SemBioSys Genetics Inc. (TSX:SBS), specializing in the manufacture of high-value proteins and oils in plant seeds, today announced its third quarter 2009 financial and operational results.
"We entered into an agreement with Cathedral Energy Services Income Trust, subsequent to the end of the quarter, which will provide us with gross proceeds of approximately $3.3 million in new non-dilutive capital. This capital infusion will extend the development runway for our Apo AI(Milano) and Biosimilar Insulin programs," said James Szarko, President and Chief Executive Officer of SemBioSys. "During the quarter we also announced key agreements with INDEAR and between Botaneco and Advitech. Our partnership with INDEAR for the commercialization and supply of safflower-made chymosin further validates our platform technology as a versatile, scalable, and cost-effective protein production system. Botaneco's pending merger with Advitech provides it with additional funding and strengthens its product portfolio while still securing a portion of the upside potential from the Botaneco opportunity for SemBioSys. The agreements with INDEAR and Botaneco/Advitech demonstrate our ability to accelerate the commercialization and capture future revenue streams from our non-pharmaceutical programs through strategic partnerships and corporate transactions."
Highlights Corporate - Botaneco entered into an agreement with Advitech Inc., whereby Advitech will acquire all of the issued and outstanding shares of Botaneco Specialty Ingredients Inc. (Botaneco). SemBioSys will hold an initial 9.48 percent shareholding in Advitech, in return for the 19.35 percent share of Botaneco it held prior to the agreement. A subsequent $2.5 million financing for the combined entity is also anticipated to close in the fourth quarter. - SemBioSys entered into an exclusive commercial license agreement with Instituto de Agrobiotecnologia Rosario S.A. (INDEAR) whereby, in exchange for an undisclosed upfront technology access fee, INDEAR was granted an exclusive royalty-bearing license to SemBioSys' technology to extract chymosin from modified safflower seeds and sell the protein for use in the manufacture of cheese in Argentina. Under the terms of the agreement, SemBioSys granted INDEAR a time-limited right of first refusal to expand the territory beyond Argentina. - Reduced the Company's burn rate, net of recoveries, to a level of approximately $500,000 per month while still ensuring the appropriate maintenance and development capabilities for its core programs. Apo AI(Milano) - Completed a pre-IND (Investigational New Drug) meeting during which the U.S. Food and Drug Administration (FDA) confirmed the development plan presented by SemBioSys to file an IND application and addressed the proposed design of clinical trials for Apo AI(Milano). - Harvested more than 10 tonnes of safflower in Chile and initiated bench to pilot scale manufacturing scale-up. - Harvested a second 10 tonnes of safflower in the U.S. providing the Company a surplus of Apo AI(Milano) safflower seed for the current scale-up process, subsequent to the end of the quarter. - Received additional interest from potential partners and continue to advance partnering discussions. Insulin Program - Continued the development and analysis of next generation seed lines designed to meet targeted economics, simplify the manufacturing process and ensure the commercial viability of plant-produced insulin program. - Received further partnership interest as a result of the completion of the first clinical trial earlier in the year. Outlook The Company anticipates a number of milestone events in the coming months including: - Closing of a plan of arrangement with Cathedral Energy Services Income Trust and Cathedral Energy Services Ltd, providing gross proceeds of approximately $3.3 million in new non-dilutive capital to SemBioSys. - Scale-up of pilot plant operations for the extraction and purification of Apo AI(Milano) in gram quantities. - Achievement of commercial economic targets for next generation insulin seed lines.
SemBioSys has historically operated in two reportable segments: (i) Biopharmaceuticals and Bioproducts focused on the Company's lead pharmaceutical candidates, recombinant human insulin and Apo AI(Milano) and (ii) Specialty Ingredients. Effective July 29, 2009, SemBioSys divested of the majority of its interest in Botaneco, and, therefore, no longer has control nor significant influence over these entities. As a result, the Specialty Ingredients segment is no longer being consolidated, but instead is being accounted for on a cost basis effective July 29, 2009 and its operating results are included in discontinued operations.
Net loss/income for the three-month period ended September 30, 2009 compared to the same period last year:
- $2,472,008 or $0.07 per share from continuing operations compared to $4,860,627 or $0.19 per share; - $2,544,986 or $0.07 per share in net income from discontinued operations compared to $883,739 or $0.03 per share in net loss from discontinued operations; and - $72,978 or $0.002 per share in total net income compared to $5,744,366 or $0.22 per share in total net loss.
Net loss for the nine-month period ended September 30, 2009 compared to the same period last year:
- $7,545,095 or $0.24 per share from continuing operations compared to $14,340,189 or $0.55 per share; - $96,492 or $0.003 per share in net loss from discontinued operations compared to $2,836,088 or $0.11 per share; and - $7,641,587 or $0.24 per share in total net loss compared to $17,176,277 or $0.66 per share.
Revenue for the three-month period ended September 30, 2009 compared to the same period last year:
- $24,540 in revenue from continuing operations compared to $nil; - $41,670 in revenue from discontinued operations compared to $228,201; and - $66,210 in total revenue compared to $228,201.
Revenue for the nine-month period ended September 30, 2009 compared to the same period last year:
- $1,476,234 in revenue from continuing operations compared to $50,110; - $378,970 in revenue from discontinued operations compared to $450,325; and - $1,855,204 in total revenue compared to $500,435.
The increase in the nine-month period for continuing operations is due mainly to the recognition of licensing option fees in the first quarter of 2009 from an option agreement entered into with MannKind Corporation in the fourth quarter of 2008 and licensing fees recognized in the second quarter of 2009 related to the Company's GLA program.
Expenditures (net of cost recoveries in each case) for the three-month period ended September 30, 2009 compared to the same period last year: - $2,461,085 in expenditures from continuing operations compared to $4,847,213; - $376,645 in expenditures from discontinued operations compared to $955,122; and - $2,837,730 in total expenses net of cost recoveries compared to $5,802,335.
Expenditures (net of cost recoveries in each case) for the nine-month period ended September 30, 2009 compared to the same period last year:
- $8,955,871 in expenditures from continuing operations compared to $14,510,694; - $2,774,345 in expenditures from discontinued operations compared to $3,091,510; and - $11,730,216 in total expenses compared to $17,602,204.
The overall decrease in expenditures is primarily due to the cost reductions implemented in the fourth quarter of 2008 and the third quarter of 2009, in addition to decreased preclinical costs as the majority of the preclinical work for the insulin clinical trial was completed in 2008. The reduction in cost recoveries for the nine-month period ended September 30, 2009 as compared to the corresponding prior year period resulted from the achievement of all outstanding milestones related to our agreement with AVAC Ltd. for the insulin program in 2008.
As of September 30, 2009 the Company had cash and cash equivalents from continuing operations of $1,737,150 and a net positive working capital balance of $1,069,357, compared to $1,926,966 ($3,819,796 including cash related to discontinued operations), and $646,156 ($3,730,413 including working capital from discontinued operations), respectively at December 31, 2008. Total long-term debt was $1,382,987 at September 30, 2009 compared to $752,644 ($5,127,829 including long-term debt from discontinued operations) at December 31, 2008.
As at November 12, 2009 the Company had 40,653,592 common shares outstanding, 12,655,341 warrants, 3,054,578 options, 711,920 broker warrants and 385,717 Deferred Stock Units.