Inflazyme Pharmaceuticals Ltd.: Financial Results for Quarter Ended September 30, 2004 and Shareholder Update.VANCOUVER Vancouver, city, Canada Vancouver, city (1991 pop. 471,844), SW British Columbia, Canada, on Burrard Inlet of the Strait of Georgia, opposite Vancouver Island and just N of the Wash. border. , British Columbia British Columbia, province (2001 pop. 3,907,738), 366,255 sq mi (948,600 sq km), including 6,976 sq mi (18,068 sq km) of water surface, W Canada. Geography -- Inflazyme Pharmaceuticals Ltd. (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :IZP IZP Inorganic Zinc Primer IZP Inter-Zone Path ) today announced its second quarter financial results for the period ended September September: see month. 30, 2004. Results of Operations for the quarter ended September 30, 2004 The net loss for the quarter ended September 30, 2004 was $6,163,236 ($0.06 per common share) compared to a net loss of $4,199,304 ($0.05 per common share) in the corresponding quarter in the prior year. The increase in the loss for the quarter of $1,963,932 was primarily due to higher research and development expenses as a result of the acquisition of Adprotech Ltd., higher amortization expenses related to the acquired intangibles assets, and one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. expenses incurred as a result of restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). activities announced on July July: see month. 27, 2004. Revenue Interest revenue for the quarter ended September 30, 2004 was $151,087 compared to $168,378 the same quarter in the prior year. The decrease of $17,291 for interest earned during the quarter was primarily due to lower interest rates for the period. The Company also recognized $73,795 of licensing revenue related to a milestone payment from Spire Corporation, as well as its partnership with Helicon Helicon (hĕl`ĭkŏn), Gr. Elikón, mountain group, c.20 mi (30 km) long, central Greece, in Boeotia; it rises to 5,736 ft (1,748 m). Helicon formed part of the border between ancient Boeotia and Phocis. Therapeutics therapeutics Treatment and care to combat disease or alleviate pain or injury. Its tools include drugs, surgery, radiation therapy, mechanical devices, diet, and psychiatry. , Inc. Research and development expenses Research and development expenses for the quarter ended September 30, 2004 were $3,093,296 compared to $1,996,848 for the same period during the prior year, an increase of $1,096,448. The increase in research and development expenses for the quarter were primarily related to higher personnel expenses and the increased use of contract research and development organizations for clinical and pre-clinical development Pre-clinical development is a stage in the development of a new drug that begins before clinical trials (testing in humans) can begin, and during which important safety and pharmacology data is collected. activities. Personnel expenses increased due to additional personnel added as a result of the Adprotech acquisition offset by the restructuring effective July 27, 2004. The Company expects that personnel expenses will decline in subsequent periods as a result of employee terminations that took effect during the current quarter. Contracted research and development expenses increased because of the research and clinical studies with respect to the Phase I/II study with Mirococept(R) (APT (Automatic Programmed Tools) A high-level programming language used to generate instructions for numerical control machines. 1. (language) APT - Automatically Programmed Tools. 2. (company) APT - Audio Processing Technology. 070) in rheumatoid arthritis rheumatoid arthritis Chronic, progressive autoimmune disease causing connective-tissue inflammation, mostly in synovial joints. It can occur at any age, is more common in women, and has an unpredictable course. . As previously announced on July 27, 2004, Inflazyme has now ceased the recruitment of additional patients in the rheumatoid arthritis study. General and administration expenses General and administration expenses for the quarter ended September 30, 2004 were $1,358,337 compared to $1,783,090 for the corresponding quarter of the prior year. The decrease of $424,753 was due primarily to lower personnel expenses offset by higher general corporate expenses. Personnel expenses were less primarily because of lower stock-based compensation expenses during the quarter. The Company expensed $52,301 in stock-based compensation expenses during the quarter ended September 30, 2004 compared to $390,727 for the corresponding quarter of the prior year. General corporate expenses were higher in the current quarter due primarily to foreign exchange loss resulting from the strengthening Canadian dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents relative to the UK pound. Amortization expenses Amortization expense for the quarter ended September 30, 2004 was $1,253,425 compared to $632,231 for the corresponding prior period. The increase of $621,194 relates to the amortization of equipment and intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. acquired as part of the acquisition of Adprotech Ltd., and GlycoDesign Inc. Liquidity and Capital Resources At September 30, 2004 the Company's cash and cash equivalents totaled $22,276,456 compared to $27,375,085 at March 31, 2004. Working capital at September 30, 2004 was $21,616,459 compared to $26,538,779 at March 31, 2004. The decrease in cash and cash equivalents for the six months ended September 30, 2004 resulted from cash used in operating activities of $11,394,360, cash used in financing activities of $321,865 offset by cash from investing activities of $6,617,596. Cash flows from investing activities related primarily to cash from the acquisition of Adprotech Ltd. of $7,345,992 offset by acquisition costs of $582,258. Inflazyme believes that its working capital position at September 30, 2004 will enable the Company to fund operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. and capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. into the second quarter of calendar 2006. Corporate Update Inflazyme is continuing to follow its strategy of internal development of certain protein therapeutic products, whilst advancing other technologies in conjunction with current or potential partners. Protein Therapeutics The Company is continuing to advance its complement inhibition inhibition In enzymology, a phenomenon in which a compound (an inhibitor), usually similar in structure to the substance on which an enzyme acts (substrate), interacts with the enzyme so that the resulting complex cannot undergo the usual reaction or cannot form the usual and Prodaptin(TM) technologies, targeting areas of unmet un·met adj. Not satisfied or fulfilled: unmet demands. medical needs. Inflazyme's lead product Mirococept(R) (formerly APT070) is being considered in a number of indications such as an acute care treatment for hypovolaemic Adj. 1. hypovolaemic - of or relating to a decrease in the volume of circulating blood hypovolemic shock. Hypovolaemic shock results from severe blood loss following trauma and may progress to poor perfusion perfusion /per·fu·sion/ (-zhun) 1. the act of pouring over or through, especially the passage of a fluid through the vessels of a specific organ. 2. a liquid poured over or through an organ or tissue. and eventual damage and subsequent failure of essential organs. Mirococept(R) has demonstrated a survival benefit in preclinical preclinical /pre·clin·i·cal/ (-klin´i-k'l) before a disease becomes clinically recognizable. pre·clin·i·cal adj. 1. models of this condition. Manufacturing contracts for Mirococept(R) have been recently signed with Avecia Avecia is a privately owned group of biotechnology companies with recognised leading positions in process development and manufacture of biological and oligonucleotide pharmaceuticals, with their International Headquarters in Blackley, Manchester, England. Limited, a biologicals Biologicals Biological products used to induce immunity to various infectious diseases or noxious substances of biological origin. The term is usually limited to immune serums, antitoxins, vaccines, and toxoids that have the effect of providing protective manufacturing company in the UK, and product material is anticipated to be delivered in Q1'05. The Company is continuing to seek to identify a partner for the development of ATHt, an anti-thrombotic product, which is being researched for the prevention of damaging thrombi thrombi /throm·bi/ (throm´bi) plural of thrombus. (blood clots Blood Clots Definition A blood clot is a thickened mass in the blood formed by tiny substances called platelets. Clots form to stop bleeding, such as at the site of cut. ) entering the brain during major surgical procedures Surgical procedures have long and possibly daunting names. The meaning of many surgical procedure names can often be understood if the name is broken into parts. For example in splenectomy, "ectomy" is a suffix meaning the removal of a part of the body. "Splene-" means spleen. such as cardiopulmonary cardiopulmonary /car·dio·pul·mo·nary/ (kahr?de-o-pool´mah-nar-e) pertaining to the heart and lungs. car·di·o·pul·mo·nar·y adj. Of, relating to, or involving both the heart and the lungs. by-pass surgery. A related product, ATHc, is already partnered with Spire Corporation of Bedford, Massachusetts Bedford is a town in Middlesex County, Massachusetts, United States. It is within the Greater Boston area, some 15 miles north-west of the city of Boston. The population of Bedford was 12,595 at the 2000 census. , as a potential coating for certain catheters. Small Molecule Therapeutics Helicon Therapeutics, Inc. of New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of have advised Inflazyme that they have filed an IND with the FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. for HT0712 (otherwise known as IPL (Initial Program Load) Same as boot. 1. IPL - Information Processing Language. 2. IPL - Internet Public Library. 3. IPL - Initial Program Load. 4. IPL - Initial Program Loader. 455,903) and expect Phase I clinical studies to commence in Q4'04. IPL455,903 is an Inflazyme developed PDE PDE Pennsylvania Department of Education PDE Plug-In Development Environment PDE Partial Differential Equation PDE Phosphodiesterases PDE Personal Digital Entertainment PDE Pulse Detonation Engine PDE Product Data Exchange PDE Present-Day English 4 inhibitor inhibitor /in·hib·i·tor/ (in-hib´i-tor) 1. any substance that interferes with a chemical reaction, growth, or other biologic activity. 2. licensed to Helicon in January 2003 as a potential new treatment for learning and memory disorders There are several different types of memory disorders which occur in the human mind. Among these are less severe disorders including minor short term memory loss, and the eventually incapacitating Alzheimer's Disease. . Inflazyme has the rights, up until the completion of Phase IIa clinical trials, to enter into a joint venture with Helicon, for further development and commercialization of this product in the field. In respect of the LSAIDs(TM), the Company does not expect the lead compound IPL512,602 to be developed further in asthma asthma (ăz`mə, ăs`–), chronic inflammatory respiratory disease characterized by periodic attacks of wheezing, shortness of breath, and a tight feeling in the chest. A cough producing sticky mucus is symptomatic. with Aventis, part of the sanofi-aventis Group. Inflazyme is seeking to progress development of the LSAIDs(TM) in potentially broader indications with other pharmaceutical partners. Other Corporate Activities In line with the strategy announced in July, Inflazyme is continuing to evaluate suitable M&A and in-licensing opportunities to grow the Company's pipeline. In October, the Company formally engaged SG Cowen & Co., LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control to assist the Company in its pursuit of a suitable business development and/or merger & acquisition transaction. Inflazyme has been working with SG Cowen for a number of years on both an informal and formal basis and SG Cowen last advised the Company on its acquisition of GlycoDesign Inc., in April 2003. Conference Call Inflazyme will host a conference call to discuss this announcement on Monday, November 8, 2004 at 9:00 a.m. PST/12:00 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. . To access the call, please dial (416) 406-4206 or (866) 546-6145. Audio replay of the conference call will be available until December 13, 2004 by calling (416) 695-5800 or (800) 408-3053 and entering passcode 3112939#. About Inflazyme Inflazyme is a Vancouver based biopharmaceutical company focused on developing new therapies to treat auto-immune and other related diseases. Further information on the Company may be obtained from its website at www.inflazyme.com. Statements in this news release other than historical information are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. subject to risks and uncertainties. Actual results could differ materially depending on factors such as the availability of resources, the timing and effects of regulatory actions, the strength of competition, the outcome of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. and the effectiveness of patent protection. Additional information regarding risks and uncertainties is set forth in the current Annual Information Form for Inflazyme on file with the Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. Securities Commissions. The Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. has not reviewed and does not accept responsibility for the adequacy or accuracy of this information.
Inflazyme Pharmaceuticals Ltd.
Consolidated Balance Sheets
(Unaudited)
September 30 March 31
2004 2004
-------------------------------
Assets
Current assets
Cash and cash equivalents $ 22,276,456 $ 27,375,085
Short-term investments 208,816 452,498
Interest receivable 34,725 38,882
Other receivables 219,717 243,566
Prepaid expenses 527,508 402,623
Tax credits recoverable 1,629,006 794,675
-------------------------------
24,896,228 29,307,329
Deferred acquisition costs - 301,527
Property and equipment 3,409,840 3,487,071
Other assets 1,794,940 1,758,908
Acquired intangible assets 15,664,369 4,864,218
-------------------------------
$ 45,765,377 $ 39,719,053
-------------------------------
-------------------------------
Liabilities
Current liabilities
Accounts payable and accrued
liabilities $ 3,100,576 $ 2,039,558
Current portion of lease
liability 54,520 320,514
Current portion of long-term debt 124,673 408,478
-------------------------------
3,279,769 2,768,550
Lease liability - 933,396
Long-term debt 14,895 52,955
Deferred licensing revenue 325,763 344,925
-------------------------------
3,620,427 4,099,826
-------------------------------
Shareholders' equity
Capital stock
Issued
Series 1, Class A preference shares 21,957,676 21,957,676
Common shares 116,952,357 97,418,912
-------------------------------
138,910,033 119,376,588
Contributed surplus 1,276,628 1,098,340
Deficit (98,041,711) (84,855,701)
-------------------------------
42,144,950 35,619,227
-------------------------------
$ 45,765,377 $ 39,719,053
-------------------------------
-------------------------------
On behalf of the board
Ian McBeath (signed) Graham Wilson (signed)
President & CEO Director
Director
Inflazyme Pharmaceuticals Ltd.
Consolidated Statements of Operations and Deficit
(Unaudited)
For the For the
Three Months Ended Six Months Ended
September 30 September 30
-------------------------- --------------------------
2004 2003 2004 2003
-------------------------- --------------------------
Revenue
Interest $ 151,087 $ 168,378 $ 318,074 $ 316,497
Licensing
revenue 73,795 44,487 83,376 54,068
-------------------------- --------------------------
224,882 212,865 401,450 370,565
-------------------------- --------------------------
Expenses
Research and
development 3,093,296 1,996,848 6,020,391 4,036,871
General and
administration 1,358,337 1,783,090 3,263,062 3,296,902
Amortization 1,253,425 632,231 2,267,528 992,115
Write-down
of acquired
intangible
assets - - 2,335,797 -
Restructuring
expenses 596,488 - 596,488 -
Loss on
disposal of
assets held
for sale 86,572 - 146,458 -
Write-down
of other
assets - - 48,090 -
Gain on
reversal of
lease
liability - - (1,090,354) -
-------------------------- --------------------------
6,388,118 4,412,169 13,587,460 8,325,888
-------------------------- --------------------------
Loss for the
period (6,163,236) (4,199,304) (13,186,010) (7,955,323)
Deficit,
beginning of
period (91,878,475) (72,577,485) (84,855,701) (68,821,466)
-------------------------- --------------------------
Deficit, end
of period $(98,041,711) $(76,776,789) $(98,041,711) $(76,776,789)
-------------------------- --------------------------
-------------------------- --------------------------
Basic and
diluted loss
per common
share (0.06) (0.05) (0.12) (0.10)
-------------------------- --------------------------
-------------------------- --------------------------
Weighted-average
number of
common shares
outstanding 106,215,150 79,653,205 104,828,914 71,661,756
-------------------------- --------------------------
-------------------------- --------------------------
Inflazyme Pharmaceuticals Ltd.
Consolidated Statements of Cash Flows
(Unaudited)
For the For the
Three Months Ended Six Months Ended
September 30 September 30
-------------------------- --------------------------
2004 2003 2004 2003
-------------------------- --------------------------
Cash flows from
operating
activities
Loss for the
period $ (6,163,236) $ (4,199,304) $(13,186,010) $ (7,955,323)
Items not
involving
cash:
Amortization 1,253,425 632,231 2,267,528 992,115
Loss on
disposal of
assets held
for sale 86,572 - 146,458 -
Write-down
of other
assets - - 48,090 -
Write-down
of acquired
intangible
assets - - 2,335,797 -
Licensing
revenue (9,581) (9,581) (19,162) (19,162)
Gain on
reversal of
lease
liability - - (1,090,354) -
Amortized
lease
liability (54,518) (54,518) (109,036) (54,518)
Loss on
disposal for
property and
equipment - 51,428 - 51,428
Stock-based
compensation 120,623 405,807 178,289 586,130
-------------------------- --------------------------
(4,766,715) (3,173,937) (9,428,400) (6,399,330)
Changes in
non-cash
working
capital (1,044,432) (2,799,863) (1,965,960) (1,154,694)
-------------------------- --------------------------
(5,811,147) (5,973,800) (11,394,360) (7,554,024)
-------------------------- --------------------------
Cash flows
from
financing
activities
Repayment of
long-term
debt (177,303) (225,330) (321,865) (340,721)
Common
shares
issued for
cash - 78,600 - 96,840
Cost of
common share
issuances - - - (87,071)
-------------------------- --------------------------
(177,303) (146,730) (321,865) (330,952)
-------------------------- --------------------------
Cash flows
from
investing
activities
Short-term
investments (208,816) - 243,682 5,000,000
Disposal of
assets held
for sale 3,862 - 3,862 23,880
Cash from the
acquisition of
GlycoDesign
Inc. - - - 12,852,187
Acquisition
costs -
GlycoDesign - - - (1,741,475)
Cash from the
acquisition
of Adprotech - - 7,345,992 -
Acquisition
costs -
Adprotech - - (582,258) -
Other assets (30,439) (38,496) (97,771) (115,079)
Purchase of
property and
equipment (213,319) (36,068) (295,911) (53,845)
-------------------------- --------------------------
(448,712) (74,564) 6,617,596 15,965,668
-------------------------- --------------------------
Increase
(decrease)
in cash and
cash
equivalents (6,437,162) (6,195,094) (5,098,629) 8,080,692
Cash and cash
equivalents,
beginning of
period 28,713,618 28,597,450 27,375,085 14,321,664
-------------------------- --------------------------
Cash and cash
equivalents,
end of
period 22,276,456 $ 22,402,356 $ 22,276,456 $ 22,402,356
-------------------------- --------------------------
-------------------------- --------------------------
Supplemental
disclosure
of cash flow
information -
Interest
paid 6,235 33,702 16,498 54,908
Issuance of
common
shares and
grant of
stock options
on the
acquisition of
GlycoDesign
Inc. net
assets - - - 15,064,740
Issuance of
common
shares on the
acquisition of
Adprotech
Limited net
assets - - 19,533,444 -
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