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Procyon announces third quarter 2005 results
Net loss reduced to $0.03 per share
MONTREAL, Nov. 14 /CNW Telbec/ - Procyon Biopharma Inc. (TSX: PBP), a
biotechnology company developing innovative therapeutics in the fields of
cancer and HIV/AIDS, announced today financial and operational results for the
third quarter ended September 30, 2005. The Company decreased its net loss to
$3,156,878 or $0.03 per common share for the third quarter of 2005, compared
with a net loss of $3,365,623 or $0.04 per common share for the same quarter
last year.
THIRD QUARTER HIGHLIGHTS
PCK3145 : Final results of the U.K. Phase IIa study amendment
Final results of the U.K. Phase IIa study amendment for PCK3145, which
objective was to assess the feasibility of a once weekly administration of the
drug in patients with metastatic hormone resistant prostate cancer, confirmed
that PCK3145 is as effective when administered once a week versus three times
a week. The U.S. dose-finding study for PCK3145, Procyon's non-toxic peptide
for the treatment of advanced metastatic prostate cancer, presently being
conducted at the Memorial Sloan Kettering Cancer Center, New York., is
expected to be completed by year-end. In addition, the mechanism of action for
PCK3145 is to be published in three peer-reviewed scientific journals, namely
the "International Journal of Cancer", the "Clinical and Experimental
Metastasis" and the "Anticancer Drugs".
TVT-Dox : anti-cancer technology presented at the RSC/KAST 3rd bilateral
symposium
Procyon presented the results of the anti-neoplastic effect in several
human tumor animal models of its anti-cancer technology, TVT-Dox (Tumor
Vasculature Targeting technology), at the Royal Society of Canada/Korean
Academy of Science and Technology 3rd bilateral symposium: Drug Delivery
Systems, held in Vancouver, last July. Procyon plans to initiate preclinical
studies with the intent to file an Investigational New Drug application within
the next 12 months. TVT-Dox was acquired through the acquisition of Bioxalis
Medica Inc. in June 2005.
PPL-100 : development program on track
PPL-100, Procyon's lead HIV protease inhibitor for the treatment of drug-
resistant HIV/AIDS, development program continues as planned and the Company
expects to begin a first-in-man Phase I clinical trial by the end of this
year. Pharmacokinetics results for PPL-100 are expected to be available to
Procyon by the second half of 2006.
"We are pleased with the final results of the U.K. study for PCK3145
which confirmed the once weekly administration effectiveness of the drug in
reducing the metastatic enzyme MMP-9 levels, and we expect to complete the
U.S. dose finding study by year-end", said Hans J. Mader, president and chief
executive officer of Procyon Biopharma. "The progress made so far in the
PCK3145 development program as well as the increased interest among the
scientific community for the mechanism of action of this non-toxic peptide
strengthen our confidence in the potential of PCK3145 for the treatment of
advanced metastatic prostate cancer," he added. "Also, I am very encouraged
with the advancement made this quarter in our PPL-100 and TVT-DOX development
programs for which we will be initiating, respectively, first-in-man Phase I
and preclinical studies by year-end," he concluded.
FINANCIAL RESULTS
Quarter ended September 30, 2005 compared with the Quarter ended
September 30, 2004
The Company incurred a net loss of $3,156,878 or $0.03 per common share
for the third quarter of 2005, compared with a net loss of $3,365,623 or $0.04
per common share for the same quarter last year.
Revenues for the third quarter of 2005 were $46,611, compared with
$82,231 in the corresponding quarter last year. The lower revenues resulted
from a decrease in interest income, due to the reduced level of cash and short-
term investments on hand, partially offset by an increase in interest rates in
the current quarter compared to the third quarter of 2004.
Research and development expenses amounted to $1,788,168 in the third
quarter of 2005, compared with $2,695,881 in the same quarter last year. The
corporate restructuring plan successfully implemented in January 2005 resulted
in the refocusing of the Company's research spending and generated cost
savings. These were only partially offset by increased expenditures on
PCK3145. Tax credits decreased to $120,000 in the current quarter from
$385,000 in the corresponding quarter last year, due to the lower level of
expenses in the current quarter, together with a lower proportion of Quebec-
based contract spending qualifying for the tax credit. Research and
development expenses represented 53% of total expenses before tax credits in
the current quarter, compared with 70% in the corresponding quarter last year,
reflecting the significant reduction in research and development expenses,
together with the increase in interest on long-term debt and accretion expense
on the convertible debentures.
General and administrative expenses amounted to $965,389 in the third
quarter of 2005, an increase of $179,765 or 23% over the total of $785,624 for
the third quarter last year. Increases in non-cash expenses resulting from
stock options and in consulting fees were the principal reasons for the higher
expenses.
Amortization expense increased to $278,656 in the current quarter from
$269,949 in the third quarter of 2004. The increase resulted primarily from
the added amortization arising from the acquisition of Bioxalis Medica Inc. on
June 29, 2005, for the most part offset by the reduction resulting from the
write-off in December 2004 of the carrying value of the Anti-Nucleosome
Antibodies (ANsA) technology.
Interest on long-term debt was $242,558 in the third quarter of 2005,
compared to $89,127 in the same quarter last year. The interest expense on the
Biolevier loan increased to $179,462 from $89,127 in the same quarter last
year. The increase was due to the additional interest resulting from the
drawdown of an additional $4,000,000 under the loan facility in December 2004.
The interest on the Biolevier loan is being capitalized and added to the
outstanding balance of the loan. Interest on the convertible debentures issued
on June 29, 2005 amounted to $63,096 in the third quarter. This amount is
payable semi-annually either in cash or common shares, at the Company's
option. Accretion expense on the convertible debentures amounted to $56,947 in
the third quarter of 2005. This ongoing non-cash accounting charge for imputed
interest will increase the carrying value of the convertible debentures to
their face value of $3,500,000 by their June 29, 2010 maturity date.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents and short-term investments totaled $9,027,739
at September 30, 2005, compared with $15,720,424 at December 31, 2004. The
decrease of $6,692,685 resulted from the utilization of $9,471,484 to finance
operating activities for the first nine months of 2005, including an increase
of $1,843,180 in non-cash working capital. In addition, a net amount of
$177,205 was used in the period for additional property, plant and equipment
and intellectual property. In addition, expenses of $179,131 were incurred in
connection with the acquisition of Bioxalis Medica Inc. on June 29, 2005 on a
share exchange basis, while the concurrent convertible debenture financing
generated $3,500,000, before cash expenses of $337,601. Cash of $253,311 was
obtained with the acquisition, with $275,000 being used to pay down a Bioxalis
loan.
The Biolevier loan does not adversely impact the Company's liquidity at
this time, as no capital or interest is repayable prior to November 19, 2006.
In addition, the semi-annual interest expense on the $3,500,000 of convertible
debentures issued in June 2005 is payable either in cash or common shares, at
the option of the Company.
Including the balance of $1 million still available from the Biolevier
loan facility referred to above and the 2004 investment tax credits expected
to be received in the fourth quarter of 2005, the Company has approximately
$11 million to support its future activities. Management believes that these
funds will be sufficient to support the Company's ongoing activities for at
least the next 12 months.
<<
PROCYON BIOPHARMA INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
As at
September 30, December 31,
2005 2004
$ $
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ASSETS
Current assets
Cash and cash equivalents 6,054,649 319,382
Short-term investments 2,973,090 15,401,042
Accounts receivable 634,674 271,973
Investment tax credits recoverable 2,018,487 685,000
Prepaid expenses 162,723 110,320
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11,843,623 16,787,717
Property, plant and equipment 669,772 808,504
Intellectual property 8,264,753 5,180,795
Deferred financing fees 1,029,658 909,500
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21,807,806 23,686,516
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued
liabilities 912,796 1,066,787
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912,796 1,066,787
Biolevier loan facility 9,940,541 9,417,393
Convertible debentures 2,098,447 50,000
Preferred shares 4,000,000 4,000,000
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16,951,784 14,534,180
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Shareholders' equity
Share capital 64,881,900 61,461,900
Warrants 2,952,462 2,904,038
Contributed surplus 4,766,124 3,995,794
Equity component of
convertible debentures 1,920,914 1,005,000
Deficit (69,665,378) (60,214,396)
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4,856,022 9,152,336
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21,807,806 23,686,516
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PROCYON BIOPHARMA INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS AND DEFICIT
(unaudited)
Three months ended Nine months ended
September 30, September 30,
2005 2004 2005 2004
$ $ $ $
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REVENUES
License revenue - - - 9,617
Interest and other
income 46,611 82,231 221,347 238,094
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46,611 82,231 221,347 247,711
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EXPENSES
Research and
development 1,788,168 2,695,881 6,095,817 8,630,898
Research and
development tax
credits (120,000) (385,000) (696,000) (1,080,000)
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Net research and
development 1,668,168 2,310,881 5,399,817 7,550,898
General and
administrative 965,389 785,624 2,587,450 2,746,605
Amortization of
property, plant
and equipment 62,189 80,144 184,322 233,926
Amortization of
intellectual
property 181,181 173,212 429,377 519,483
Amortization of
deferred financing
fees 35,286 16,593 86,553 49,778
Accretion on
convertible
debentures 56,947 - 56,947 -
Interest on long-
term debt 242,558 89,127 586,244 269,190
Restructuring
charges - - 172,279 -
Financial
charges 8,828 854 12,920 3,583
Foreign exchange
gains (17,057) (8,581) (23,278) (31,595)
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3,203,489 3,447,854 9,492,631 11,341,868
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Loss before write-
down of
intellectual
property (3,156,878) (3,365,623) (9,271,284) (11,094,157)
Write-down of
carrying value of
intellectual
property - - 179,698 -
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Net loss (3,156,878) (3,365,623) (9,450,982) (11,094,157)
Deficit, beginning
of period (66,508,500) (49,919,874) (60,214,396) 42,191,340)
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Deficit, end of
period (69,665,378) (53,285,497) (69,665,378) (53,285,497)
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Basic and diluted
loss per share (0.03) (0.04) (0.11) (0.14)
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Weighted average
number of common
shares
outstanding 94,077,563 84,600,063 88,176,464 78,476,946
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PROCYON BIOPHARMA INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Three months ended Nine months ended
September 30, September 30,
2005 2004 2005 2004
$ $ $ $
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OPERATING ACTIVITIES
Net loss for the
period (3,156,878) (3,365,623) (9,450,982) (11,094,157)
Items not affecting
cash
Amortization of
property, plant
and equipment 62,189 80,144 184,322 233,926
Amortization of
intellectual
property 181,181 173,212 429,377 519,483
Amortization of
deferred
financing fees 35,286 16,593 86,553 49,778
Write-down of
carrying value of
intellectual
property - - 179,698 -
Write-down of
investment - - - 7,001
Accretion on
convertible
debentures 56,947 - 56,947 -
Loan interest
capitalized 179,462 89,127 523,148 269,190
Non-cash license
revenues - - - (4,417)
Services paid by
issuance of stock
options 108,576 60,753 362,633 422,362
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(2,533,237) (2,945,794) (7,628,304) (9,596,834)
Net change in
non-cash
balances
relating to
operations (919,332) (951,919) (1,843,180) (2,088,192)
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Cash flows related
to operating
activities (3,452,569) (3,897,713) (9,471,484) (11,685,026)
-------------------------------------------------------------------------
INVESTING ACTIVITIES
Acquisition of
intellectual
property (50,039) (81,041) (173,580) (89,284)
Acquisition of
property, plant
and equipment (4,145) (16,399) (14,778) (79,914)
Proceeds on disposal
of property, plant
and equipment - - 11,153 -
Cash and cash
equivalents
obtained on
acquisition of
business - - 253,311 -
Business acquisition
expenses (159,131) - (179,131) -
Purchase of
short-term
investments (1,490,265) (5,743,474) (4,960,270) (10,143,474)
Maturities of
short- term
investments 1,987,180 - 17,388,222 9,440,494
-------------------------------------------------------------------------
Cash flows related
to investing
activities 283,600 (5,840,914) 12,324,927 (872,178)
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FINANCING ACTIVITIES
Issuance of units - - - 17,250,000
Unit issue expenses - (14,211) - (1,607,365)
Issuance of common
shares - 44,850 - 128,160
Debt financing costs (299,120) - (343,176) -
Repayment of debt
assumed in an
acquisition (137,500) (383) (275,000) (4,207)
Issuance of
convertible
debentures - - 3,500,000 330,000
-------------------------------------------------------------------------
Cash flows related
to financing
activities (436,620) 30,256 2,881,824 16,096,588
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Net increase
(decrease)
in cash and
cash equivalents (3,605,589) (9,708,371) 5,735,267 3,539,384
Cash and cash
equivalents,
beginning of
period 9,660,238 13,724,428 319,382 476,673
-------------------------------------------------------------------------
Cash and cash
equivalents,
end of period 6,054,649 4,016,057 6,054,649 4,016,057
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Supplemental cash flow
information
Cash paid during
the period for
interest 8,956 16 9,303 2,853
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>>
ABOUT PROCYON BIOPHARMA INC.
Procyon Biopharma Inc. is a biotechnology company actively engaged in the
discovery and development of innovative therapeutics in the fields of cancer
and HIV/AIDS. The Company leverages its strengths in research and clinical
development, bringing products through late-stage clinical trials and then
evaluating the best options for further development, such as co-development
and licensing. Procyon's pipeline includes: PCK3145, a non-toxic peptide soon
to enter a Phase II North American trial for the treatment of advanced
metastatic prostate cancer; TVT-Dox, a tumor vasculature targeting technology
for the treatment of solid tumors for which an IND filing is expected within
12 months; and, PPL-100, a protease inhibitor for the treatment of drug-
resistant HIV/AIDS soon to enter the clinic. Procyon has won the 2005
Frost & Sullivan Award for Excellence in Technology for its overall scientific
and technological contributions towards the advancement of cancer therapy.
Headquartered in Montreal, Procyon shares are listed on the Toronto Stock
Exchange (TSX) under the ticker symbol PBP. For more information, visit
www.procyonbiopharma.com.
This release contains forward-looking statements that reflect the
company's current expectation regarding future events. The forward-looking
statements involve risks and uncertainties. Actual events could differ
materially from those projected herein and depend on a number of factors
including, but not limited to, changing market conditions, successful and
timely completion of clinical studies, uncertainties related to the regulatory
approval process, establishment of corporate alliances and other risks
detailed from time to time in the company's filings.
%SEDAR: 00010254EF
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