Bioxel Pharma Inc.

Bioxel Pharma Inc.

May 25, 2006 13:45 ET

Annual General Meeting/Bioxel Pharma: Results for the First Quarter of 2006

SAINTE-FOY, QUEBEC--(CCNMatthews - May 25, 2006) -

Bioxel Confirms its Breakthrough in Europe and Exceeds its Financing Goal

At the Annual General Meeting of Shareholders of Bioxel Pharma Inc. (TSX VENTURE:BIP), a leading manufacturer of taxane active pharmaceutical ingredients and developer of targeted oncology drugs, the Corporation announced its results for the three-month period ended March 31, 2006.

"Bioxel's first quarter of 2006 was highlighted by the execution of a second paclitaxel manufacturing and supply agreement with a major European generic drug manufacturer. This marks the first time that Bioxel has secured the means to grow its business in Europe by teaming up with leading pharmaceutical partners. These new agreements attest to the competitiveness and quality of our products," indicated Pascal Delmas, President and Chief Executive Officer of the Corporation. "Concurrently, we have enhanced our ability to finance the Corporation's continued development by raising a total of $7.4 million. The proceeds will be used to support our marketing efforts in North America and Europe and to expand our product mix, primarily with docetaxel. These initiatives are focused on a single goal: to accelerate profitable revenue growth in order to achieve our earnings objective in 2007. We are solidly positioning Bioxel in the world taxanes market."


Execution of a Second Agreement with a Leading European Generic Drug Manufacturer and Delivery of First Lots of Paclitaxel

The February 2006 execution of a second paclitaxel manufacturing and supply agreement with a leading European generic drug manufacturer has confirmed Bioxel's breakthrough in Europe.

Pursuant to the terms of the agreement, Bioxel started to deliver its first lots of paclitaxel in the second quarter. This agreement should yield revenues of approximately $800,000 in 2006. The Corporation expects to double its paclitaxel sales for the full year compared with 2005. The foregoing sale forecasts are forward-looking information.

Overall Financing of $7.4 Million

In February 2006, Bioxel successfully completed a private placement of common shares for proceeds of $4.7 million. The subsequent exercise of warrants provided the Corporation with an additional $2.7 million in financing effective April 13, 2006; with a total of $7.4 million raised during the round. These proceeds will enable Bioxel to increase its market share through international expansion and to accelerate the industrial development of its taxanes manufactured through semi-synthesis, especially docetaxel.

Filing of an International Patent Application in PCT Member Countries

Bioxel has filed an international patent application for an innovative paclitaxel and docetaxel synthesis process covering PCT (Patent Cooperation Treaty) member countries. The intellectual property rights arising from these patents will enable Bioxel to leverage its raw material and manufacturing position to expand its product mix. The Corporation has now secured a highly favorable position to take advantage of the opening market opportunity for generic Taxotere®. Patent expiration begins in 2008 on the drug marketed by Sanofi-Aventis whose active ingredient is docetaxel.


The information below should be read in conjunction with the selected financial data included herein.

Operating Results

The Corporation recorded revenues of $812 during the three months ended March 31, 2006, compared with $496,000 in the equivalent period of 2005. Gross profit totaled $204, down from $102,000 a year earlier. The first-quarter spread is explained by two factors, the existence of paclitaxel inventories currently in use by Bioxel's North American customers and the expected ordering delays that followed the execution of supply agreements between the Corporation and its European customers as Bioxel's products are integrated into their regulatory filings. Under the supply agreements entered into by Bioxel, initial deliveries of paclitaxel in Europe began in the second quarter of 2006. Paclitaxel sales will accelerate in the second half of the year.

Research and development expenses totaled $152,000 for the three-month period ended March 31, 2006, up from $112,000 for the first quarter of 2005. This $40,000 increase can be attributed to development activities aimed at expanding Bioxel's taxane mix, more specifically the pilot scale-up of docetaxel manufacturing.

Selling expenses decreased from $100,000 on March 31, 2005 to $76,000 as of March 31, 2006. This $24,000 reduction is a result of changes in compensation structure. Administrative expenses went from $325,000 to $285,000, this $40,000 decline was due to lower payroll and public corporation expenses.

Financial expenses went from $194,000 as of March 31, 2005 to $175,000 during the same period in 2006. This $19,000 decline was due mainly to interest expenses associated with the convertible debentures.

Amortization expenses rose slightly to $241,000 as at March 31, 2006, up by $6,000 over $235,000 for the first quarter of 2005.

Overall, the Corporation incurred a net loss, of $1.0 million or $0.02 per share, for the three-month ended March 31, 2006; equivalent to the same period in 2005.

Cash Position and Sources of Financing

The Corporation had cash and a temporary investment of $4.6 million as of March 31, 2006, compared with $440,000 as at December 31, 2005. Working capital amounted to $6.2 million as of March 31, 2006, up from $1.6 million as of December 31, 2005. This increase in liquidity is due primarily to the closing of the $4.7 million financing and the gradual exercise of 3,235,271 warrants at a revised price of $0.34, for total proceeds of $1.1 million as of March 31, 2006.

Investing activities used cash flows of $182,000 for the purchase of property, plant and equipment associated with the taxane manufacturing process.

Finally, the 4,745,000 remaining warrants were exercised for total proceeds of $1.6 million effective April 13, 2006. All of the 7,980,271 warrants were exercised on expiry of the conversion period.


Management intends to continue building its position in the paclitaxel market in Europe and the United States by respectively targeting generic drug manufacturers and innovative pharmaceutical companies with late stage taxane drug products. This is the foundation of Bioxel's marketing strategy.

Bioxel will concurrently invest in the industrial scale-up of its semi-synthetic taxanes, particularly docetaxel. The Corporation is currently assessing various types of docetaxel marketing and distribution alliances to rapidly and efficiently launch this high-potential product once the Taxotere® market opens up to generic competition in 2008.

The Corporation will continue to diversify sourcing of its intermediate products in order to increase profit margins and make its manufacturing chain more robust and competitive.

Finally, Bioxel will continue to explore strategic partnership opportunities likely to increase market share and accelerate revenue growth.

Management is focused on achieving the following financial targets for 2006:

- revenues of approximately $4 million;

- gross profit of 20% to 25% as a percentage of revenues; and

- 30% reduction in the operating loss compared with 2005.

These financial targets are objectives of the Corporation, and not a projection of future results nor a representation that such results will be achieved. Several factors may impact the realization of such objectives, including the risk factors and uncertainties set forth under the heading "Risk factors and uncertainties" of the first quarter report for the period ended March 31, 2006

Bioxel Pharma Inc.
Selected Financial Data (Unaudited)

Three Months Ended March 31,
Earnings 2006 2005
$ $
Revenues 812 495,812
Cost of goods sold 608 393,707
Gross profit 204 102,105
Research and development expenses 151,509 111,820
Selling expenses 75,875 100,301
Administrative expenses 284,866 324,856
Financial expenses 175,187 194,123
Stock-based compensation 159,177 151,440
Exchange loss 1,115 29,394
Amortization 241,249 234,556
Interest income 17,249 12,442

Net loss 1,071,525 1,031,943

Net loss and diluted net loss per share 0.02 0.02

Weighted average number of shares
outstanding 64,831,134 54,142,764

As at As at
March 31, December 31,
Balance Sheets 2006 2005
(Unaudited) (Audited)
$ $

Cash 301,963 440,330
Temporary investment 4,300,000 -
Other current assets 3,965,114 3,584,997
Total current assets 8,567,077 4,025,327
Property, plant and equipment 4,509,903 4,538,391
Other long-term assets 900,822 1,023,462
Total assets 13,977,802 9,587,180

Current liabilities 2,343,993 2,388,332
Long-term debt 1,573,912 1,782,783
BioLevier note payable 2,596,253 2,544,355
Liability component of convertible
debentures 1,229,168 1,221,402
Shareholders' equity 6,234,476 1,650,308
Total liabilities and shareholders' equity 13,977,802 9,587,180


Bioxel Pharma Inc. is an emerging leader in biopharmaceuticals, focused on developing, manufacturing and marketing taxane pharmaceutical ingredients. Taxanes are used in drug products for the treatment of cancer and other diseases, including psoriasis, rheumatoid arthritis, Alzheimer's disease and cardiovascular disease. The Corporation sells cGMP paclitaxel and develops a portfolio of other generic taxane APIs and taxane-based proprietary products for improved cancer therapy.

This announcement includes forward-looking statements that involve a number of risks and uncertainties, the outcome of which could materially and/or adversely affect future results. These include risks and uncertainties that could affect Bioxel's products under development such as regulatory factors, technological developments and competitive factors. Achievement of the objectives set forth in this release is subject to these risks and uncertainties. The Corporation's results, or the measures it adopts, could differ materially from those indicated or underlying these statements, or could have an impact on the realization of financial projections.

The TSX Venture Exchange has not reviewed the contents of this press release and accepts no responsibility for the adequacy or the accuracy thereof.

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