Ambrilia Biopharma Inc.

Ambrilia Biopharma Inc.

March 27, 2007 17:36 ET

Ambrilia Announces Fiscal 2006 Results

- Merck deal validates Ambrilia's HIV/AIDS franchise - Cellpep acquisition strengthens Ambrilia's late stage pipeline

MONTREAL, QUEBEC--(CCNMatthews - March 27, 2007) - Ambrilia Biopharma Inc. (TSX:AMB), a biopharmaceutical company developing innovative therapeutics in the fields of cancer and infectious diseases, announced today its fiscal 2006 results and provided an update on its development programs.

"2006 proved to be a productive and successful year for Ambrilia. Without a doubt, the highlight was the licensing agreement signed with a subsidiary of Merck & Co., Inc., for the HIV Protease Inhibitor Program, including Ambrilia's lead compound PPL-100," said Hans J. Mader, President and Chief Executive Officer of Ambrilia Biopharma Inc. "Moving into 2007, we also made important strides recently in our Octreotide program with the start of our clinical studies in Europe and the filing of an IND in the U.S.," he continued. "We also look forward to having clinical safety data available in the first half of this year for PCK3145, Ambrilia's anti-cancer therapeutic peptide for advanced prostate cancer. This data will be important in determining the future of this program and in guiding our discussions with potential development partners."

"We also plan to initiate a phase 1/2 single dose study in hormone-sensitive prostate cancer patients with Ambrilia's new formulation of Goserelin. On the business development side, we aim to conclude a partnership agreement for the commercialization of Ambrilia's novel biomarker assay for the diagnostic/prognostic of prostate cancer, PSP94," he concluded.



On March 1, 2006, the Company acquired 87.117% of the outstanding shares of Cellpep S.A., a French private biotechnology company developing therapeutics in oncology and infectious diseases, in exchange for 10,162,762 common shares of Ambrilia with a fair value of $32,520,883. The acquisition was accompanied by an $18.1 million concurrent private placement of units of Ambrilia priced at $2.30 per unit. Each unit comprised one common share and one warrant to subscribe for one additional common share at a price of $3.50 at any time within five years from the issue date of the unit.

Ambrilia's forward-looking statements

This press release contains forward-looking statements that reflect the Company's current expectation regarding future events. These forward-looking statements involve risks and uncertainties. Actual events could differ materially from those projected herein and depend on a number of factors including, but not limited to, changing market conditions, successful and timely completion of clinical studies, uncertainties related to the regulatory approval process, establishment of corporate alliances and other risks detailed from time to time in the Company's filings. We refer you to the Risk Factors section of the Company's Management's Discussion & Analysis of Financial Condition and Results of Operations which contain a more exhaustive analysis of the risks and uncertainties that are generally connected to the business of the Company. Such statements are also based on various assumptions, including the successful and timely completion of clinical studies on Ambrilia's products demonstrating efficacy and safety for human use, their successful commercialization within the forecasted timelines and the attainment of the forecasted milestone payments and other revenues. While Ambrilia anticipates that subsequent events and developments may cause Ambrilia's views to change, Ambrilia specifically disclaims any obligation to update these forward looking statements.

As of today, the Company has increased its ownership in Ambrilia Biopharma France S.A. (formerly Cellpep S.A.) to 94.29% .

PPL-100: Licensed-out to Merck & Co., Inc.

- Oct. 06: Ambrilia granted to Merck & Co. exclusive worldwide rights to its HIV Protease Inhibitor (PI) Program, including lead compound PPL-100, in return for a $US 17 million upfront, potential milestones of up to $US 212 million, and royalties.

- Dec. 06: Merck pursues formulation and other developments of PPL-100 following Ambrilia's Phase 1 repeat dosing study with the compound. Good safety profile and pharmacokinetic data of the study support the potential for a once or twice a day treatment, without ritonavir boosting, for a significant proportion of HIV/AIDS patients.

Octreotide: Start of clinical studies in Europe and disclosure of U.S. and European licensees

- Oct. 06: Positive pivotal human pharmacokinetic study results for Ambrilia's improved formulation of Octreotide to treat acromegaly. Data support a more convenient dosing, better stability of the reconstituted product and ease of use as compared to the original product.

- Nov. 06: Disclosure of licensing partnership with TEVA Europe, for marketing of Octreotide in France, Germany, Benelux, Spain and Scandinavia.

- Dec. 06: Further European licensing partnerships for Octreotide disclosed: Archimedes Pharma for the U.K., Gerolymatos for Greece, Turkey and certain other countries, Kwidza Pharma for Austria and Pharmis for Portugal and Brazil.

- Feb. 07: Start of European clinical studies in acromegaly patients.

- Mar. 07: Ambrilia and its U.S. licensee, Mallinckrodt, a division of Tyco Healthcare, announce filing of investigational new drug application ("IND") with the U.S. FDA to conduct a Phase 3 clinical trial in the U.S. with the improved formulation of Octreotide.

PCK3145: Intellectual property rights secured in the U.S.

- May 06: U.S. patent granted to Ambrilia for PCK3145, its anti-cancer therapeutic peptide for advanced prostate cancer, covering the signal transduction inhibitor and 63 other related sequences.

PSP94: Prognostic value in prostate cancer confirmed

- Nov. 06: Published Virginia Urology study shows that Ambrilia's PSP94, a novel biomarker assay, has prognostic value in patients with risk of prostate cancer recurrence. A previous published study had shown also its diagnostic value in patients with prostate cancer.


- Oct. 06: Ambrilia consolidates all of its common shares and convertible securities in a one-for-ten ratio, reducing the number of outstanding shares to approximately 29 million at the time of the consolidation. All applicable numbers of shares and other securities in this press release, as well as per-share data, have been adjusted to reflect this change on a retrospective basis.

- 2006-07: In January 2007, Ambrilia announces the departure of Dr. Max Link, former Chairman of the Board, and of Dr. Bernard Coupal, former member of the Board. Stephen G. Sudovar, CEO of SGS Associates, a highly accomplished pharmaceutical executive (appointed to Ambrilia's Board in May 2006), is elected Chairman of the Board. Appointments to the Board for 2006-07 include Luc Tanguay, Senior Executive Vice- President and CFO of Theratechnologies Inc., and Frederic Porte, President of Medipress Management Inc.


Year ended December 31, 2006 compared with the year ended December 31, 2005

The net loss for the year ended December 31, 2006 amounted to $2,339,465 or $0.09 per common share, compared with a net loss of $12,910,034 or $1.44 per common share for the year ended December 31, 2005. The reduction in the net loss was primarily due to the license revenue of $19,154,706 earned in 2006, which included the upfront licensing fee of US$17 million on the grant to Merck & Co. of exclusive worldwide rights to the Company's Protease Inhibitor Program, including PPL-100, its lead compound against HIV/AIDS.

Revenues for 2006 amounted to $19,765,122, compared with $274,346 in 2005. The higher level of revenues in 2006 resulted primarily from the above mentioned license revenue, together with an increase in interest income earned in 2006 as a result of higher average levels of cash and increased interest rates compared to 2005. Until 2006, revenues were earned primarily from interest on available cash and short-term investments. We expect to continue to receive interest revenues during the next several years, as well as licensing revenues to be earned as our products advance through clinical development and the revenues expected from Octreotide and Goserelin following their launch. Due to the delay in the development of Octreotide, we received only part of the expected revenues from milestones during 2006.

Research and development expenses for 2006 amounted to $10,938,984, compared with $8,331,698 in 2005. The increase of $2,607,286 or 31% over 2005 reflected the higher level of spending in the year, primarily due to spending of $3.7 million for Octreotide and Goserelin in the 10 months following the acquisition of Ambrilia France and increased spending on TVT-Dox and PPL-100, which was partially offset by reduced spending on PCK3145 of $1.2 million and government assistance of $0.9 million under the National Research Council Canada's Industrial Research Assistance Program ("IRAP"). Research and development tax credits were $1,474,793 in 2006, compared with $880,000 in 2005. The increase reflected the impact of the higher research and development expenses and included $0.4 million of tax credits earned in France and receivable in 2010.

Our research and development expenses consist primarily of salaries and related personnel costs, fees paid to external service providers, laboratory supplies and costs for leasing of facilities and equipment. In 2006, fees paid to external service providers were primarily related to pre-clinical costs for PPL-100 and material for clinical studies for Octreotide.

General and administrative expenses for 2006 were $7,071,448, an increase of $3,613,552 over the total of $3,457,896 incurred in 2005. The increase resulted primarily from the expenses added as a result of the operations in France ($1.2 million), together with higher professional fees of $1.4 million, following the acquisition, increased occupancy costs of $0.3 million incurred to accommodate the expanded business activities and related increases in compensation, travel and investor relations expenses. The 2006 professional fees included $1.0 million of expenses of a non-recurring nature, relating primarily to the outlicensing of the Company's Protease Inhibitor Program and to the development and implementation of tax planning strategies following the Ambrilia France acquisition.

Amortization expense amounted to $7,199,692 in 2006, compared with $986,086 in 2005. The increase reflected primarily the added amortization on the intellectual property resulting from the acquisition of Ambrilia France on March 1, 2006.

Interest expense on long-term debt for 2006 amounted to $1,160,198, compared with $840,804 in 2005. The increase resulted from the additional interest on the Biolevier loan, on which the interest was capitalized until November 2006, and on the full-year impact of the interest on the $3,500,000, 7% convertible debentures, issued on June 29, 2005.

As a consequence of the intellectual property arising on the acquisition of Ambrilia France, a future income tax liability of $8,990,856 was recorded during the year as part of the acquisition equation for accounting purposes. This amount is being drawn down over a term of up to the 7-year period during which the intellectual property is being amortized. This resulted in a future income tax recovery on the consolidated statement of operations of $2,000,276 for the year ended December 31, 2006. This recovery was further increased by a foreign exchange gain of $1,492,157 relating to the future income tax liability.


Cash and cash equivalents and short-term investments at December 31, 2006 totaled $22,359,604, compared with $5,360,158 at December 31, 2005, an increase of $16,999,446 in 2006. Cash flow of $4,882,511 was generated by operating activities in 2006, reflecting the revenue from the upfront licensing fee for the Company's HIV/AIDS programs. This cash flow included a decrease of $1,764,929 in non-cash working capital.

As a result of the $18,095,904 common shares and warrants financing that closed on March 1, 2006 concurrent with the Ambrilia France acquisition, financing activities generated cash flow of $14,861,494, after cash expenses of $1,234,410 associated with the financing and a $2,000,000 repayment of the Biolevier loan.

On March 1, 2007, the Company repaid in full the 12% loan of $768,841 which was outstanding as of December 31, 2006. This loan originated as part of the Ambrilia France acquisition.

Investing activities utilized $2,744,560 of cash, excluding amounts relating to short-term investments. Cash acquisition expenses for the Ambrilia France transaction amounted to $1,979,031, while cash of $174,625 was obtained with the acquisition. An amount of $299,336 was utilized for the purchase of intellectual property and $640,817 for net additions to property, plant and equipment.

The semi-annual interest expense on the $3,500,000, 7% convertible debentures, issued in June 2005 is payable either in cash or common shares, at the option of the Company. To-date, the Company has elected to pay the interest in shares.

Interest on the Biolevier loan balance of $8,927,466 is at prime rate plus 3% and subsequent to November 19, 2006, is payable in cash. Prior to this date, the interest on the loan was capitalized, including $804,497 in 2006.

Effective November 16, 2006, all of the Company's outstanding Series 1 Preferred Shares were converted into 968,523 common shares at a market conversion rate of $4.13 per common share.

During 2006, general and administrative and net research and development expenses amounted to $16.5 million, for an average of $1.4 million per month. Management believes that it will have sufficient funds available to support its ongoing activities for at least the next 15 months.

Ambrilia Biopharma Inc.

As at December 31
2006 2005
$ $
Current assets
Cash and cash equivalents 3,155,854 417,953
Short-term investments 19,203,750 4,942,205
Accounts receivable 847,688 1,707,890
Investment tax credits recoverable 1,902,212 2,202,487
Prepaid expenses 116,154 668,428
25,225,658 9,938,963
Long-term receivables 1,095,130 -
Property, plant and equipment 1,782,558 600,653
Intellectual property 53,379,022 8,165,089
Deferred financing costs 979,534 993,563
82,461,902 19,698,268

Current liabilities
Accounts payable and accrued liabilities 5,762,426 1,798,126
Deferred license revenues 3,377,976 -
Loan payable 768,841 -
9,909,243 1,798,126
Minority interest 1 -
Biolevier loan facility 8,927,466 10,122,969
Future income tax liability 6,295,095 -
Convertible debentures 2,408,559 2,157,022
Preferred shares - 4,000,000
27,540,364 18,078,117

Shareholders' equity
Share capital 114,401,167 65,004,736
Warrants 6,143,141 2,952,462
Contributed surplus 7,920,211 4,866,469
Equity component of convertible debentures 1,920,914 1,920,914
Deficit (75,463,895) (73,124,430)
54,921,538 1,620,151
82,461,902 19,698,268

Ambrilia Biopharma Inc.

Years ended December 31
2006 2005
$ $
License revenue 19,154,706 -
Interest and other income 610,416 274,346
19,765,122 274,346

Research and development 10,938,984 8,331,698
Research and development tax credits (1,474,793) (880,000)
Net research and development 9,464,191 7,451,698
General and administrative 7,071,448 3,457,896
Amortization of property, plant and
equipment 402,354 248,553
Amortization of intellectual property 6,642,316 614,884
Amortization of deferred financing fees 155,022 122,649
Accretion on convertible debentures 251,537 115,522
Interest on long-term debt 1,160,198 840,804
Financial charges 120,399 13,679
Loss on disposal of property, plant and
equipment 786 7,032
Restructuring charges 251,120 172,279
Write-down of carrying value of
intellectual property - 179,698
Foreign exchange losses (gains) 77,649 (40,314)
25,597,020 13,004,682
Loss before income taxes (5,831,898) (12,910,034)

Future income tax recovery 2,000,276 -
Foreign exchange gain on future
income tax liability 1,492,157 -
3,492,433 -
Net loss for the year (2,339,465) (12,910,034)
Deficit, beginning of year (73,124,430) (60,214,396)
Deficit, end of year (75,463,895) (73,124,430)

Basic and diluted loss per share (0.09) (1.44)
Weighted average number of common shares
outstanding 24,864,231 8,966,746

Ambrilia Biopharma Inc.

Years ended December 31
2006 2005
$ $
Net loss for the year (2,339,465) (12,910,034)
Items not affecting cash
Amortization of property, plant
and equipment 402,354 248,553
Amortization of intellectual property 6,642,316 614,884
Amortization of deferred financing fees 155,022 122,649
Write-down of carrying value of
intellectual property - 179,698
Loss on disposal of property, plant
and equipment 786 7,032
Accretion on convertible debentures 251,537 115,522
Future income tax recovery and related
exchange gain (3,492,433) -
Loan interest capitalized 804,497 716,458
Interest paid by issue of common shares 245,000 122,836
Unrealized foreign exchange loss 92,699 -
Services paid by issuance of stock options 355,269 462,978
3,117,582 (10,319,424)
Net change in non-cash balances relating
to operations 1,764,929 (2,720,771)
Cash flows related to operating activities 4,882,511 (13,040,195)
Acquisition of intellectual property (299,336) (259,423)
Acquisition of property, plant and
equipment (641,612) (16,651)
Proceeds from disposal of property, plant
and equipment 795 10,882
Cash and cash equivalents obtained on
acquisition of business 174,625 253,311
Business acquisition costs (1,979,031) (179,131)
Maturities of short-term investments 8,878,165 20,361,312
Purchase of short-term investments (23,139,710) (9,902,475)
Cash flows related to investing activities (17,006,104) 10,267,825
Issuance of convertible debenture - 3,500,000
Issue of common shares 18,095,904 -
Share issue costs (1,234,410) -
Repayment of Biolevier loan (2,000,000) (10,882)
Repayment of long-term debt assumed
in an acquisition - (275,000)
Debt issuance costs - (343,177)
Cash flows related to financing activities 14,861,494 2,870,941
Net increase in cash and cash equivalents 2,737,901 98,571
Cash and cash equivalents, beginning
of year 417,953 19,382
Cash and cash equivalents, end of year 3,155,854 417,953


Ambrilia will be hosting a conference call and webcast on Wednesday, March 28(th), at 9:00 AM ET, to discuss fiscal year 2006 results. Interested parties may access the conference call by way of telephone or webcast. The numbers to access the conference call are 1(800)732-9303 (toll free) or (416) 644-3420 (local). The webcast will be available at, Investors section, Conference calls and webcasts. A replay of the call will be available at, Investors section, Conference calls and webcasts, and the numbers to access the replay are (416) 640-1917 (local) and 1(877) 289-8525 (toll free) with access code 21224730.


Ambrilia Biopharma Inc. (TSX:AMB) is a biopharmaceutical company developing novel small molecules and peptides to treat infectious diseases and cancer. Ambrilia's product portfolio includes promising anti-HIV treatments (PPL-100 and a HIV Integrase Inhibitor Program), two new formulations of existing drugs developed with a patented technology (Octreotide and Goserelin), an anti-cancer therapeutic peptide (PCK3145), a Tumor Vasculature Targeting (TVT) technology platform, as well as other anti-virals and immunomodulators. Exclusive worldwide rights to PPL-100 and its related compounds have been granted to Merck & Co., Inc. in return for a $US 17 million upfront payment, potential milestones that could reach $US 212 million, and royalties. Ambrilia's head office, research and development and manufacturing facilities are located in Montreal with a regional office in France. For more information, please visit the Company's web site:

Contact Information