Inflazyme Pharmaceuticals Ltd. Announces Financial Results for the Quarter Ended June 30, 2004.VANCOUVER, 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 announces financial results for the first quarter ended June 30, 2004. This was a quarter of significant events for the Company culminating in the recently announced re-alignment of the Company's R&D strategy and restructuring. Results of Operations for the quarter ended June 30, 2004 The loss for the quarter ended June 30, 2004 was $7,022,774 ($0.07 per common share) compared to a net loss of $3,756,019 ($0.06 per common share) in the corresponding quarter in the prior year. The increase in the loss of $3,266,755 was primarily due to the write-down of the acquired 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. related to the termination of the GH9001 program, higher amortization expenses related to the acquired intangible assets, and higher research and development expenses. These higher expenses were partially offset by a gain on reversal of the lease liability due to the early termination of the Company's Toronto facility lease. On April 20, 2004 the Company completed its acquisition of Adprotech Limited (Adprotech), a private U.K. based company developing new protein 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. to inhibit the human complement system. Adprotech's operations contributed approximately $0.5 million to the Company's net loss for the period of April 20 to June 30, 2004. Revenue Interest revenue for the quarter ended June 30, 2004 was $166,987 compared to $148,119 for the same quarter in the prior year. The increase of $18,868 for the quarter was primarily due to a higher combined total of cash, cash equivalents and short-term investments compared to the same period during the prior year. The Company also recognized $9,581 of licensing revenue related to 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. Research and development expenses Research and development expenses for the quarter ended June 30, 2004 were $2,927,095 compared to $2,040,023 for the same period during the prior year, an increase of $887,072. The increase was primarily related to 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 during the current period. The contracted research and development expenses for the quarter ended June 30, 2004 related primarily to research and pre-clinical studies conducted at the Hamilton Civic Hospital Research Centre as part of a research collaboration and the completion of a Phase Ib study with GH9001. Contracted research for the corresponding period of the prior year primarily related to pre-clinical efficacy studies with 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. 550,260. General and administration expenses General and administration expenses for the quarter ended June 2004 were $1,904,725 compared to $1,513,812 for the corresponding quarter of the prior year. The increase of $390,913 for the quarter ended June 30, 2004 was due primarily to higher rent and corporate expenses partially offset by lower personnel expenses. Rent expenses increased as a result of the Company incurring additional rent expense related to the GlycoDesign facility in Toronto. On June 28, 2004 the Company gave notice that it was exercising its right to early termination of its lease for the Toronto premises, as provided in the lease agreement, effective December 31, 2004. The Company paid an early termination payment of $423,000 to the landlord as a result of the early termination. The landlord has disputed the termination and the termination payment and the Company is in discussions with the landlord on this matter. Amortization expenses Amortization expense for the quarter ended June 30, 2004 was $1,014,103 compared to $359,884 for the corresponding quarter of the prior year. The increase of $654,219 was related to the amortization of equipment and intangible assets acquired as part of the Adprotech and GlycoDesign acquisitions. Write-down of acquired intangible assets On May 13, 2004 the Company announced the termination of the clinical development of GH9001 following the results from a Phase Ib clinical study. The Company determined that, based on the scientific data collected from this study and recent pre-clinical studies, the risks and costs associated with the further development of this product were not acceptable at this time and the program was terminated. The decision to terminate the program meant that the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of GH9001, $2,335,797, was not recoverable and accordingly the Company's acquired intangible assets were written down by this amount, resulting in a charge to the consolidated statement of operations See Income statement. of $2,335,797. Gain on reversal of lease liability On June 28, 2004 the Company gave notice that it was exercising its right to early termination of its lease for the Toronto premises, as provided in the lease agreement, effective December 31, 2004. As a result of the termination, the Company reversed that portion of the unamortized lease liability related to the lease for the period January 1, 2005 to December 31, 2009 resulting in a gain of $1,090,354 recorded in the consolidated statement of operations during the quarter On June 30, 2004 the landlord disputed the termination and the termination payment. The Company is in discussions with the landlord on this matter. Liquidity and Capital Resources At June 30, 2004 the Company's cash and cash equivalents totaled $28,713,618 compared to $27,375,085 at March 31, 2004. Working capital at June 30, 2004 was $26,581,684 compared to $26,538,779 at March 31, 2004. The increase in cash and cash equivalents resulted primarily from cash provided by investing activities of $7,066,309 offset by cash used to fund operating activities of $5,583,214. Cash flows provided by investing activities related primarily to cash from the acquisition of Adprotech of $7,345,992 and the net redemption of short-term investments of $452,498, offset by costs associated with the acquisition of Adprotech of $582,258 during the quarter. The Company believes that its working capital position at June 30, 2004, together with the restructuring subsequent to the quarter end, 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. Revised R&D Strategy The Company's main thrust going forward is to build a robust pipeline of pre-clinical and clinical candidates from the complement inhibition and Prodaptin(TM) technologies, targeting areas of unmet medical need primarily in the acute care market. Potential indications might include trauma or hypovolemic shock hypovolemic shock n. Shock caused by a reduction in the volume of blood, as from hemorrhage. Hypovolemic shock Shock caused by a lack of circulating blood. ; orphan drug orphan drug, drug developed under the U.S. Orphan Drug Act (1983) to treat a disease that affects fewer than 200,000 people in the United States. The orphan drug law offers tax breaks and a seven-year monopoly on drug sales to induce companies to undertake the conditions for which there are no approved therapies, such as Guillain Barre Barre (bă`rē), city (1990 pop. 9,482), Washington co., central Vt., SE of Montpelier; settled late 18th cent., inc. 1894. Granite quarrying, which began in the region in the early 19th cent., is still important. syndrome (GBS See GB/sec. ) and paroxysmal nocturnal hemoglobinuria paroxysmal nocturnal hemoglobinuria n. An infrequent disorder the onset of which usually occurs in the third or fourth decades of life and is characterized by periods of hemolytic anemia, hemoglobinuria primarily at night, pallor, bronzing of the skin, (PNH PNH paroxysmal nocturnal hemoglobinuria. Paroxysmal nocturnal hemoglobinuria (PNH) A rare complement disorder characterized by episodes of red blood cell destruction (hemolysis) and blood in the urine (hemoglobinuria) that is worse at ). Hypovolemic 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 failure of essential organs resulting in organ failure. GBS is a severe, acute inflammatory disorder of the peripheral nerves Peripheral nerves Nerves throughout the body that carry information to and from the spinal cord. Mentioned in: Amyloidosis, Charcot Marie Tooth Disease and is the most common cause of acquired paralysis paralysis or palsy (pôl`zē), complete loss or impairment of the ability to use voluntary muscles, usually as the result of a disorder of the nervous system. in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . PNH is an acquired genetic blood disorder Noun 1. blood disorder - a disease or disorder of the blood blood disease cytopenia - a deficiency of some cellular element of the blood acidemia - a blood disorder characterized by an increased concentration of hydrogen ions in the blood (which falls characterized by severe anemia anemia (ənē`mēə), condition in which the concentration of hemoglobin in the circulating blood is below normal. Such a condition is caused by a deficient number of erythrocytes (red blood cells), an abnormally low level of hemoglobin , which often renders patients transfusion Transfusion Definition Transfusion is the process of transferring whole blood or blood components from one person (donor) to another (recipient). dependent, with chronic fatigue and high risk of life threatening hepatic hepatic /he·pat·ic/ (he-pat´ik) pertaining to the liver. he·pat·ic adj. 1. Of, relating to, or resembling the liver. 2. Acting on or occurring in the liver. n. and cerebral vein Noun 1. cerebral vein - any of several veins serving the cerebral hemispheres of the brain vena cerebri anterior cerebral vein, vena cerebri anterior - accompanies the anterior cerebral artery and empties into the basal vein thrombosis thrombosis (thrŏmbō`sĭs), obstruction of an artery or vein by a blood clot (thrombus). Arterial thrombosis is generally more serious because the supply of oxygen and nutrition to an area of the body is halted. . APT070 is a truncated truncated adjective Shortened form of human Complement Receptor A complement receptor is a receptor of the complement system, a part of the mediated innate immune system. Complement receptors are responsible for detecting pathogens by mechanisms not mediated by antibodies. 1 (CR1) linked to an engineered Prodaptin(TM) tail and is the lead compound under development. APT070 has already completed a number of early clinical studies demonstrating its safety in man. In progressing compounds in these and other areas the Company intends to seek pharmaceutical partners who will share in the risk and reward of developing products through to commercialization. In addition, the Company is actively pursuing suitable M&A and in-licensing opportunities to further strengthen its pipeline and grow shareholder value. 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 is developing an Inflazyme 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 (phosphodiesterase phosphodiesterase /phos·pho·di·es·ter·ase/ (-di-es´ter-as) any of a group of enzymes that catalyze the hydrolytic cleavage of an ester linkage in a phosphoric acid compound containing two such ester linkages. 4) enzyme inhibitor Enzyme inhibitors are molecules that bind to enzymes and decrease their activity. Since blocking an enzyme's activity can kill a pathogen or correct a metabolic imbalance, many drugs are enzyme inhibitors. They are also used as herbicides and pesticides. , IPL455,903, 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. . Helicon has advised the Company that they expect to move this product into human clinical trials either late 2004 or early 2005. Another antithrombotic product, ATH, also obtained through the Company's acquisition of GlycoDesign, continues in development 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 blood-contact catheters. ATH may also be developed, with a partner, for the prevention of damaging thrombi thrombi /throm·bi/ (throm´bi) plural of thrombus. 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. . Technology Briefing Day The Company would like to invite you to hear more about its revised R&D strategy at a technology briefing meeting on September 15, 2004 at Le Royal Meridien King Edward King Edward has been the name of several monarchs in English history:
Conference Call Inflazyme will host a conference call to discuss this announcement on Monday, August 16, 2004 at 1:30 p.m. PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT . To access the call please dial 1-800-387-6216 or 416-405-9328. Audio replay of the conference call will be available until September Until September is a 1984 romantic drama set in France. It stars Karen Allen as an American tourist in Paris who falls in love with a married Frenchman (Thierry Lhermitte). External links 15, 2004 by calling 1-800-408-3053 or 416-695-5800 and entering pass code 3090119#. About Inflazyme Inflazyme is a Vancouver based biopharmaceutical company focused on developing new therapies for the treatment of inflammation 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 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)
June 30 March 31
2004 2004
----------------------------------
Assets
Current assets
Cash and cash equivalents $ 28,713,618 $ 27,375,085
Short-term investments - 452,498
Interest receivable 26,843 38,882
Other receivables 189,066 243,566
Prepaid expenses 490,141 402,623
Tax credits recoverable 1,681,786 794,675
----------------------------------
31,101,454 29,307,329
Assets held for sale 90,813 -
Deferred acquisition
costs - 301,527
Property and equipment 3,585,982 3,487,071
Other assets 1,744,295 1,758,908
Acquired intangible
assets 16,548,159 4,864,218
----------------------------------
$ 53,070,703 $ 39,719,053
----------------------------------
----------------------------------
Liabilities
Current liabilities
Accounts payable and
accrued liabilities $ 4,121,888 $ 2,039,558
Current portion of lease
liability 109,038 320,514
Current portion of
long-term debt 288,844 408,478
----------------------------------
4,519,770 2,768,550
Lease liability - 933,396
Long-term debt 28,027 52,955
Deferred licensing
revenue 335,344 344,925
----------------------------------
4,883,141 4,099,826
----------------------------------
----------------------------------
Shareholders' equity
Capital stock
Issued
Series 1, Class A
preference shares 21,957,676 21,957,676
Common shares 116,952,356 97,418,912
----------------------------------
138,910,032 119,376,588
Contributed surplus 1,156,005 1,098,340
Deficit (91,878,475) (84,855,701)
----------------------------------
48,187,562 35,619,227
----------------------------------
$ 53,070,703 $ 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 Three Months Ended
-----------------------------------
June 30, 2004 June 30, 2003
-----------------------------------
Revenue
Interest $ 166,987 $ 148,119
Licensing revenue 9,581 9,581
-----------------------------------
176,568 157,700
-----------------------------------
Expenses
Research and development 2,927,095 2,040,023
General and
administration 1,904,725 1,513,812
Amortization 1,014,103 359,884
Write-down of acquired
intangible assets 2,335,797 -
Write-down of property
and equipment 59,886 -
Write-down of other assets 48,090 -
Gain on reversal of lease
liability (1,090,354) -
-----------------------------------
7,199,342 3,913,719
-----------------------------------
Loss for the period (7,022,774) (3,756,019)
Deficit, beginning of
period (84,855,701) (68,821,466)
-----------------------------------
Deficit, end of period $ (91,878,475) $ (72,577,485)
-----------------------------------
-----------------------------------
Basic and diluted loss
per common share (0.07) (0.06)
-----------------------------------
-----------------------------------
Weighted-average number
of common shares
outstanding 103,427,446 63,582,489
-----------------------------------
-----------------------------------
Inflazyme Pharmaceuticals Ltd.
Consolidated Statements of Cash Flows
(Unaudited)
For the Three Months Ended
-----------------------------------
June 30, 2004 June 30, 2003
-----------------------------------
Cash flows from operating
activities
Loss for the period $ (7,022,774) $ (3,756,019)
Items not involving cash:
Amortization 1,014,103 359,884
Write-down of property
and equipment 59,886 -
Write-down of other assets 48,090 -
Write-down of acquired
intangible assets 2,335,797 -
Licensing revenue (9,581) (9,581)
Gain on reversal of lease
liability (1,090,354) -
Amortized lease liability (54,518) -
Stock-based compensation 57,665 180,323
-----------------------------------
(4,661,686) (3,225,393)
Changes in non-cash
working capital (921,528) 1,645,169
-----------------------------------
(5,583,214) (1,580,224)
-----------------------------------
Cash flows from financing
activities
Repayment of long-term
debt (144,562) (115,391)
Common shares issued for
cash - 18,240
Cost of common share
issuances - (87,071)
-----------------------------------
(144,562) (184,222)
-----------------------------------
Cash flows from investing
activities
Short-term investments 452,498 5,000,000
Disposal of assets held
for sale - 23,880
Cash from the acquisition
of GlycoDesign Inc. - 12,852,187
Acquisition costs -
GlycoDesign - (1,741,475)
Cash from the acquisition
of Adprotech 7,345,991 -
Acquisition costs -
Adprotech (582,258) -
Other assets (67,330) (76,583)
Purchase of property and
equipment (82,592) (17,777)
-----------------------------------
7,066,309 16,040,232
Increase (decrease) in -----------------------------------
cash and cash equivalents 1,338,533 14,275,786
Cash and cash
equivalents, beginning of
period 27,375,085 14,321,664
Cash and cash
equivalents, end of
-----------------------------------
period $ 28,713,618 $ 28,597,450
-----------------------------------
-----------------------------------
Supplemental disclosure
of cash flow information
Interest paid 10,263 21,206
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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