IND to the FDA and prepare for Phase II clinical trial

    With the Company's recent achievement of successfully developing
commercial levels of Apo AI, the 2007 milestone events that the Company
expects from this program include:

    -   Functional equivalence results comparing Arabidopsis-produced Apo AI
        to serum-derived Apo AI from animal trials
    -   Functional equivalence results comparing safflower-produced Apo AI to
        serum-derived Apo AI from animal trials

    In addition to the above pharmaceutical milestones, the Company is also
advancing the development of its non-pharmaceutical products. The 2007
milestone events expected from these programs include:

    -   Increase production capacity of personal care topical oilbody
        products and establish distribution channels for commercialization
    -   Initiate and complete pond trials for the Company's shrimp feed
        additive, ImmunoSphere(TM)
    -   Complete development feed of formulation process using harvested
        ImmunoSphere(TM) product
    

    Financials

    Total revenue for the three and six-month periods ended June 30, 2007
were $459,407 and $1,002,195 respectively, compared with $167,445 and $267,531
for the corresponding periods in 2006. The increase in revenue relates
primarily to the recognition of an upfront license fee payment received from
Martek and is offset by the reduced level of research activity with respect to
the collaboration agreement with Martek.
    Total expenditures for the three and six-month periods ended June 30,
2007 were $4,046,723 and $7,990,131 respectively, compared with $5,007,483 and
$7,756,437 for the corresponding periods last year.
    Research and development expenses for the three and six-month periods
ended June 30, 2007 were $1,924,745 and $3,668,717, compared with $1,375,635
and $2,483,161 for the corresponding periods last year. The difference is
primarily due to increased personnel and the related support costs in all
areas of research and development with an expanded focus on preclinical work
for insulin and Apo AI, and increased field planting costs incurred for
process development of the ImmunoSphere(TM) product. The increased personnel
costs are primarily attributable to an enhanced quality control and assurance
program and further development of a stronger preclinical and clinical team.
    General and administrative expenses for the three and six-month periods
ended June 30, 2007 were $1,086,766 and $2,110,477 respectively, compared with
$819,659 and $1,791,919 for the corresponding periods last year. The
difference is mainly due to newly added staff and increased investor relations
activities as the Company broadens its exposure to U.S. and European markets.
    Intellectual property costs for the three and six-month periods ended
June 30, 2007 were $307,414 and $835,663 respectively, compared with
$2,081,258 and $2,344,295 for the corresponding periods last year. This
difference is primarily attributable to a $1,516,906 non-cash license fee
incurred in the second quarter of 2006 for the acquisition of technology from
Syngenta Crop Protection AG in exchange for warrants and a decrease in patent
activity in the second quarter offset by an increase in royalty payments that
became due in the same period.
    Business development costs for the three and six-month periods ended
June 30, 2007 were $404,434 and $713,909 respectively, compared with $267,292
and $452,097 for the corresponding periods last year. The difference is
primarily related to the further commercialization of the oilbody business,
increased staffing levels and increased contractor and consulting time as the
Company's products progress further along in their commercialization.
    Net loss for the 2007 second quarter was $3,225,371 or ($0.15) per share,
compared to a net loss of $4,608,182 or ($0.28) per share for the same period
last year. Net loss for the six-month period ended June 30, 2007 was
$6,453,782 or ($0.31) per share compared with $7,112,521 or ($0.43) for the
same six-month period last year.
    As at June 30, 2007 the Company had cash and cash equivalents totaling
$22,877,784 compared to $28,805,937 at March 31, 2007. Approximately
$2,112,436 has been spent to date on the construction of the topical oilbody
manufacturing facility.

    About SemBioSys Genetics Inc. (www.sembiosys.com)

    Calgary, Alberta-based SemBioSys Genetics Inc. is a biotechnology company
developing protein-based pharmaceuticals for metabolic and cardiovascular
diseases. The Company's lead pharmaceutical candidates, produced in the plant
host safflower, are recombinant human insulin to serve the rapidly expanding
global diabetes market and Apo AI, a next generation cardiovascular drug. In
addition to its pharmaceutical products, SemBioSys is developing a series of
non-pharmaceutical products addressing human topical, nutritional oils and
animal health markets.

    This press release contains certain forward-looking statements,
including, without limitation, statements containing the words "believe",
"may", "plan", "will", "estimate", "continue", "anticipate", "intend",
"expect" and other similar expressions which constitute "forward-looking
information" within the meaning of applicable Canadian securities laws.
Forward-looking statements reflect the Company's current expectation and
assumptions, and are subject to a number of risks and uncertainties that could
cause actual results to differ materially from those anticipated. These
forward-looking statements involve risks and uncertainties including, but 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 filings with the Canadian securities
regulatory authorities which filings can be found at www.sedar.com. Given
these risks and uncertainties, readers are cautioned not to place undue
reliance on such forward-looking statements. The Company undertakes no
obligation to publicly update or revise any forward-looking statements either
as a result of new information, future events or otherwise, except as required
by applicable Canadian securities laws.

    
    Financials results included below:


    SemBioSys Genetics Inc.
    Consolidated Balance Sheets
    (Unaudited)
    As at June 30, 2007 and December 31, 2006
    -------------------------------------------------------------------------

    (expressed in Canadian dollars)
                                                       June 30,  December 31,
                                                          2007          2006
                                                  ------------- -------------
                                                        $             $
    Assets
    Current assets
    Cash and cash equivalents                       22,877,784    16,328,459
    Accounts receivable                                228,403       526,002
    Interest receivable                                 67,352       504,551
    Prepaid expenses, deposits and other               444,728       405,459
                                                  ------------- -------------
                                                    23,618,267    17,764,471

    Property and equipment                           7,559,026     5,157,163
                                                  ------------- -------------

                                                    31,177,293    22,921,634
                                                  ------------- -------------
                                                  ------------- -------------

    Liabilities
    Current liabilities
    Accounts payable and accrued liabilities         1,719,307     1,356,018
    Repayable advances                                       -        85,640
    Short-term portion of long-term debt               667,985       746,658
                                                  ------------- -------------
                                                     2,387,292     2,188,316

    Deferred cost recoveries                           286,551        84,203

    Long-term debt                                     890,534     1,337,445
                                                  ------------- -------------
                                                     3,564,377     3,609,964
                                                  ------------- -------------

    Shareholders' Equity
    Capital stock                                   62,691,360    48,302,036

    Warrants                                         6,274,716     6,274,716

    Contributed surplus                              5,841,108     5,475,404

    Deficit                                        (47,194,268)  (40,740,486)
                                                  ------------- -------------
                                                    27,612,916    19,311,670
                                                  ------------- -------------

                                                    31,177,293    22,921,634
                                                  ------------- -------------
                                                  ------------- -------------



    SemBioSys Genetics Inc.
    Consolidated Statements of Loss, Comprehensive Loss and Deficit
    (Unaudited)
    ----------------------------------------------- -------------------------

    (expressed in
     Canadian dollars)        Three month period         Six month period
                                 ended June 30             ended June 30
                          ------------------------- -------------------------
                              2007         2006         2007         2006
                          ------------ ------------ ------------ ------------
                                $            $            $            $
    Revenue
    Licensing fees            437,012            -      874,024            -
    Contract research          22,395      167,445      128,171      267,531
                          ------------ ------------ ------------ ------------
                              459,407      167,445    1,002,195      267,531
                          ------------ ------------ ------------ ------------

    Expenses
    Research and
     development            1,924,745    1,375,635    3,668,717    2,483,161
    General and
     administration         1,086,766      819,659    2,110,477    1,791,919
    Intellectual
     property costs           307,414    2,081,258      835,663    2,344,295
    Business development      404,434      267,292      713,909      452,097
    Stock-based
     compensation             186,654      294,731      365,704      346,443
    Amortization              241,887      201,908      469,945      400,522
    Cost recoveries          (105,177)     (33,000)    (174,284)     (62,000)
                          ------------ ------------ ------------ ------------
                            4,046,723    5,007,483    7,990,131    7,756,437
                          ------------ ------------ ------------ ------------

    Loss before the
     undernoted            (3,587,316)  (4,840,038)  (6,987,936)  (7,488,906)
                          ------------ ------------ ------------ ------------

    Interest income           262,962      230,525      475,195      450,605
    Interest expense          (52,570)     (45,505)    (110,543)     (94,353)
    Loss on sale of
     property and equipment    (1,483)     (16,802)      (1,483)     (16,802)
    Foreign exchange gain     153,036       63,638      170,985       36,935
                          ------------ ------------ ------------ ------------

                              361,945      231,856      534,154      376,385
                          ------------ ------------ ------------ ------------

    Net loss and
     comprehensive loss
     for the period        (3,225,371)  (4,608,182)  (6,453,782)  (7,112,521)

    Deficit - Beginning
     of period            (43,968,897) (29,117,739) (40,740,486) (26,613,400)
                          ------------ ------------ ------------ ------------

    Deficit - End of
     period               (47,194,268) (33,725,921) (47,194,268) (33,725,921)
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------

    Loss per share -
     basic and diluted          (0.15)       (0.28)       (0.31)       (0.43)
                          ------------ ------------ ------------ ------------

    Weighted average
     shares outstanding    22,089,356   16,680,603   20,511,557   16,622,790
                          ------------ ------------ ------------ ------------



    SemBioSys Genetics Inc.
    Consolidated Statements of Cash Flows
    (Unaudited)
    -------------------------------------------------------------------------

    (expressed in
     Canadian dollars)        Three month period         Six month period
                                 ended June 30             ended June 30
                          ------------------------- -------------------------
                              2007         2006         2007         2006
                          ------------ ------------ ------------ ------------
                                $            $            $            $
    Cash provided by
     (used in)
    Operating activities
    Net and comprehensive
     loss for the period   (3,225,371)  (4,608,182)  (6,453,782)  (7,112,521)
    Add items not
     affecting cash:
    Amortization              241,887      201,908      469,945      400,522
    Acquisition of
     intellectual property
     for warrants                   -    1,516,906            -    1,516,906
    Loss on sale of
     property and
     equipment                  1,483       16,802        1,483       16,802
    Stock-based
     compensation             186,654      294,731      365,704      346,443
    Unrealized foreign
     exchange gain           (128,534)     (65,819)    (149,544)     (50,830)
                          ------------ ------------ ------------ ------------
                           (2,923,881)  (2,643,654)  (5,766,194)  (4,882,678)

    Change in non-cash
     working capital
     and other balances
     related to operations   (686,470)    (145,061)     795,297     (242,028)
                          ------------ ------------ ------------ ------------

                           (3,610,351)  (2,788,715)  (4,970,897)  (5,124,706)

    Financing activities
    Issuance of capital
     stock                          -            -   15,904,488            -
    Share issue costs        (168,939)           -   (1,525,478)           -
    Exercise of stock
     options                   10,000      162,813       14,500      167,915
    Repayment of
     long-term debt          (191,843)    (146,964)    (375,812)    (290,808)
    Repayment of repayable
     advances                       -            -      (85,640)           -
                          ------------ ------------ ------------ ------------
                             (350,782)      15,849   13,932,058     (122,893)
                          ------------ ------------ ------------ ------------


    Investing activities
    Proceeds on sale of
     property and equipment     6,000            -        6,000            -
    Acquisition of property
     and equipment         (1,973,020)    (249,861)  (2,417,836)    (390,962)
                          ------------ ------------ ------------ ------------

                           (1,967,020)    (249,861)  (2,411,836)    (390,962)
                          ------------ ------------ ------------ ------------

    Increase (decrease)
     in cash and cash
     equivalents           (5,928,153)  (3,022,727)   6,549,325   (5,638,561)

    Cash and cash
     equivalents -
     Beginning of period   28,805,937   25,897,261   16,328,459   28,513,095
                          ------------ ------------ ------------ ------------

    Cash and cash
     equivalents - End
     of period             22,877,784   22,874,534   22,877,784   22,874,534
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------

    Supplemental
     Information
    Cash interest
     received                 308,755       45,600      912,394      247,383
    Cash interest paid         47,864       41,651       99,206       86,646
    Non-cash transactions
      Capital items
       included in
       accounts payable       824,063      117,017      824,063      117,017
      Capital items
       included in
       accounts receivable          -        7,000            -        7,000
    





For further information:

For further information: SemBioSys Genetics Inc., Mr. Andrew Baum,
President and Chief Executive Officer, Phone: (403) 717-8767, Fax: (403)
250-3886, E-mail: bauma@sembiosys.com, Internet: www.sembiosys.com; Investor
Relations, Ross Marshall, The Equicom Group Inc., Phone: (416) 815-0700 (Ext.
238), Fax: (416) 815-0080, E-mail: rmarshall@equicomgroup.com

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