Inflazyme Pharmaceuticals Ltd. Letter to Shareholders for the Quarter Ended June 30th, 2003.Business Editors/Health/Medical Writers RICHMOND Richmond, cities, United States Richmond. 1 City (1990 pop. 87,425), Contra Costa co., W Calif., on San Pablo Bay, an inlet of San Francisco Bay; inc. 1905. , British Columbia--(BUSINESS WIRE)--Sept. 2, 2003 Inflazyme Pharmaceuticals Ltd. Dear Shareholder, The quarter ended June June: see month. 30th , 2003 has been a very significant one for the Company. In this quarter we have seen the completion of our acquisition of GlycoDesign and the commencement, by our partner Aventis Aventis Is a pharmaceutical and lab assay testing company. It was formed in 1999 when Rhône-Poulenc S.A. merged with Hoechst AG. The merged company was based in Strasbourg, France. Sanofi-Aventis was formed in 2004 when Sanofi-Synthélabo purchased Aventis. , of a large Phase II 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. study 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. 512,602. The acquisition of GlycoDesign strengthened our product pipeline with the addition of two novel potential anti-thrombotic therapies, GH9001 and ATH, and the addition of a new anti-inflammation technology, CORE2 inhibitors. The latter technology helps strengthen our franchise in inflammation inflammation, reaction of the body to injury or to infectious, allergic, or chemical irritation. The symptoms are redness, swelling, heat, and pain resulting from dilation of the blood vessels in the affected part with loss of plasma and leucocytes (white blood with an approach that is different from our existing LSAIDs(TM) (Leukocyte leukocyte (l  `kəsīt'): see blood. leukocyte or white blood cell or white corpuscle Selective Anti-Inflammatory Drugs Anti-inflammatory drugs A class of drugs that lower inflammation and that includes NSAIDs and corticosteroids. Mentioned in: Antirheumatic Drugs ). The GlycoDesign acquisition presents us with additional clinical development and partnering opportunities and strengthened our balance sheet with the addition of $10.5 million in cash and short term investments after acquisition costs. GH9001 The 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. therapies take us into a new area where there exists considerable unmet un·met adj. Not satisfied or fulfilled: unmet demands. medical need. GH9001 is a novel proprietary formulation formulation /for·mu·la·tion/ (for?mu-la´shun) the act or product of formulating. American Law Institute Formulation of medium molecular weight heparin heparin (hĕp`ərĭn), anticoagulant produced by cells in many animals. A polysaccharide, heparin is found in the human body and occurs in greatest concentration in the tissues surrounding the capillaries of the lungs and the liver. and low molecular weight dermatan sulfate der·ma·tan sulfate n. A mucopolysaccharide that is a structural component of certain body tissues, especially the skin. dermatan sulfate a component of the acellular ground substance of skin. , which is being developed for the treatment and prevention of arterial arterial /ar·te·ri·al/ (-al) pertaining to an artery or to the arteries. ar·te·ri·al adj. 1. Of or relating to one or more arteries or to the entire system of arteries. 2. thrombosis. It is hoped that this product can overcome many of the current deficiencies of anti-coagulation therapy and provide better treatment options. Phase I is currently in progress with Phase II expected to start some time into 2004. ATH ATH is a unique combination of anti-thrombin (AT) and heparin (H) that contains pentasaccharide sub-units. The unique way in which the components are combined results in a product in which the anti-thrombin is permanently activated activated a state of being more than usually active. In biological systems this is usually brought about by chemical or electrical means. Commonly said of pharmaceutical and chemical products. ; thus the product is able to act very rapidly to both prevent blood coagulation Noun 1. blood coagulation - a process in which liquid blood is changed into a semisolid mass (a blood clot) blood clotting clotting, coagulation, curdling - the process of forming semisolid lumps in a liquid and inhibit inhibit /in·hib·it/ (in-hib´it) to retard, arrest, or restrain. in·hib·it v. 1. To hold back; restrain. 2. the growth of thrombii (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. ). This is a necessary requirement for medical devices such as heart valves Heart valves Valves that regulate blood flow into and out of the heart chambers. Mentioned in: Heart Failure , vascular vascular /vas·cu·lar/ (vas´ku-ler) 1. pertaining to vessels, particularly blood vessels. 2. indicative of a copious blood supply. vas·cu·lar adj. grafts and venous venous /ve·nous/ (ve´nus) pertaining to the veins. ve·nous adj. Of, relating to, or contained in the veins. venous pertaining to the veins. and arterial catheters, which come into contact with blood, but where it is essential that thrombosis, which might otherwise be stimulated by the presence of such devices, be prevented. We plan to develop ATHc as a coating for such devices and subsequent to the end of the quarter we announced that we had entered into an agreement with Spire Corporation in which they will seek to develop certain coated catheters using our technology. ATHt is the therapeutic form of ATH and is being reviewed as a potential therapeutic agent for the minimization and prevention of post-surgical thrombotic thrombotic /throm·bot·ic/ (-bot´ik) pertaining to or affected with thrombosis. throm·bot·ic adj. Relating to, caused by, or characterized by thrombosis. events. Phase II asthma study IPL512,602 began a Phase II study in May in patients with mild to moderate asthma. Approximately 160 patients will be enrolled in around 25 centers across 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. . The study is being conducted by our partner Aventis who are supplying all resources and paying for all costs associated with the execution and completion of this study. The study is expected to take between 12 to 15 months to complete. Given a successful outcome of this study Aventis may pay us a milestone of US$10 million and take over the remaining development and subsequent commercialization of the product. If so, Inflazyme may receive a further US$35 million in milestone payments and double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. royalties on sales. IPL12 Our research teams continued to make progress with our other LSAIDs(TM), in particular with molecules in our new IPL12 series. Under our expanded agreement with Aventis, signed in November November: see month. 2002, we will work to deliver them a molecule from this series which will become a second product under our respiratory products agreement. We expect to be able to deliver a molecule to Aventis shortly for their further evaluation and acceptance into the program. Financial Results For The Quarter Ended June 30, 2003 At June 30, 2003, we had cash and short term investments of $28.6 million which we believe is sufficient cash to operate the Company beyond fiscal 2005 based on current plans. For the quarter ended June 30, 2003 our loss was $3.6 million ($0.06 per share) compared to $4.8 million ($0.08 per share) for the corresponding quarter of the prior year, a decrease of $1.2 million. The decrease is attributable to lower contract clinical development expenses partially offset by higher general and administration expenses. Under our collaboration Working together on a project. See collaborative software. with Aventis, clinical development expenses related to the Phase II asthma are paid for by Aventis, an important reason for the reduction in contract clinical development expenses for the quarter. On September September: see month. 9th , 2003, at the Meridien King Edward King Edward has been the name of several monarchs in English history:
phase II . The program will also include presentations on thrombosis by Professors Hirsh and Weitz, from the Henderson Research Center. Further details on this meeting may be found on our website at www.inflazyme.com. Further, our Annual General Meeting will be held at the Hotel Vancouver, Vancouver, on Friday September 12th . We do hope that you will be able to attend one or the other of the meetings. Thank you for your continued interest and support of Inflazyme. Yours sincerely, Ian McBeath, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Inflazyme is a Richmond, B.C., Canada based biopharmaceutical company dedicated to the discovery and development of new drug therapies for the treatment of inflammation and related diseases. For more information please visit http://www.inflazyme.com Conference Call Inflazyme will host a conference call to discuss this announcement on Tuesday, September 2, 2003 at 1:30 p.m. Pacific time. Audio replay of the conference call will be available two hours following the completion of the call by dialing 416 252 1143 or toll free 1 866 518 1010 until December 2nd , 2003. 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)
June 30 March 31
2003 2003
------------------------------
Assets
Current assets
Cash and cash equivalents $ 28,597,450 $ 14,321,664
Short-term investments - 5,000,000
Interest receivable 50,279 141,380
Other receivables 242,671 47,267
Prepaid expenses 520,712 179,150
Tax credits recoverable 835,323 -
------------------------------
30,246,435 19,689,461
Assets held for sale 341,018 -
Deferred acquisition costs - 578,977
Property and equipment 4,037,494 2,556,839
Other assets 1,559,774 1,510,736
Acquired intangible assets 5,739,777 -
------------------------------
$ 41,924,498 $ 24,336,013
------------------------------
------------------------------
Liabilities
Current liabilities
Accounts payable and accrued
liabilities $ 5,216,703 $ 1,477,492
Current portion of lease
liability 320,514 -
Current portion of long-term
debt 886,144 322,055
------------------------------
6,423,361 1,799,547
Lease liability 1,096,950 -
Long-term debt 625,431 168,342
Deferred licensing revenue 373,669 383,250
------------------------------
8,519,411 2,351,139
------------------------------
Shareholders' equity
Capital stock
Issued
Series 1, Class A preference
shares 21,957,676 21,957,676
Common shares 83,704,487 68,848,664
------------------------------
105,662,163 90,806,340
Contributed surplus 140,086 -
Deficit (72,397,162) (68,821,466)
------------------------------
33,405,087 21,984,874
------------------------------
$ 41,924,498 $ 24,336,013
------------------------------
------------------------------
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, 2003 June 30, 2002
-------------------------------
Revenue
Interest $ 148,119 $ 259,757
Licensing revenue 9,581 -
-------------------------------
157,700 259,757
-------------------------------
Expenses
Research and development 2,035,780 3,847,032
General and administration 1,337,732 958,324
Amortization 359,884 246,181
-------------------------------
3,733,396 5,051,537
-------------------------------
Loss for the period (3,575,696) (4,791,780)
Deficit, beginning of period (68,821,466) (54,102,898)
-------------------------------
Deficit, end of period $(72,397,162) $(58,894,678)
-------------------------------
-------------------------------
Basic and diluted loss per
common share (0.06) (0.08)
-------------------------------
-------------------------------
Weighted-average number of
common shares outstanding 63,582,489 57,550,080
-------------------------------
-------------------------------
Inflazyme Pharmaceuticals Ltd.
Consolidated Statements of Cash Flows
(Unaudited)
For the Three Months Ended
-------------------------------
June 30, 2003 June 30, 2002
-------------------------------
Cash flows from operating
activities
Loss for the period $ (3,575,696) $ (4,791,780)
Items not involving cash:
Amortization 359,884 246,181
Licensing revenue (9,581) -
-------------------------------
(3,225,393) (4,545,599)
Changes in non-cash working
capital 1,645,169 (764,702)
-------------------------------
(1,580,224) (5,310,301)
-------------------------------
Cash flows from financing
activities
Repayment of long-term debt (115,391) (66,908)
Common shares issued for cash 18,240 -
Cost of common share issuances (87,071) -
-------------------------------
(184,222) (66,908)
-------------------------------
Cash flows from investing activities
Short-term investments 5,000,000 1,000,000
Disposal of assets held for sale 23,880 -
Cash from the acquisition of
GlycoDesign Inc. (note 3) 12,852,187 -
Acquisition costs (1,741,475) -
Other assets (76,583) (60,043)
Purchase of property and
equipment (17,777) (69,646)
-------------------------------
16,040,232 870,311
-------------------------------
Increase (decrease) in cash
and cash equivalents 14,275,786 (4,506,898)
Cash and cash equivalents,
beginning of period 14,321,664 4,926,266
-------------------------------
Cash and cash equivalents, end
of period $ 28,597,450 $ 419,368
-------------------------------
-------------------------------
Supplemental disclosure of
cash flow information
Interest paid 21,206 24,490
Issuance of common shares and
granting of stock options
on the acquisition of
GlycoDesign Inc. net assets 15,064,740 -
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