Afexa Life Sciences Inc.

Afexa Life Sciences Inc.

May 14, 2009 20:13 ET

Afexa Life Sciences Announces Fiscal 2009 Second Quarter Results

- First half net loss of $361,000 ($0.00 per share) on sales of $25.8 million - Company remains on track for profitable year and strong fourth quarter - Widespread media coverage of the recent flu outbreak leads to increased consumer demand for COLD-FX®

EDMONTON, ALBERTA--(Marketwire - May 14, 2009) - Afexa Life Sciences Inc. (the "Company" or "Afexa") (TSX:FXA) today announced that revenue was $6.1 million in the three months ended March 31, 2009, down from $10.7 million in the second quarter of fiscal 2008. Due mainly to lower sales, the net loss increased to $3.2 million ($0.03 per share) in the fiscal 2009 second quarter from a net loss of $768,000 ($0.01 per share) in the same three months last year.

"Economic conditions permitting, we continue to believe that we are on track for another profitable year", said Executive Chairman Jack Moffatt. "A key reason for our positive outlook is a shift in the seasonality of shipments, which could produce even stronger sales in the fiscal 2009 fourth quarter than last year's outstanding result for the period, especially since customer inventories are exceptionally low.

"In addition, Afexa benefits from Health Canada's 2007 approval of daily use of COLD-FX® to help reduce the frequency, severity and duration of cold and flu symptoms by boosting the immune system. There is strong brand awareness and consumer acceptance of our product and, media reports on the recent flu outbreak have led to a pickup in consumer demand beyond our expectation for a normal fiscal third quarter, which is the period when colds and flu incidences are usually lowest," Mr. Moffat said. "Our inventory positions are sufficiently strong to cover any significant increases that may arise."

Over the longer term, Afexa expects to enhance its performance and achieve growth by introducing a number of additional products into the Canadian market, with a new product being prepared for launch late in fiscal 2009.

In the first half of fiscal 2009, sales declined to $25.8 million from $32.0 million in the six months ended March 31, 2008. The year to date net loss was $361,000 ($0.00 per share) in the first six months of fiscal 2009 compared to net earnings of $6.0 million ($0.06 per share) in the same period of fiscal 2008.

Afexa's sales to retailers were down in the first three and six months of fiscal 2009 although consumer purchases of COLD-FX® from retailers rose significantly in the first quarter and fell only modestly in the second quarter, as incidences of colds and flu declined. Afexa's revenue decreases occurred partly because shipments to its customers in the fiscal 2008 fourth quarter were exceptionally high on a historical basis. Since then, in order to conserve cash in uncertain economic times, retailers have adopted just-in-time purchasing to significantly reduce inventory from many of their suppliers, including Afexa. As well, a one-time change in product sizing for a major account adversely affected production and shipping time and significantly reduced revenue in the first quarter of the current fiscal year. However, despite broad economic upheaval in recent months, unit sales to end-customers of Regular and Extra Strength COLD-FX® rose 5% in the 24 weeks ended March 14, 2009 from the same period last year, according to data received from Nielsen. Moreover, the strong prospects for Afexa's business are reflected in COLD-FX® remaining the number one selling cold and flu remedy in Canada for the 52 and 12 week periods ended March 14, 2009(i).

The Company's combined cash, cash equivalents and short-term investments balance was strong at $9.4 million at March 31, 2009, unchanged from the fiscal 2008 year-end balance. Afexa's own inventory levels were stable in the second quarter and first half of fiscal 2009 and there were no significant accounts receivable issues.

"The search for a new CEO is progressing under the direction of a committee of independent Directors; meanwhile, we are benefiting from effective executive leadership in all key areas of the Company, as well as from the five-year strategic plan that we are implementing," Mr. Moffatt said.

In order to maximize the tremendous brand equity associated with COLD-FX®, in April 2009 the Company changed its name from CV Technologies Inc. to Afexa Life Sciences Inc. and the Toronto Stock Exchange ticker symbol for its common shares from CVQ to FXA.

In January 2009, Afexa announced a four-year Official Supplier partnership with the Vancouver Organizing Committee ("VANOC") involving sponsorship rights for the 2010 Olympic and Paralympic Winter Games. Afexa will invest in the Games and provide COLD-FX® to VANOC. COLD-FX® will be available at general stores in the Olympic and Paralympic Villages. Afexa will also serve as Official Supplier for the Canadian Olympic Teams at the 2010 Winter Games and the London 2012 Olympic Games. Afexa will further leverage its Olympic promotion efforts through the relationships the Company has with the seven Olympic sport centers across Canada, the sponsorship relationships it has with a number of Olympic athletes, and with Alpine Canada and the Canadian Ski Cross team.

Under a Normal Course Issuer Bid ("NCIB") that began on October 16, 2008 to purchase up to 5,386,175 (5%) of Afexa's then issued and outstanding common shares, the Company has bought and cancelled 2,420,230 common shares, all in the fiscal 2009 second quarter, at an average cost of $0.39 per share (including brokerage fees), for a total expenditure of $0.9 million. Additional purchases are expected to occur following the release of Afexa's fiscal 2009 second quarter results, with the NCIB scheduled to end on October 15, 2009.

Detailed Financial Statements and Management's Discussion and Analysis

A complete set of Financial Statements and Management's Discussion and Analysis will be filed on SEDAR ( ) and posted on the Company's web site tomorrow.


Afexa Life Sciences Inc., founded in 1992, strives to transform people's lives to be healthier and happier by focusing on prevention and recovery through the use of evidence-based naturally-derived health products. The Company's lead product COLD-FX® strengthens the immune system and is widely used as a leading over the counter remedy ("OTC") for helping to prevent and relieve cold and flu infections. On April 1, 2009, the Company changed its name from CV Technologies Inc. to Afexa Life Sciences Inc.

Advisory Regarding Forward-Looking Statements

This news release and the associated Management Discussion and Analysis ("MD&A") contain certain forward-looking statements and information within the meaning of applicable securities laws, which reflect current expectations of the management of Afexa Life Sciences Inc. (the "Company") regarding future events or the Company's future performance, including, without limitation, statements relating to the timing and/or initiation of clinical trials, clinical trial results, the introduction of new products, associated regulatory clearances, economic or financial trends or expectations, financing, acceptance of the Company's products in the marketplace and the hiring or retention of personnel. Forward-looking statements are often, but not always, identified by the use of words such as "expect", "anticipate", "seek", "aim", "continue", "estimate", "objective", "ongoing", "may", "will", "would", "project", "predict", "potential", "could", "should", "might", "believe", "plan", "target", "intend" and similar expressions. All statements other than statements of historical fact contained in this letter may be forward-looking statements. The forward-looking information included in this document does not guarantee future performance and should not be unduly relied upon. Such information involves 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, including, without limitation, the impact of competition, the incidence of cold and flu, consumer confidence and spending levels, general economic conditions, interest and currency exchange rates, unseasonable weather patterns, the cost and availability of capital and grants/funding, product development uncertainties and labour market challenges.
The Company believes that the expectations and assumptions reflected in the forward-looking information contained herein are reasonable but no assurance can be given that these expectations and assumptions are correct or that that the results, performance or achievements expressed in, or implied by, forward-looking statements herein will occur, or if they do, that any benefits may be derived from them. In particular, the Company can give no assurance that the recruitment process will lead to the hiring of a Chief Executive Officer in a timely fashion, that new product development initiatives will lead to new product commercialization, that the emergence of the H1N1 (swine) flu will increase consumer demand for COLD-FX®, or that the involvement of COLD-FX® in the 2010 Winter Olympics or other events will lead to increased demand for the product. The Company assumes no duty to update or revise forward looking information, except as may be required pursuant to applicable laws. All forward-looking information is expressly qualified in its entirety by this cautionary statement. Further information regarding risks and uncertainties relating to the Company and its securities can be found in the disclosure documents filed by the Company with the securities regulatory authorities, available at The Company claims exemption under U.S. SEC Rule 12g3-2(b).

(i) Source: Nielsen Brand Overview, National All Channels Total Cold Remedies (including Antihistamines), and Natural Supplements for 52 and 12 week periods ending March 14, 2009.

Contact Information