Afexa Life Sciences Inc.
TSX : FXA

Afexa Life Sciences Inc.

June 24, 2010 08:00 ET

Afexa Announces Results for Six Month Fiscal Year Ended March 31, 2010

- Strong six month results

- New March 31 year-end produces transitional six-month fiscal 2010

EDMONTON, ALBERTA--(Marketwire - June 24, 2010) - Afexa Life Sciences Inc. (TSX:FXA) today announced that for the six months ended March 31, 2010, revenue was $34.4 million, a 33.0% increase from revenue of $25.8 million in the same period in the prior year. Net earnings in the six months ended March 31, 2010 were $2.8 million ($0.03 per share), up from a net loss of $361,000 ($0.00 per share) in the six months ended March 31, 2009.

In the three months ended March 31, 2010 revenue was $4.8 million, a decrease from revenue of $6.1 million in the same period of 2009. Net loss was $4.0 million ($0.04 per share) in the three months ended March 31, 2010 compared to a net loss of $3.2 million ($0.03 per share) in the three months ended March 31, 2009, as marketing and research and development costs rose, while revenue declined.

"Early in 2010, Afexa changed its financial year-end from September 30 to March 31. This synchronized our financial reporting and business planning with our customers' business cycles and eased some administrative burden associated with our previous year-end. The change created a six-month transitional reporting fiscal year end for Afexa for the period ending March 31, 2010. The Company's next fiscal year end will return to a twelve month period ending March 31, 2011," said Chairman and Chief Executive Officer Jack Moffatt.

"In the Company's first quarter of fiscal 2010, which ended December 31, 2009, Afexa's outstanding financial results included the highest revenue for any quarter in the Company's history due to a high demand for our product. This higher demand corresponded with heightened public awareness and concern about flu. During the three months ended March 31, 2010, Afexa's revenue slowed. Concern regarding the pandemic flu strain abated and retailers were already well stocked with our products due to orders they had made during the previous quarter as a result of the unprecedented demand in that period. They therefore did not need to replenish supplies in the most recently completed quarter. In addition the regular winter flu season was unusually mild, contributing to lower revenue in the quarter ended March 31," Mr. Moffatt said. "We continue to be optimistic that Afexa's results for the 12 months ending September 30, 2010 will compare favorably with those for the immediately preceding 12-month period."

Although the incidences of colds and flu persist throughout the year, they are typically lowest in April to August of each year and the sales of COLD-FX correspondingly decrease. As a result, April to June is historically the lowest revenue quarter for the Company and management believes this trend will continue for the first quarter of our new fiscal year. 

During the six months ended March 31, 2010, Afexa's gross margin rose to 68.4% from 66.6% in the same six months a year earlier, due mainly to the averaging down of fixed overhead costs as a percentage of revenue.

The Company's cash position at March 31, 2010 was strong at $17.7 million, up from $16.2 million at December 31, 2009 and $3.5 million at September 30, 2009. Working capital was $17.5 million at March 31, 2010 compared to $21.9 million at December 31, 2009 and $15.1 million at September 30, 2009.

COLD-FX remained Canada's best selling cold and flu remedy for the 52- and 12-week periods ended March 13, 2010, according to The Nielsen Company. In addition, COLD-FX continues to be the number one pharmacist and doctor recommended natural cold remedy in Canada, according to 2009/2010 surveys on over-the-counter counseling and recommendations reported by Drugstore Canada/L'actualite pharmaceutique and The Medical Post, respectively.

Afexa's daily immune booster, IMMUNITY-FX™, was launched in the fourth quarter of fiscal 2009 and is now on the shelves of major grocery stores and leading pharmacies across Canada. Consistent with the Company's revenue recognition policy for new products, IMMUNITY-FX revenue is only recorded when consumers make purchases from retailers. This approach will be maintained until the brand is firmly established. A number of public relations, social media and marketing events are being planned during fiscal 2011 to broaden consumer awareness. Programs to educate pharmacists and doctors on the benefits of this product are underway. In the coming months Afexa anticipates receiving a Natural Product Number (NPN) for IMMUNITY-FX from Health Canada but the Department has a large backlog of applications. Any holdup in receiving an NPN will delay the timing of Afexa's plans for market penetration of the IMMUNITY-FX brand. Afexa has NPN certification for COLD-FX. 

The Company is currently in the process of finalizing contractual terms to license a new product which it expects to launch within 12 months of receiving an NPN. The product is aligned with Afexa's vision of delivering the most trusted health brand on the planet and its mission of pioneering evidence-based natural medicines that empower people to achieve their health potential.

Afexa's normal course issuer bid ("NCIB") with the Toronto Stock Exchange permits the Company to purchase, over a one-year period, up to 5% (5,245,645) of the common shares issued and outstanding when the NCIB came into effect on October 16, 2009. Afexa has repurchased and cancelled 408,248 common shares at a weighted average trading price of $0.68 per share. Afexa's management believes the current market price of the Company's shares does not reflect their underlying value.

A complete set of Afexa's most recent Financial Statements and Management's Discussion and Analysis will be filed on SEDAR (www.sedar.com) and posted on the Company's web site.

ABOUT AFEXA LIFE SCIENCES INC.
Afexa Life Sciences Inc., founded in 1992, strives to deliver the most trusted health brand on the planet through pioneering evidence-based natural medicines that empower people to achieve their health potential. The Company's patented ChemBioPrint® discovery and standardization technology enables the development of effective and safe medicines from complex natural sources, while ensuring reliable health benefits and batch-to-batch consistency. COLD-FX®, a ChemBioPrint product, is the Company's flagship product and Canada's leading over-the-counter (OTC) cold and flu remedy. It is officially indicated in Canada to help reduce the frequency, severity and duration of cold and flu symptoms by boosting the immune system. COLD-FX products have product licenses (NPN) and are supported by scientific evidence, including randomized, double-blind, placebo-controlled clinical trials.

This news release contains certain forward-looking information and statements within the meaning of applicable securities laws. The forward-looking information and statements included in this news release are not guarantees of future performance and should not be unduly relied upon. Such information and statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information or statements including, without limitation: those comments predicting the favorable results for the 12 months ending September 30, 2010, the periods in which the incidences of colds and flu decline and the associated impact on the Company's results, the timing of public relations, social media and marketing events and expenditures, the timing of when retail customers begin stocking cold and flu products, the timing of receiving a NPN for IMMUNITY-FX, and when the contractual terms of a license agreement will be finalized. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "would", "project", "could", "should", "contemplate", "potential", "depend", "forecast", "believe", "plans", "targets", "intends" and similar expressions are intended to identify forward-looking statements. In addition to the risks outlined in the Risks and Uncertainties section of the associated MD&A which will be filed on SEDAR today, further forward-looking information and statements may pertain to the following: the impact of competition; consumer confidence and spending levels; general economic conditions; interest and currency exchange rates; unseasonable weather patterns; the incidence of illnesses in the general population; the cost and availability of capital; the cost and availability of grants/funding; product development; lawsuit final settlement expectations within insurance limits; reliance on third parties; dependence on a small number of major customers; hiring expectations and related anticipated capital expenditures; adequate cash position to mitigate potential tightening of credit terms; success and adequacy of the IFRS conversion plan and the impact of the implementation on future financial statements; the risk that actual results may differ from management's assumptions, estimates and interpretation of policies; marketing efforts anticipated to parallel increases in cold and flu activity may not necessarily be accounted for in the quarters for which revenue is derived; and delays in receipt of an NPN for IMMUNITY-FX may potentially have a negative impact on the business and future development plans. The Company believes that the expectations and assumptions reflected in the forward-looking information and statements contained herein are reasonable but no assurance can be given that these expectations and assumptions are correct and that the results, performance or achievements expressed in, or implied by, forward-looking statements within this disclosure will occur, or if they do, that any benefits may be derived from them. All forward-looking statements are expressly qualified in their entirety by this cautionary statement. The Company claims exemption under U.S. SEC Rule 12g3-2(b).

Contact Information

  • Afexa Life Sciences Inc. - Financial Contact
    Allan Cleiren
    Chief Financial Officer and Senior VP Operations
    1-780-432-0022
    acleiren@afexa.com
    or
    Afexa Life Sciences Inc. - Investor Contact
    Jane Tulloch
    Senior Director, Investor Relations
    1-780-577-3724
    jtulloch@afexa.com
    www.afexa.com