-- Helix announced that a pre-IND meeting had been held for L-DOS47 with
the U.S. Food and Drug Administration ("FDA") in which the FDA
generally agreed with Helix's proposed remaining non-clinical
pharmacology and toxicology studies as well as its remaining GMP
manufacturing program initiatives prior to IND filing.
-- Helix announced plans to conduct a Phase I/II clinical study of
non-small cell lung cancer ("NSCLC") patients in Poland. Helix
continues to develop these plans together with key opinion leader
clinicians and prospective contract research organizations. The study
is expected to run concurrently with the planned U.S. Phase I study in
refractory solid tumor patients. Assuming IND/CTA approvals are
obtained, the Company plans to prioritize its current capital resources
to initiating the proposed U.S. Phase I and Polish Phase I/II clinical
studies for L-DOS47, however, it is still in the process of gathering
the required third-party service provider costing proposals to execute
the studies and has not yet committed any funds for this purpose.
Additional capital will be required to see both trials through to
completion. The Company plans to file an investigational new drug
submission ("IND") for the U.S. Phase I study and a clinical trial
application ("CTA") for the Polish Phase I/II study in its second
quarter of fiscal 2011, pending timely and successful completion of the
Company's planned remaining IND/CTA preparatory activities.
-- Helix's GMP clinical batch of L-DOS47 has been manufactured and vialed,
has undergone quality control testing, and is currently undergoing
stability testing.
-- Helix announced that it has completed its definitive GLP, rodent and
primate, repeat-dose toxicology studies with L-DOS47. These studies
demonstrated a good safety profile in an expanded number of rodent and
primate test animals, building upon Helix's positive findings from its
preliminary non-GLP toxicology studies.
Topical Interferon Alpha-2b:
-- Helix announced the filing of an investigational new drug application
with the U.S. Food and Drug Administration, seeking approval to
perform a planned Phase II/III efficacy trial of Topical interferon
Alpha-2b in patients with low-grade cervical lesions.
-- A pre-IND meeting with the FDA was held in which the FDA confirmed the
acceptability of a Phase II/III, randomized, vehicle-controlled
clinical trial as the next step in the compound's clinical development
plan for patients with cervical dysplasia. The FDA also confirmed
Helix's expectation that an additional well-controlled, Phase III
confirmatory clinical trial will be required to establish efficacy and
safety of the product for marketing authorization purposes. Helix
intends to continue to make preparations to conduct a European
Phase III trial for this purpose, although the timing of filing the
European Phase III CTA has not yet been established. The timing of
both the planned U.S. and European trials will be contingent on the
timing of regulatory approvals of the trials as well as obtaining
additional capital and strategic partner support.
-- Helix announced that its Phase II trial of Topical Interferon Alpha-2b
for the treatment of ano-genital warts ("AGW") showed that the
treatment and placebo preparations were well tolerated, but the
treatment did not show a statistically significant effect in the
primary and secondary efficacy analyses.
-- Helix announced positive Phase II pharmacokinetic ("PK") findings for
Topical Interferon Alpha-2b in patients with low-grade cervical
lesions. These findings were considered consistent with the primary
purpose of the study: to verify that Topical Interferon Alpha-2b
causes no significant systemic interferon alpha-2b exposure in patients
following cervical application using the dose and regimen in this
study.
-- Further announced positive safety and efficacy findings from its
Phase II PK study of Topical Interferon Alpha-2b in patients with
low-grade cervical lesions.
Financing:
-- Completed a private placement financing on September 8, 2009 for net
proceeds of $11,597,000.
-- Completed a private placement financing on August 6, 2010 for net
proceeds of approximately $9,500,000.
-- Trading commenced on the NYSE Amex stock exchange.
Other:
-- Consulting for Strategic Growth 1 Ltd. was retained as exclusive US
investor relations firm.
Financial Review
For fiscal 2010, the Company recorded a net loss of $14,469,000, which
represents an increase of $367,000 when compared to fiscal 2009. The net
loss per common share for fiscal 2010 was $0.24 compared to a net loss per
common share of $0.27 for fiscal 2009. Product revenue contributed to the
increase in revenue in fiscal 2010 and overall expenses were higher when
compared to fiscal 2009 which mainly reflect higher research and
development expenditures, stock-based compensation expense, lower interest
income and a foreign exchange loss.
Total revenues in fiscal 2010 were $4,434,000 and represent an increase of
$593,000 or 15.4% when compared to total revenues in fiscal 2009 of
$3,841,000. Product revenue contributed to the increase in revenue in
fiscal 2010 when compared to fiscal 2009 and was offset slightly by a
decrease in license fees and royalties.
Product revenue in fiscal 2010 totalled $3,925,000 and represents an
increase of $681,000 or 21.0% when compared to product revenue in fiscal
2009 of $3,244,000. Except for Normacol®(1), product revenues were higher
across all products, with the majority of the increase reflected in the
combined product sales of Orthovisc®(2) and Monovisc™(2). The Company
commenced the distribution of Monovisc™ in the 2010 fiscal year.
License fees and royalties in fiscal 2010 totalled $509,000 and represent a
decrease of $88,000 or 14.7% when compared to fiscal 2009. The decrease
reflects the fiscal 2009 final payment from Lumera Corporation of US$75,000
when it provided the Company with notice of termination of a sub-license
agreement.
Cost of sales in fiscal 2010 and fiscal 2009 totalled $1,669,000 and
$1,516,000, respectively. As a percentage of product revenues, cost of
sales in fiscal 2010 and fiscal 2009 were 42.5% and 46.7%, respectively.
The decrease in cost of sales on a percentage basis was mainly the result
of the Company commencing the distribution of Monovisc™ in Canada.
Research and development expenditures in fiscal 2010 totalled $10,715,000
and represent an increase of $393,000 or 3.8% when compared to fiscal 2009.
L-DOS47 and Topical Interferon Alpha-2b reflect an increase of 37.8% and a
decrease of 3.4%, respectively. The increase in research and development
expenditures associated with L-DOS47 are primarily related to higher
collaborative scientific expenditures and clinical research expenditures in
anticipation of U.S. Phase I IND and Polish Phase I/II CTA filings. Lower
research and development expenditures are associated with both of the
Company's Topical Interferon Alpha-2b clinical programs being in late
stages of completion during fiscal 2010. The lower clinical research
expenditures were offset by higher consulting services and scale-up
contract manufacturing initiatives in preparation of a U.S. Phase II/III
IND and European Phase III CTA filing for low-grade cervical lesions. The
Company also received an investment tax credit for research and development
tax credit in fiscal 2010 of $229,000 and recorded an investment tax credit
of $838,000.
Operating, general and administration expenses in fiscal 2010 totaled
$3,176,000 and represent a decrease of $741,000 or 18.9% when compared to
fiscal 2009. The decrease in operating, general and administrative
expenditures mainly reflects lower investor and media relations
expenditures and associated marketing materials in fiscal 2010 coupled with
higher expenditures in fiscal 2009 associated with consulting services
which have since been terminated, SEC registration statement filings and
the implementation of a new financial reporting system.
Sales and marketing expenses in fiscal 2010 totaled $1,125,000 and
represent an increase of $156,000 or 16.1% when compared to fiscal 2009.
The increase mainly reflects higher marketing and promotion activities and
quality compliance expenditures associated with the product launch of
Monovisc™ in Canada.
Amortization of intangible assets in fiscal 2010 totalled $nil and
represents a decrease of $12,000 when compared to fiscal 2009. The lower
amortization expense of intangible assets was the result of a write-down of
in tangible assets in the fourth quarter of fiscal 2009.
Amortization of capital assets in fiscal 2010 increased $155,000 when
compared to fiscal 2009. The higher amortization expense of capital assets
in fiscal 2010 is the result of higher capital acquisitions in recent
periods.
Stock-based compensation expense in fiscal 2010 totalled $1,275,000 and
represents an increase of $252,000 when compared to fiscal 2009. The
stock-based compensation expense in fiscal 2010 relates to the ongoing
amortization of compensation costs of 2,070,000 stock options granted on
December 17, 2008 as well as 968,000 stock options granted on December 14,
2009 over their vesting period. The stock options vest 25% on the date of
grant and 25% at each anniversary date thereafter. The Company did not
issue any stock options in fiscal 2008. The stock-based compensation
expense for fiscal 2008 represents the ongoing amortization of compensation
costs of stock options granted on June 30, 2005, over their vesting period.
Interest income totalled $49,000 in 2010 and $339,000 in 2009. The decrease
in interest income in fiscal 2010 reflects lower interest rates earned on
deposits.
The Company recorded a foreign exchange loss of $564,000 in fiscal 2010 and
$133,000 in fiscal 2009. Foreign exchange losses are mainly the result of
the foreign currency translation of the Company's integrated foreign
operation in Ireland, cash balances as well as a value added value added
tax ("VAT") receivable, accounts payable and accrued liabilities, which are
denominated in Euros. During fiscal 2010, the Euro materially depreciated
against the Canadian dollar.
Impairment of intangible assets totaled $nil in fiscal 2010 and $98,000 in
fiscal 2009. During the fourth quarter of fiscal 2009, the Company reviewed
its capitalized intangible assets and determined that expected future cash
flows may not exceed their carrying values. As a result, the carrying value
of the related intellectual property became impaired and was written down.
Income tax expenses totalled $46,000 in fiscal 2010 and $18,000 in fiscal
2009. Income taxes are mainly attributable to the Company's operations in
Ireland.
Liquidity and Capital Resources
Since inception, the Company has financed its operations from public and
private sales of equity, the exercise of warrants and stock options, and,
to a lesser extent, on interest income from funds available for investment,
government grants, investment tax credits, and revenues from distribution,
licensing and contract services. Since the Company does not have net
earnings from its operations, the Company's long-term liquidity depends on
its ability to access the capital markets, which depends substantially on
the success of the Company's ongoing research and development programs.
At July 31, 2010, and 2009, the Company had cash and cash equivalents
totaling $13,125,000 and $14,494,000, respectively. The $1,369,000 decrease
in cash and cash equivalents reflects a use of cash in operating activities
of $12,193,000, which includes a net loss for the year of ($14,469,000)
with significant adjustments in operating activities related to stock-based
compensation of $1,275,000; amortization of capital assets of $429,000;
other receivables of ($459,000); foreign exchange loss of $564,000; and
$540,000 in changes to non-cash working capital.
At July 31, 2010 and 2009, the Company's working capital was $13,387,000
and $15,296,000 respectively.
Subsequent to the Company's fiscal 2010 year-end, on August 6, 2010, the
Company completed a private placement issuing 4,530,000 units at $2.43 per
unit, for gross proceeds of $11,007,900. Each unit consists of one common
share and one common share purchase warrant with each common share purchase
warrant entitling the holder to purchase, subject to adjustment, one common
share at a price of $3.40 until August 5, 2013.
Based on the Company's planned expenditures and assuming no unanticipated
expenses, we estimate that our cash reserves and expected cash from
operations will be sufficient to meet our anticipated cash needs for
working capital and capital expenditures through at least the next twelve
months. The Company has no external sources of liquidity such as bank
lines of credit. The Company will require future additional financing to
carry out its business plan. The market for both debt and equity financings
for companies such as Helix has always been challenging, and the global
economic downturn and credit crisis have added further challenges. The
failure to obtain financing on a timely basis may result in the Company's
having to reduce or delay one or more of its planned research, development
and marketing programs and to reduce related overhead, any of which could
impair the Company's current and future value. It may also have a material
adverse effect on the Company's ability to continue as a going concern. Any
additional equity financing, if obtained, may result in significant
dilution to the existing shareholders at the time of such financing.
The Company's consolidated fiscal 2010, 2009, and 2008 financial statements
are summarized below.
Consolidated Statements of Operations
(thousand $, except for per share data)
2010 2009 2008
------- ------- -------
Revenue:
Product revenue 3,925 3,244 2,952
License fees & royalties 509 597 639
------- ------- -------
4,434 3,841 3,591
Expenses:
Cost of sales 1,669 1,516 1,239
Research and development 10,715 10,322 5,064
Operating, general and admin 3,176 3,917 3,948
Sales and marketing 1,125 969 809
Amortization of intangibles - 12 16
Amortization of capital assets 429 274 254
Stock-based compensation 1,275 1,023 44
Interest income (49) (339) (645)
Foreign exchange loss (gain) 564 133 (327)
Realized gain on sale of investment (47) - -
Impairment of intangible assets - 98 -
------- ------- -------
18,857 17,925 10,402
Loss before income taxes (14,423) (14,084) (6,811)
Income taxes 46 18 153
------- ------- -------
Net loss for the year (14,469) (14,102) (6,964)
======= ======= =======
------- ------- -------
Loss per share:
Basic (0.24) (0.27) (0.16)
Diluted (0.24) (0.27) (0.16)
Consolidated Statements of Cash Flows (thousand $)
2010 2009 2008
-------- -------- --------
Cash provided by (used in):
Loss for the year (14,469) (14,102) (6,964)
Items not involving cash:
Amortization of capital assets 429 274 254
Amortization of intangibles - 12 16
Other receivables (459) - -
Deferred lease credit (26) 123 -
Stock-based compensation 1,275 1,023 44
Realized gain on sale of investment (47) - -
Impairment of intangibles - 98 -
Foreign exchange loss (gain) 564 133 (327)
-------- -------- --------
(12,733) (12,439) (6,977)
Change in non-cash
working capital 540 (718) (20)
-------- -------- --------
Operating activities (12,193) (13,157) (6,997)
Financing activities 11,947 9,659 14,614
Investing activities (559) (932) (266)
Effect of exchange rate changes
on cash and cash equivalents (564) (133) 327
-------- -------- --------
Cash and cash equivalents:
Increase/(decrease) in the year (1,369) (4,563) 7,678
Beginning of the year 14,494 19,057 11,379
-------- -------- --------
End of the year 13,125 14,494 19,057
======== ======== ========
Consolidated Balance Sheet (thousand $)
2010 2009
--------- ---------
Current assets:
Cash and cash equivalents 13,125 14,494
Accounts receivable 1,365 1,053
Inventory 780 858
Prepaid and other 398 1,049
--------- ---------
15,668 17,454
Non current assets 2,446 1,865
--------- ---------
Total assets 18,114 19,319
========= =========
Current liabilities:
Accounts payable & accruals 1,435 1,299
Accrued liabilities 821 834
Deferred lease credit 25 25
--------- ---------
2,281 2,158
Non current liabilities 72 98
--------- ---------
Total liabilities 2,353 2,256
Shareholders' equity 15,761 17,063
--------- ---------
Total liabilities and shareholders'equity 18,114 19,319
========= =========
The Company's complete 2010 Consolidated Financial Statements, Management's
Discussion and Analysis and Annual Information Form on Form 20-F are being
filed today with Canadian securities regulatory authorities and will be
available at SEDAR at www.sedar.com.
About Helix BioPharma Corp.
Helix BioPharma Corp. is a biopharmaceutical company specializing in the
field of cancer therapy. The Company is actively developing innovative
products for the prevention and treatment of cancer based on its
proprietary technologies. Helix's product development initiatives include
its novel L-DOS47 new drug candidate and its Topical Interferon Alpha-2b.
Helix is listed on the TSX, NYSE Amex and FSE under the symbol "HBP".
Forward-Looking Statements and Risks and Uncertainties
This News Release contains certain forward-looking statements and
forward-looking information, within the meaning of applicable securities
laws, regarding the Company's plans for future clinical trials for L-DOS47
and Topical Interferon Alpha-2b, including its plans, assuming IND/CTA
approvals are obtained, to prioritize its current capital resources to
initiating the L-DOS47 clinical trials, the planned filing of an IND for
the U.S. Phase I study, and clinical trial application ("CTA") for the
Polish Phase I/II study, of L-DOS47 in its second quarter of fiscal 2011,
the planned filing of a European CTA for Topical Interferon Alpha-2b,
obtaining additional capital and strategic partner support, sufficiency of
the Company's cash reserves and expected cash flow from operations; and
other information in future periods, which statements and information can
be identified by the use of forward-looking terminology such as "plans",
"expected", "intends"; "estimates", "next", "anticipated", "developing",
"will" or variations thereon, or comparable terminology referring to future
events or results. Although Helix believes that the expectations reflected
in such forward-looking statements and information are reasonable, such
statements and information involve risks and uncertainties, and undue
reliance should not be placed on such statements and information.
Forward-looking statements, including financial outlooks, are intended to
provide information about management's current plans and expectations
regarding future operations, including without limitation, future financing
requirements, and may not be appropriate for other purposes. Certain
material factors or assumptions are applied in making forward-looking
statements and providing forward-looking information, including, but not
limited to, receipt of necessary additional funding, strategic partner
support and regulatory approvals; GMP manufacturing and other activities;
the timely provision of services by third parties; and future revenue,
costs and expenditures. Important factors that could cause actual results
to differ materially from these forward-looking statements and information
include, without limitation, the Company's continuing need for additional
capital, which may not be available in a timely manner or at all and which
if not obtained will have a material adverse impact on the Company and its
ability to continue, or if not obtained in a timely manner, may result in
the Company's having to discontinue or delay one or more of its product
development programs or other initiatives; uncertainty whether Topical
Interferon Alpha-2b or L-DOS47 will be successfully developed and
commercialized as a drug or at all; the risk that the FDA is not bound by
its pre-IND meetings; the need for strategic partner support, which is not
assured; uncertainty whether any of the timelines mentioned in this press
release will be achieved; Helix's dependence on its third party service
providers, including without limitation, contract research organizations,
contract manufacturing organizations, clinical trial consultants,
collaborative research consultants, regulatory affairs advisors, and
others, whose performance and interdependence can critically affect the
Company's performance and the achievement of its milestones; uncertainty
whether any of the clinical trials referred to in this news release will be
approved, initiated or completed as planned or at all or will achieve
expected results; the need for additional clinical trials, the occurrence
and success of which cannot be assured; product liability and insurance
risks; research and development risks, including the possibility that
further challenges may arise in connection with the scale-up manufacturing
of L-DOS47 or Topical Interferon Alpha-2b; the risk of obtaining negative
findings or factors that may become apparent during the course of research
or development which may result in the discontinuation or delay of the
research or development projects; the risk of technical obsolescence; the
need for further regulatory approvals, which may not be obtained in a
timely matter or at all; intellectual property risks, including without
limitation, the risk that three patents for Topical Interferon Alpha-2b
will expire in 2013 and no additional patent may be issued, that patent
applications may not result in issued patents, that issued patents may be
circumvented or struck down, and the risk of potential claims of
infringement by the Company of third party intellectual property rights;
marketing/manufacturing and partnership/strategic alliance risks; the
effect of competition; uncertainty of the size and existence of a market
opportunity for Helix's products; the risk that the Company's supplier for
interferon alpha-2b may not continue to provide the Company with interferon
alpha-2b or exercise its commercialization option, which would have a
negative effect on the further development of the drug candidate and on the
Company; the risk that the Company's supplier of urease may not continue to
provide the Company with urease and may not continue to bulk manufacture
L-DOS47 for clinical trials, and a suitable substitute supplier or
manufacture may not be found on commercially reasonable terms or at all,
which would have a negative effect on the further development of the drug
candidate and on the Company; Helix's dependence on its licensor of the
L-DOS47 antibody; the need to secure new strategic relationships, which is
not assured, to commercialize L-DOS47 and any other drug candidates which
may arise out of DOS47; the risk of unanticipated expenses or failure to
achieve expected revenue; and the risk of changes in business strategy or
development plans. Certain of these risks and uncertainties, and others
affecting the Company which could cause actual results to vary materially
from current results or those anticipated in forward-looking statements and
information, are more fully described in the Company's latest MD&A, Form
20-F and other reports filed with the Canadian Securities Regulatory
Authorities and the U.S. SEC from time to time at www.sedar.com and
www.sec.gov/edgar.shtml, respectively. Forward-looking statements and
information are based on the beliefs, assumptions, opinions and
expectations of Helix's management at the time they are made, and Helix
does not assume any obligation to update any forward-looking statement or
information should those beliefs, assumptions, opinions or expectations
change, except as required by law.
(1) Normacol® is a registered trademark in Canada of Norgine Limited.
(2) Orthovisc® and Monovisc™ are trademarks of Anika Therapuetics, Inc.
Contact Information: For further information contact: Investor Relations: Stanley Wunderlich Consulting for Strategic Growth 1 Ltd. Tel: 800-625-2236 ext. 7770 Email: Web Site: www.cfsg1.com Media Relations: Richard Stern Stern & Co. Tel: 212 888-0044 Email: Web Site: www.sternco.com