Microbix' Six-Month Results Highlight 44% Jump In Virology Sales, Over $800,000 Profit Turnaround

Management Provides Detailed Corporate Update

TORONTO, May 15, 2014 /CNW/ - Microbix Biosystems Inc. (TSX: MBX), an innovator of biological products and technologies, today reported financial results for its six months and second quarter ending March 31, 2014.

Six-Month Financial Results

In the first six months of fiscal 2014, Microbix reported total revenue of $4,000,982, compared to $3,199,041 for the same period in 2013, or an increase of 25%. Virology products revenue was $3,812,613 for the first six months compared to $2,651,421 for the same period in 2013, or an increase of 44%.  Strong customer demand and a favourable currency impact are the main drivers of this growth.  R&D contract revenue in the first six months was $188,369 compared to $547,620 for the same period in 2013.  R&D contract revenue typically fluctuates with customer priorities.

Total expenses were $1,714,995 for the fist six months compared to $1,828,607 for the same period in 2013.  After adjusting for the one-time gain on the disposal of assets of $145,266 in 2013, normalized total expenses were $1,973,873 for the first six months of 2013. As a result, total expenses in the first six months of 2014 decreased 13% compared to the normalized total expenses in 2013; primarily driven by cost saving initiatives implemented in the past year. 

Operating income for the first six months was $484,026, compared to an operating loss of $321,034 for the same period last year, or an improvement in the bottom line of $805,060. Net cash flow increased in the first six months by $889,619, compared to a decrease of $103,736 for the same period in 2013, contributing to an improvement in the Company's ending cash position of $1,024,974.

Vaughn C. Embro-Pantalony, President and Chief Executive Officer remarked, "I am delighted with our half-year operating results. Our virology customers continue to show strong confidence in our capabilities to support their growing businesses demonstrated by the record growth in our half-year sales. We are also experiencing the full impact of our cost transformation priorities, realizing a significant reduction in our cost base in the first half of this year.  These results have contributed to an $800,000 turnaround in the bottom line of our business and a significant improvement in our net cash position for the first six months of our fiscal year. I am optimistic that we will see continued improvement in our operating results in the second half of 2014."

Second Quarter Financial Results

In the second quarter, Microbix reported total revenue of $2,073,097, slightly below the total revenue of $2,103,426 for the same period in 2013. There were no R&D contract revenues in the second quarter, compared to $264,576 in R&D contract revenues in 2013. Virology products revenue was $2,073,097 in the second quarter, compared to $1,838,850 for the same period in 2013, or an increase of 13%. The higher virology products revenue was primarily due to continued growth in customer demand including significant new business from an existing customer, as well as a favourable currency impact.

Total expenses for the second quarter were $826,217 compared to $710,405 for the same quarter in 2013.  However, the 2013 total expenses included a one-time gain on the disposal of assets of $145,266; removing this gain results in normalized total expenses of $855,671 in 2013. As a result, total expenses in the second quarter decreased 3.5% compared to the normalized total expenses in 2013. This decrease was primarily due to various cost savings initiatives implemented in the past year.  Operating income for the second quarter was $269,620 compared to $308,471 for the same quarter last year.

Net cash flow increased in the second quarter by $941,391, compared to a decrease of $49,992 for the same period in 2013.  The improvement was primarily due to the receipt of proceeds from the LumiSort™ convertible debenture of $1,500,000, the conversion of warrants and stock options of $543,335, and the release of restricted cash of $250,000 by the Company's bank; this was offset by a reduction in bank loans of $176,003 plus additional investment in new property, equipment and intangible assets of $863,245.

Financial Highlights

Corporate Update

LumiSort™
After closing the financing for the first phase of the development of the LumiSort™ instrument during the second quarter, Microbix management reported that the Company is progressing with the early stages of its technical program to construct the Lumisort™ instrument and aims to have a demonstration platform available later in the year.

CEO, Embro-Pantalony explained, "The present phase of the LumiSort™ instrument development program is aimed at providing a compelling demonstration to the industry of the game-changing advantages of our platform including speed, accuracy, and fertility that are intrinsic to the technological innovations underpinning the LumiSort™ instrument. Our partnership with Lathrop Engineering in California, the pre-eminent engineering design-build firm in its field, provides our LumiSort™ instrument development program with the means to meet our technical goals, and to do it on time and on budget."

Embro-Pantalony added, "We continue to actively pursue patent protection for the important innovations resulting from our LumiSort instrument development program, which is fundamental to enhancing shareholder value as we advance through this exciting phase of technical development toward commercialization."

Kinlytic®
After the termination of the Kinlytic® License Agreement last December by Zydus Cadila, Microbix has been pursuing new potential Kinlytic® partners during the second quarter. A number of candidates have signed confidentiality agreements and have begun evaluating the Kinlytic® opportunity with a special interest in the U.S. thrombolytic market.

Embro-Pantalony commented, "I am encouraged by the response we have had towards our renewed efforts to partner Kinlytic®. A couple of the interested parties approached us after learning about Zydus' decision to terminate our license agreement late last year. I remain optimistic that we will secure a partner for Kinlytic® in due course, as we work through the necessary assessment stages with the interested parties."

VIRUSMAX®
Early in the second quarter, Microbix initiated a legal action in Texas against Novartis, a multi-national influenza vaccine manufacturer, alleging infringement of its VIRUSMAX® patents in the United States.  

Embro-Pantalony stated, "We are working very closely with our legal counsel through the preliminary stages of this legal proceeding, which could reach the trial stage in the latter part of calendar 2015.  The unequivocal success of our patent defence at the European Patent Office in January has reinforced the strength of our VIRUSMAX® patent estate, which we will vigorously enforce going forward."

Please visit www.sedar.com for recent Microbix Biosystems, Inc. filings and financial information.

About Microbix Biosystems

Microbix Biosystems Inc. specializes in the development of biological solutions, including products for vaccine and diagnostics markets worldwide.  The company owns intellectual property for an approved biological drug, a vaccine technology and an animal reproduction technology.  Established in 1988, Microbix is headquartered in Mississauga, Ontario.

Microbix' pipeline of innovative technologies and products includes LumiSort™ semen sexing technology for the livestock industries, and Kinlytic®, a thrombolytic drug with several approved and potential applications including the treatment of life-threatening blood clots, and VIRUSMAX®, a proprietary technology for increasing virus yields in influenza vaccine manufacture.

Disclaimer

This press release contains forward-looking statements which are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements including the risks associated with development projects, operations in foreign jurisdictions, risks associated with engineering and construction generally, risks associated with production including control over costs, quality, quantity and timeliness of delivery of products, foreign currency and exchange rate risk, and risks of raising capital on acceptable terms or at all.  These forward-looking statements represent the Company's judgment as of the date of this press release. The Company disclaims any intent or obligation to update these forward-looking statements.

SOURCE Microbix Biosystems Inc.