news-SemBioSys loses $14.12-million in 2006
SemBioSys Genetics Inc
Symbol SBS
Shares Issued 22,083,886
Close 2007-03-14 C$ 2.79
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SemBioSys loses $14.12-million in 2006
2007-03-15 09:09 ET - News Release
Mr. Andrew Baum reports
SEMBIOSYS ANNOUNCES 2006 RESULTS
SemBioSys Genetics Inc. has released its operational and financial results for the fiscal year which ended on Dec. 31, 2006.
2006 highlights
Pharmaceutical products:
commercial viability achieved by exceeding the company's commercial target levels of human insulin (insulin) accumulation in safflower by 20 per cent with 1.2 per cent of total seed protein;
functional equivalence results demonstrated the company's proprietary safflower-produced insulin is functionally equivalent to United States pharma-grade human insulin in animal models, subsequent to the end of the fiscal year. The company also announced in vitro and in vivo assay results that demonstrate the company's safflower-produced insulin is chemically, structurally and physiologically indistinguishable from U.S. pharma-grade human insulin;
regulatory path confirmed as the company is eligible to pursue a Section 505(b)(2) regulatory path for safflower-produced insulin after meeting with the U.S. Food and Drug Administration (FDA), subsequent to the end of the fiscal year;
preclinical and clinical material processing secured through a technology transfer and manufacturing agreement with Cangene Corp. to prepare batches of the company's safflower-produced insulin in preparation for the preclinical and early stage clinical development; and
increased levels of Apo AI expression in Arabidopsis, the company's model plant system, and continued development progress in safflower, the commercial plant system.
Non-pharmaceutical products:
continued the commercial scale-up of the company's proprietary transgenic safflower-produced ImmunoSphere feed additive in the U.S. and Chile in preparation for product launch expected in late 2007 or early 2008;
announced the completion of key milestones in its gamma linolenic acid (GLA)-rich safflower oil project with Arcadia Biosciences, Inc. with the delivery of safflower seeds from plant lines containing GLA transformed using Arcadia's proprietary genes;
announced an agreement to acquire technology assets and in-license intellectual property from Syngenta Crop Protection AG related to the manufacture of biopharmaceuticals in safflower, which allows SemBioSys to further increase its efficiency in the development of transgenic safflower;
announced the company will continue to manufacture and supply DermaSphere to its customers in the personal care market after reaching an agreement to conclude the distribution relationship with Lonza Inc.; and
amended the collaboration agreement with Martek Biosciences Corp., subsequent to the end of the fiscal year. SemBioSys has received a one-time licence fee payment in relation to the amended agreement and agreed to a potential additional licence fee and royalty payments from Martek, which in return is entitled to select an alternative seed oil production system to meet its future docosahexaenoic acid (DHA) supply.
"Over the course of 2006 and into 2007 we have delivered on four critical scientific, operational and regulatory milestones within our insulin program. In our view the insulin expression and the insulin equivalence results represent an important achievement and position us to address a large and growing market for insulin. While other projects have produced pharmaceutical proteins in plant systems, no one, to our knowledge, has been able to develop plant-produced insulin at commercially viable levels," said Andrew Baum, president and chief executive officer of SemBioSys Genetics. "We believe that with these scientific results in hand and the outcome of our meeting with the FDA that clarified the regulatory path for our plant-produced insulin, the risks associated with our insulin program have decreased significantly. Our team is now scaling up our insulin production and completing the preclinical work necessary to file an investigational new drug application (IND) later this year. We intend to initiate a phase II trial for our safflower-produced insulin in late 2007 or early 2008 with pharmacokinetics and pharmacodynamics as the primary endpoints."
Financials
Total revenue for the fiscal year ended Dec. 31, 2006, was $523,258, compared with $2,459,202 for the corresponding period in 2005.
The $523,258 of revenue for the fiscal year period ended Dec. 31, 2006, consisted entirely of contract research revenue, compared with contract research revenue of $1,696,171 in 2005. The difference in contract research is a result of the completion of collaboration agreements with Arcadia Biosciences Inc. and Dow AgroSciences LLC in late 2006, such that the contract research revenue from the 2006 fiscal year relates solely to the continuing collaboration agreement with Martek Biosciences. In 2006 there were no licence fees earned, as a result of the agreements with Lonza Inc. and Arcadia moving from a research-and-development stage to a commercialization stage, compared with licence fees of $763,031 generated during the 2005 fiscal year.
Total expenditures for the year ended Dec. 31, 2006, were $15,082,560, compared with $9,734,220 for the year ended Dec. 31, 2005.
Research and development expenses for the fiscal year ended Dec. 31, 2006, were $5,480,972, an increase of $1,060,086 from $4,420,886 for the 2005 fiscal year. This difference is primarily from increased personnel and the related support costs in all areas of research and development with an expanded focus on insulin. This included an enhanced quality control and assurance program, and further development of a stronger preclinical and clinical team.
General and administrative expenses for the year ended Dec. 31, 2006, were $4,013,653, compared with $3,516,871 for the 2005 fiscal year. The difference is due mainly to the expansion of the company's indoor plant growth facilities resulting in increased operating costs such as utilities. Increases also resulted from increased staff costs, including additional support costs.
Intellectual property costs for the year ended Dec. 31, 2006, were $3,467,045, compared with $1,586,788 for the year ended Dec. 31, 2005. The difference is primarily due to the $1,516,906 non-cash expense in the second quarter of 2006 for the acquisition of intellectual property from Syngenta Crop Protection AG in exchange for warrants to purchase 550,000 common shares of the company, and the $500,000 (U.S.) payment to reacquire the rights to the DermaSphere Oleosome technology from Lonza at the end of the fourth quarter of 2006. Excluding these one-time items, intellectual property costs decreased modestly.
Net loss for the year ended Dec. 31, 2006, was $14,127,086, or 85 cents per share, compared with a net loss of $6,824,545, or 54 cents per share, for 2005.
As at Dec. 31, 2006, the company had cash and cash equivalents totalling $16,328,459, compared with $28,513,095 at Dec. 31, 2005. Total long-term debt at Dec. 31, 2006, was $2,084,103, compared with $1,877,330 at Dec. 31, 2005.
As at Dec. 31, 2006, the company had 16,781,890 common shares outstanding, 3,102,796 warrants and 1,056,144 options.
Subsequent to the end of the year, on Feb. 20, 2007, the company completed an underwritten public offering of 4,251,496 common shares at a price of $3 per share, for total gross proceeds to SemBioSys of approximately $12.75-million. Concurrent with the public offering, certain shareholders of the company sold 2,748,504 previously issued common shares of the company at a price of $3 per share by way of a secondary offering. On March 7, 2007, the underwriters of the public offering exercised the entire overallotment option and purchased an additional 1.05 million common shares from treasury at $3 per common share, resulting in an additional $3.15-million in gross proceeds to SemBioSys, raising the total gross proceeds to the company from the transaction to $15.9-million.
Outlook
The company has completed the major scientific milestones necessary to proceed into first-in-man clinical trials of safflower-produced insulin in late 2007 or early 2008. Upcoming milestone events expected in 2007 include:
complete scale-up and preclinical work of safflower-produced insulin;
complete the technology transfer and production of clinical-grade material for early stage human trials;
initiate business development activities toward an insulin partnership;
submit insulin IND to FDA and initiate phase II trial;
achieve commercial levels of Apo AI expression in safflower;
increase production capacity of personal care topical-oil body products and establish distribution channels for commercialization;
complete scale-up of ImmunoSphere product for commercial launch;
achieve key DHA proof-of-concept milestone; and
initiate a new pharmaceutical product development program.
CONSOLIDATED STATEMENT OF OPERATIONS AND (DEFICIT)
Year ended
Dec. 31, Dec. 31,
2006 2005
Revenue
Contract research $ 523,258 $ 1,696,171
Licensing fees - 763,031
------------ ------------
523,258 2,459,202
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Expenses
Research and development 5,480,972 4,420,886
General and administration 4,013,653 3,516,871
Intellectual property 3,467,045 1,586,788
Business development 745,964 480,022
Stock-based compensation 713,902 131,384
Amortization 832,845 568,595
Cost recoveries (171,821) (899,018)
Investment tax credits - (71,308)
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15,082,560 9,734,220
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(Loss) before the undernoted (14,559,302) (7,275,018)
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Interest income 857,595 421,091
Interest expense (182,440) (31,410)
Foreign exchange gain (loss) (64,405) 52,028
Writedown of property and equipment (161,732) -
Gain (loss) on sale of property and equipment (16,802) 8,764
------------ ------------
432,216 450,473
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Net (loss) for the year $(14,127,086) $ (6,824,545)
(Deficit) -- beginning of year (26,613,400) (19,788,855)
------------ ------------
(Deficit) -- end of year $(40,740,486) $(26,613,400)
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(Loss) per share -- basic and diluted $ (0.85) $ (0.54)