Sophiris Bio Reports Fourth Quarter and Full Year 2013 Financial Results and Key Operational Highlights

Sophiris Bio Inc. (NASDAQ: SPHS) (the “Company” or “Sophiris”), a biopharmaceutical company developing a clinical-stage, targeted treatment for the symptoms of benign prostatic hyperplasia (BPH) or enlarged prostate, today announced financial results and recent key operational highlights for the three months and full year ended December 31, 2013.

Key Operational Highlights

• On October 28, 2013, the Company announced that enrollment had begun and the first patients had been dosed in a Phase 3 clinical trial of PRX302 (topsalysin) as a treatment for lower urinary tract symptoms of BPH. The Phase 3 international, multi-center trial, called the PLUS 1 study, will enroll approximately 440 patients. The randomized, double-blind and vehicle-controlled trial will assess the safety and efficacy of a single intraprostatic treatment of PRX302 (0.6 µg/g prostate). The primary endpoint is the International Prostate Symptom Score (IPSS) total score change from baseline over 52 weeks. Secondary endpoints include Qmax (maximum urine flow rate) change from baseline over 52 weeks.
• On July 16, 2013, the Company received a formal waiver from the Food and Drug Administration that the Company will not be required to complete a separate thorough QT study as part of our clinical development plan.
• On August 23, 2013, the Company announced that it had closed its initial U.S. public offering. Under the offering, the Company issued 13,000,000 common shares at a price of $5.00 per share for aggregate gross proceeds of $65 million. Following the U.S. public offering, the Company decided to voluntarily delist from the Toronto Stock Exchange, which was effective in November 2013.
• During the first quarter of 2013, the Company recognized revenue of $5.0 million associated with a non-refundable milestone payment due upon the achievement of certain development activities due in connection with its licensing agreement for PRX302 with Kissei Pharmaceutical Co., Ltd. The Company received payment for this milestone in April 2013.

“2013 was an important year for positioning Sophiris to access the capital required to further the clinical development of PRX302 as a treatment for the symptoms of BPH,” stated Randall Woods, president and CEO of Sophiris Bio. “After raising $65 million in an initial U.S. public offering in August 2013, we quickly executed on our plan for creating shareholder value by initiating our first Phase 3 clinical trial of PRX302. We believe that we are on-track to complete enrollment in the second half of 2014.”

Financial Results

At December 31, 2013, Sophiris had cash, cash equivalents and securities available-for-sale of $48.1 million and working capital of $41.3 million. The Company expects that current cash, cash equivalents and securities available-for-sale as of December 31, 2013 will be sufficient to fund operations for at least the next 12 months.

For the Fourth Quarter Ended December 31, 2013

The Company reported a net loss of $5.4 million ($0.34 per share) for the three months ended December 31, 2013 compared to a net loss of $5.3 million ($1.69 per share) for the three months ended December 31, 2012.

Research and development expenses

Research and development expenses were $4.1 million for the three months ended December 31, 2013 compared to $3.3 million for the three months ended December 31, 2012. The increase in research and development costs was attributable to an increase in the costs associated with the Company’s first Phase 3 clinical trial and an increase in personnel costs.

General and administrative expenses

General and administrative expenses were $1.5 million for the three months ended December 31, 2013 compared to $1.3 million for the three months ended December 31, 2012. This increase was due to an increase in personnel costs, an increase in stock-compensation expense and an increase in directors and officers liability insurance. These increases were offset by decreases in accounting and tax professional fees.

Interest income (expense), net

Interest expense, net was $0.2 million for the three months ended December 31, 2013 compared to $0.4 million in the same period in 2012. This decrease was due to a reduction in interest expense related to the Company’s promissory notes with Oxford Finance.

Gain on revaluation of warrant liability

Gain on revaluation of warrant liability was $0.5 million for the three months ended December 31, 2013. The Company recognized a $0.5 million non-cash gain for the change in the fair value of the Company’s warrant liability.

Other income (expense), net

Other expense, net was $49,000 for the three months ended December 31, 2013 compared to $0.2 million for the three months ended December 31, 2012. These amounts primarily relate to foreign exchange losses from foreign currency transactions.

For the Year Ended December 31, 2013

The Company reported a net loss of $11.1 million ($1.39 per share) for the year ended December 31, 2013 compared to a net loss of $21.2 million ($6.94 per share) for the year ended December 31, 2012.

License revenue

During the year ended December 31, 2013, the Company recorded as revenue a $5.0 million non-refundable milestone payment due from Kissei upon its achievement of certain development activities.

Research and development expenses

Research and development expenses were $10.3 million in the year ended December 31, 2013 compared to $13.5 million in the year ended December 31, 2012. The decrease in research and development costs was attributable to a decrease in the costs associated with the Company’s non-clinical activities, specifically a repeat dose monkey study and a rat fertility study both of which were completed in 2012, a decrease in the costs associated with the transfer and scale-up of manufacturing activities for PRX302, and a decrease in costs associated with the Company’s completed Phase 1/2 transrectal clinical trial. Offsetting these decreases was an increase in costs associated with the Company’s first Phase 3 clinical trial.

General and administrative expenses

General and administrative expenses were $4.5 million in the year ended December 31, 2013 compared to $5.7 million for the year ended December 31, 2012. The decrease was primarily due to a decrease in market research costs.

Interest income (expense), net

Interest expense, net was $1.3 million in the year ended December 31, 2013, compared to $1.9 million in the same period in 2012. This decrease was due to a reduction in interest expense related to the Company’s promissory notes with Oxford Finance.

Gain on revaluation of warrant liability

Gain on revaluation of warrant liability was $0.7 million as of December 31, 2013. The non-cash gain was associated with the change in the fair value of the Company’s warrant liability.

Other income (expense), net

Other expense, net was $0.2 million for the year ended December 31, 2013 compared to $0.1 million for the year ended December 31, 2012. These amounts primarily relate to foreign exchange losses from foreign currency transactions.

Income tax expense

The milestone payment from Kissei was subject to a 10 percent Japanese withholding tax. As a result the Company recorded an income tax expense of $0.5 million for the year ended December 31, 2013.

For complete financial results, please see the Company’s website at www.sophiris.com.

About Sophiris

Sophiris Bio Inc. is a biopharmaceutical company developing a clinical-stage, targeted treatment for the symptoms of BPH, which it believes is an unsatisfied market with significant market potential. Sophiris’ lead candidate for BPH, PRX302, is designed to be as efficacious as pharmaceuticals, less invasive than the surgical interventions, and without the sexual side effects seen with existing treatments. Sophiris initiated its first Phase 3 clinical trial of PRX302 in October 2013. For more information, please visit www.sophiris.com.

Certain statements included in this press release may be considered forward-looking, including the quote of our President and CEO and any expectations relating to our Phase 3 trial of PRX302 or our capital requirements. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements, and therefore these statements should not be read as guarantees of future performance or results. All forward-looking statements are based on Sophiris’ current beliefs as well as assumptions made by and information currently available to Sophiris and relate to, among other things, anticipated financial performance, business prospects, strategies, regulatory developments, clinical trial enrollment and results, market acceptance and future commitments. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Due to risks and uncertainties, including the risks and uncertainties identified by Sophiris in its public securities filings; actual events may differ materially from current expectations. Sophiris disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.