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Bioxel Pharma: 2008 Second Quarter Results QUEBEC CITY, QUEBEC--(MARKET WIRE)--Aug 29, 2008 -- Bioxel Pharma Inc. (CDNX:BIP.V - News), a leading manufacturer
of taxane active pharmaceutical ingredients (APIs) and developer
of targeted oncology drugs, today announced its results
for the second quarter ended June 30, 2008.
"Since my recent arrival at Bioxel, I have already been able to fully appreciate the strengths and tremendous potential of the Corporation. The quality of work achieved to date has placed Bioxel in a more than promising growth stage position. As compared to its competitors, Bioxel's assets are significant and appreciated by its customers. Indeed, the progress achieved so far by Bioxel allows us to consolidate and offer fundamental elements to anticancer drug developers: - High quality pharmaceutical ingredients, resulting from processes complying with good manufacturing practice pharmaceutical standards (cGMP), and produced in facilities successfully inspected by the Food and Drug Administration (FDA); - Sound intellectual property giving clients the right to use docetaxel without infringing patents protecting the synthetic processes of the active ingredient of Sanofi-Aventis' Taxotere®; - An important quantity already available of 9-DHB, the intermediate we use to synthesize docetaxel, allowing immediate support to our clients for the launch of a docetaxel-based product; - Long-term supply of paclitaxel and docetaxel thanks to abundant Canadian yew resource areas we have access to. To my knowledge, Bioxel is the only company that can claim all such assets," declared Olivier Meyer, President and Chief Executive Officer of Bioxel, before adding "I am also happy to bring to Bioxel my fifteen years of experience with biotechnology companies and large pharmaceutical corporations devoted to the development of oncology products. I intend to share such experience with Bioxel, notably to ramp up the development of paclitaxel and docetaxel sales." Q2 2008 HIGHLIGHTS Docetaxel: New Customers At the end of the second quarter, Bioxel confirmed it gained six new customers for development lots of its docetaxel molecule. We believe that the docetaxel produced by Bioxel is today generating considerable interest that represents major business opportunities. These new customers are pharmaceutical companies developing innovative docetaxel-based drugs and generic drug manufacturers from around the world. We are enthusiastic about the global pharmaceutical industry's interest in our docetaxel molecule. Our customers are taking advantage of the great opportunity offered by the gradual opening up of the major international markets to generic docetaxel-based drugs. Given the expiry of the patents to docetaxel, this market is expected to open up as of 2010. In such a context, Bioxel is emerging as a key docetaxel provider that stands apart from the competition through the use of a unique synthesis intermediate in an innovative manufacturing process. Consistent with scheduled milestones, Bioxel will be able to deliver its first lots of cGMP docetaxel produced on a commercial scale as of the second half of 2008. With the gain of these new customers, Bioxel anticipates an increase of its docetaxel sales in the short term. Paclitaxel: New Business Opportunities In June 2008, in response to the demand of a leading generic drug manufacturer, Bioxel filed an application to register its Paclitaxel Drug Master File ("DMF") in 25 countries in the European Union, subsequent to its registration in the United States in 2007. This customer has a commercial footprint extending into Europe, North America, Latin America and the Asia-Pacific region. With this application, Bioxel is confident that it will remain the supplier of choice of this customer for the development and marketing of its product. Bioxel also made its second delivery of paclitaxel pursuant to an order from a major European generic drug manufacturer, having made its first delivery at the beginning of the second quarter of 2008. Once again, Bioxel maintains that it will respect this customer's order schedule. FINANCIAL HIGHLIGHTS Operating Results The Corporation recorded second-quarter revenues of $353,800, compared with $236,700 for the equivalent period of 2007. For the six-month period ended June 30, 2008, revenues reached $393,000 compared with $281,300 for the corresponding period of 2007, an increase of approximately 40%. The gross margin for the second quarter amounted to $122,900 or 35% of revenues, up from $46,700 or 20% of revenues a year earlier. For the first six months, the gross margin amounted to $138,800 or 35% compared with $55,500 or 20% for the same period in 2007. The growth in the gross margin stems primarily from the revenue mix, combined with the paclitaxel manufacturing cost-cutting and productivity improvement initiatives in 2006. Research and development (R&D) expenses for the second quarter of 2008 totalled $128,000 compared with $61,300 for the equivalent period of 2007, an increase of $66,700. This variance is due to the favorable adjustment in 2007 of the provision of tax credits receivable. Thus, for the first six months of the year, research and development (R&D) expenses decreased from $187,400 to $177,100. This $10,300 decrease can be explained by the Corporation's maintained decision to prioritize and focus its resources on the development of docetaxel. This choice was matched with a reduction in research efforts on the development of new drugs in the form of injectable nano-emulsions as well as the development of new biomass harvesting tools. These elements, combined with the favorable adjustment of the provision of tax credits receivable in 2007, complete the explanation of this variance for the first half of 2008. Selling expenses reached $79,600 compared with $94,200 for the same quarter in 2007, a decrease of $14,600. For the six-month period, selling expenses decreased by $51,800, from $199,000 in 2007 to $147,200 in 2008. This reduction is due mainly to lower salaries and traveling expenses incurred in Europe and Asia during the first half of 2008. Administrative expenses were reduced by $63,100 reaching $324,100 compared with $387,200 for the second quarter of 2007. For the six-month period ending June 30, 2008, administrative expenses reached $589,300 compared with $685,900 for the same period of 2007, a significant reduction of $96,600. This decline is primarily attributable to the decreased cost of operating as a public corporation. Financial expenses totalled $351,000, up from $167,700 in the second quarter of 2007, an increase of $183,300. For the six-month period, financial expenses increased by $414,100 to reach $764,100, compared with $350,000 a year earlier. This increase is primarily attributable to the interest expenses related to the convertible debentures totaling $4.09 million issued in November 2007. Amortization of property, plant and equipment and intangible assets was similar, reaching $219,300 for the second quarter of 2008 compared with $218,300 for the same period of 2007. During the first six months of the year, amortization costs were $436,300, a slight increase of $3,900 compared with $432,400 for the corresponding period of 2007. The Corporation incurred a net loss of $989,700 or $0.01 per share for the quarter, compared with a net loss of $930,600 or $0.01 per share for the corresponding period of 2007. For the six-month period ending June 30, 2008, the net loss was $2.0 million compared with $1.9 million for the same period of 2007, or 0.02 $ per share for each of the two six-month periods. Shareholders' Equity As of June 30, 2008, the Corporation posted a year-to-date deficit of $34.4 million and a contributed surplus of $2.9 million pursuant to the Canadian accounting standards regarding stock-based compensation. The value of shareholders' equity and convertible debentures totalled $4.36 million, compared with $5,58 million as of December 31, 2007. Cash Position and Sources of Financing As of June 30, 2008, the Corporation had cash and cash equivalents (cash and temporary investment) of $420,800, compared with $2.2 million as of December 31, 2007. As of June 30, 2008, working capital totaled $2.1 million, compared with $3.2 million as of December 31, 2007. The Corporation's financial resources are derived primarily from the issue of share capital, the exercise of warrants, convertible debentures, loans to finance the purchase of property, plant and equipment, income tax credits receivable, subsidies from various sources and an Investissement Quebec loan under the BioLevier program. In the coming years, Bioxel plans to increase the proportion of cash flows from its business operations. On January 17, 2008, the Corporation announced that it agreed to a moratorium with Investissement Quebec on the payment of approximately $130,000 in interest payable on the BioLevier note payable, which is capitalized. Second, Investissement Quebec agreed to a one-year extension of its loan guarantee on a term loan made to Bioxel by its banker for the purchase of equipment to match the one-year extension of such loan to June 2010, and a moratorium on the principal repayment of such loan for the period between January 1, 2008 and June 30, 2010, which represents a cash savings of approximately $385,000 for the Corporation. During the first six-month period of 2008, Bioxel also obtained an Investissement Quebec guarantee for a specific working capital credit facility of $1.0 million granted by its financial institution. This credit is to be allocated to the financing of the Corporation's export contracts subject to firm orders from its customers. This additional financial leverage bolsters Bioxel's working capital and will help it to further increase the development of its sales. This financing also enhances the Corporation's capacity to meet customer demand in connection with the launch of docetaxel. As of June 30, 2008, the working capital credit facility available totaled $560,000. Bioxel's first six-month period operating activities for 2008 used cash flows of $1.6 million, reflecting the net loss of $887,000 including non-cash items and a $755,000 increase in changes in working capital items. Cash flows used for operations were mainly allocated to business development efforts, research and development, financial expenses and the costs of the underlying administrative structure. For the six-month period ending June 30, 2008, the Corporation showed a monthly absorption rate of cash ('burn rate') of $148,000 compared with $196,000 for the equivalent period a year earlier, for a progression rate of 24%. Investing activities used cash flows of $238,000 and were made primarily in connection with the development of the semi-synthetic taxane manufacturing process. Financing activities used cash flows of $94,000 associated with the repayments made pursuant to the Corporation's long-term debt repayment schedule and the working capital credit facility. Outstanding Shares, Stock Options, Deferred Stock Units and Warrants During the first six-month period , 3,887,877 common shares, of which 3,224,606 common shares were issued in consideration of the interest payable on the debentures issued in 2002 and 2007, and 663,271 common shares issued following the 2007 debenture conversion, thereby bringing the number of common shares outstanding to 84,916,506 as of June 30, 2008. During the same period, 250,000 warrants fell due, thereby bringing the number of outstanding warrants by June 30, 2008 to 29,342,456. Also, 540,052 options were cancelled, bringing to 3,330,133 the number of options outstanding and exercisable under the terms of the stock option plan for employees and directors. On March 3, 2008, the Corporation set up a deferred stock unit (DSU) plan for directors. Each director may receive in the form of DSUs a portion of the total annual compensation owed to him as a director of Bioxel. Such compensation includes directors' fees and additional fees for chairing Board committees. The number and price of the DSUs are based on the weighted average trading price of the Corporation's common shares over a five-day period. The DSUs will be redeemable only once the participant has ceased to serve as a director. Thus, on June 30, 2008, the Corporation granted 178,241 DSUs to its directors in payment for compensation owed for the second quarter of 2008, thereby bringing to 1,603,435 the number of DSUs outstanding as of June 30, 2008. OUTLOOK In compliance with its set objectives, the increase in the number of countries in which Bioxel's paclitaxel and docetaxel DMFs are filed and registered will continue to accompany its customers in developing and marketing their taxane-based products. The milestones leading to commercial-scale manufacturing of cGMP docetaxel by semi-synthesis are fully reached, allowing Bioxel to supply orders of docetaxel to its customers in kilogram quantity as early as 2008's fourth quarter. Consequently, Bioxel will be ready to meet the needs of the generic pharmaceutical market as early as of the end of this year, estimated period for the initial filing of abbreviated new drug applications (ANDA) before the statutory authorities (FDA or equivalents outside the United States) of generic manufacturers of the Taxotere® brand currently marketed by Sanofi-Aventis. Such advances are timely, given the significant increase in the number of Bioxel docetaxel customers during this quarter. The gain of these new customers represents not only an increasing interest in our molecule, but also allows us to foresee more significant sales opportunities between now and the opening up of large docetaxel markets in 2010. We are committed to pursue our business development strategy, and we anticipate seeing its benefits in the short term. Forward-Looking Statements This press release contains forward-looking statements comprising factors of risk and uncertainty likely to materially and/or adversely affect the Corporation's future results. Risks and uncertainties likely to affect the Corporation's development products include legislation, technological developments and the competition. The expectation of the objectives set forth herein is subject to such risks and uncertainties. The Corporation's results, or the measures it adopts, could differ materially from those indicated or underlying these statements, or could have an impact on the degree of achievement of financial forecasts. ABOUT BIOXEL PHARMA Bioxel Pharma Inc. is an emerging leader in biopharmaceuticals, focused on developing, manufacturing and marketing taxane active pharmaceutical ingredients and proprietary products for improved cancer therapy. Taxanes are used in drug products for the treatment of cancer and other diseases, including psoriasis, rheumatoid arthritis and cardiovascular disease.
BIOXEL PHARMA INC.
Selected Financial Data (Unaudited)
Earnings
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Three Months Ended Six Months Ended
June 30, June 30,
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2008 2007 2008 2007
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Revenues $353,760 $236,685 $393,032 $281,353
Cost of goods sold 230,871 189,956 254,276 225,834
Operating expenses 403,685 481,348 736,463 884,861
Net Research and
development expenses 127,955 61,347 177,157 187,380
Stock-based compensation 19,250 74,223 73,375 74,223
Financial expenses 350,921 167,693 764,133 350,015
Exchange loss (gain) 2,140 (42,184) 14,894 (39,367)
Amortization of property,
plant & equipment and
intangible assets 219,304 218,324 436,318 432,359
Inventory write-downs 26,686 53,222
Loss (gain) on disposal
of property, plant
& equipment (6,445) 2,938 (6,445) 1,463
Interest income 4,269 13,062 20,086 30,733
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Net loss $989,652 $930,584 $2,037,053 $1,857,904
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Net loss and diluted net
loss per share $ 0.01 $0.01 $0.02 $0.02
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Weighted average number
of shares outstanding 83,214,003 78,735,426 82,391,375 79,365,387
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Balance Sheet
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As at June 30, As at December 31,
2008 2007
(unaudited) (audited)
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Cash $170,799 $206,559
Temporary investment 250,000 2,000,000
Other current assets 3,460,924 3,075,923
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Total current assets 3,881,723 5,282,482
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Property, plant and equipement 4,857,581 5,035,939
Other long-term assets 505,486 518,828
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$9,244,790 $10,837,249
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Bank loans 938,457 500,000
Other current liabilities 812,170 1,544,624
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Total current liabilities 1,750,627 2,044,624
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Long-term debt 527,749 680,281
BioLevier note payable 2,602,542 2,528,374
Liability component of
convertible debentures 3,003,511 2,928,922
Shareholders' Equity 1,360,361 2,655,048
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Total liabilities and
shareholders' equity $9,244,790 $10,837,249
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Contact: Contacts:
Bioxel Pharma Inc.
Olivier Meyer, Ph.D.
President and Chief Executive Officer
514-759-8561
investisseurs@bioxelpharma.com
http://www.bioxelpharma.com
Source: Bioxel Pharma Inc.
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