Protox reports net and comprehensive loss of $2.2 million for first quarter 2011

Protox Therapeutics Inc. (the "Company" or "Protox") (TSX: PRX), a leader in the development of receptor targeted therapeutic fusion proteins, today announced financial results and achievements for the quarter ended March 31, 2011.

"It's been a very transformative and productive year-to-date. We strengthened our board and set about the planning for what has since been announced as the transition to our new corporate offices in San Diego, California," said Dr. Lars Ekman, Executive Chairman and President of Protox. "This transition will further strengthen the company and help us advance the development of the benign prostatic hyperplasia program as we continue to build out our clinical and regulatory team in a region with a deep pool of management talent and experience in biologic drug development."

Operational and Financial Highlights (up to and including May 31, 2011)

  • Appointed Mr. William Rohn and Mr. Amit Sobti to the Company's Board of Directors. Bill Rohn is a highly experienced senior biotech executive who brings experience as Chief Operating Officer at Biogen-Idec and President and COO of IDEC Pharmaceuticals where he helped transform IDEC from a small research organization into a very successful, biotechnology company. Amit Sobti is a principal with Warburg Pincus where he focuses on investments in healthcare, prior to which he worked at Rhône Capital, a mid-market private equity firm and at Merrill Lynch in the Mergers and Acquisitions group.
  • Announced the move to new corporate offices in San Diego, California from which the operations will be directed by the end of June 2011.
  • Transitioned Chairman Lars Ekman, M.D. Ph.D., to the role of Executive Chairman and President of Protox and appointed Allison J. Hulme, Ph.D., to the role of Chief Operating Officer and Head of Research & Development. In connection with this move, President and Chief Executive Officer Fahar Merchant, and Senior Vice President, Development and Regulatory Affairs Nina Merchant resigned their positions and transitioned to the role of consultants to assist in the orderly transition of operations to San Diego.
  • Appointed Mark Brunswick Ph.D., as the Head of Regulatory Affairs. Dr. Brunswick has over 20 years of regulatory experience in the pharmaceutical industry and over nine years of experience as a reviewer of biologics at the U.S. Food and Drug Administration.
  • The U.S. Food and Drug Administration accepted the Company's recently submitted Investigational New Drug application to evaluate PRX302 in patients with moderate to severe benign prostatic hyperplasia (BPH), a painful and bothersome urological condition that affects the quality of life of more than 60 million men worldwide. The IND opening study is designed to confirm the safety and tolerability of PRX302 administered transrectally.

Selected Financial Information & Results of Operations

Eight quarters ended March 31, 2011, unaudited, in thousands, except per share data

The Company reported net and comprehensive loss of $2.2 million ($0.02 per share) in the three months ended March 31, 2011 ("2011-Q1") compared to a net loss of $1.6 million ($0.02 per share) for the three months ended March 31, 2010 ("2010-Q1"). The increase of $565,000 in net loss in the current quarter was driven by increased activities relating to the preparation of the BPH IND application to the FDA, increase in Chemistry, Manufacturing and Controls ("CMC") costs associated with the manufacture and testing of new clinical batches of PRX302 and expanding operations to facilitate further development of our PRX302 program.

Expenses, in particular R&D costs, are influenced by a number of factors including the scope of clinical development and research programs pursued; the type and size of clinical trials undertaken; the number of clinical trials that are active during a particular period of time; the rate of patient enrollment; regulatory activities to support the clinical programs; CMC activities associated with process development, scale-up and cGMP compliant manufacture of drugs used in clinical trials and are ultimately a function of decisions made to continue the development and testing of a product candidate based on supporting safety and efficacy from clinical trial results. Consequently, expenses vary from period to period. G&A expenses will be dependent on the personnel and infrastructure required to support the corporate, clinical and business development objectives and initiatives of the Company.

Research and development ("R&D") costs of $1.3 million were incurred during 2011-Q1: an increase of $265,000 from the $1.0 million incurred in the three months ended March 31, 2010. This reflects the effect of increased regulatory activities to support a submission of the IND application to the FDA as well as increased CMC activities offset by lower clinical trial expenses as there were no active studies in the first quarter of 2011. Stock based compensation also contributed to the increase due to a higher number of options vesting during the first quarter of 2011 compared to 2010. With the Warburg Pincus financing secured, the Company plans to initiate additional BPH clinical activities and as such, development costs associated with clinical trials, drug manufacturing and regulatory activities are expected to increase through 2011.

General and administrative costs for the three months ended March 31, 2011 were $876,000 an increase of $239,000 from the $637,000 incurred the 2010-Q1 comparative period. General and administrative costs vary from period to period depending on the specific business development, market research and shareholder relations initiatives undertaken and related travel required at such time to support the Company's corporate objectives. The increase in general and administrative expenses is attributed to costs associated with closing the Warburg Pincus Financing, the approval and payment of corporate bonuses, as well as preparation for the anticipated expansion of our operations. The relocation of operations to San Diego, California and infrastructure costs associated with our increasing development activities will result in increased general and administrative expenses in 2011.

At March 31, 2011, the Company had cash and cash equivalents of $10.8 million, representing a net decrease of $1.5 million from December 31, 2010. The Company had working capital of $8.9 million at March 31, 2011, 2010, a decrease of $1.8 million from December 31, 2010.

As of May 27, 2011, the Company has 121,563,537 common shares issued and outstanding.

The Company has 21,281,929 common share purchase warrants outstanding which expire between March 2015 and November 2015 and entitle warrant holders to purchase common shares at a prices ranging between $0.50 and $0.65. The weighted average warrant price is $0.54 and the weighted average remaining term is 4.3 years.

The Company has 7,305,167 options outstanding to purchase common shares of the Company. Of the options currently outstanding, approximately 4.4 million are exercisable into an equivalent number of common shares of the Company at exercise prices ranging from $0.51 to $0.90 and with an average exercise price of $0.65.


The opinions expressed here are the views of the writer and do not necessarily reflect the views and opinions of News Medical.
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