Ambrilia Biopharma Inc.
TSX : AMB

Ambrilia Biopharma Inc.

August 10, 2007 08:00 ET

Ambrilia Announces Second Quarter 2007 Results and Provides Update on Development Program

MONTREAL, QUEBEC--(Marketwire - Aug. 10, 2007) - Ambrilia Biopharma Inc. (TSX:AMB), a biopharmaceutical company developing novel small molecules and peptides to treat infectious diseases and cancer, announced today the second quarter 2007 financial results and provided an update on its development program.

SECOND QUARTER 2007 HIGHLIGHTS AND BEYOND

- Ambrilia presented preclinical data on its new series of HIV integrase inhibitors at the renowned XVI International HIV Drug Resistance Workshop (June 12-16).

- At the same venue, Ambrilia co-authored with Dr. Mark Wainberg from McGill University, Merck & Co.'s oral presentation on PPL-100 which established the structural basis for the favorable resistance profile of the compound.

- Ambrilia completed a South Korean licensing and distribution agreement with Shin Poong Pharmaceutical Co. for its improved prolonged-release formulation of Octreotide.

- On April 18, Hans J. Mader left his position as President and CEO and as a member of the Board. On the same date, Mr. Stephen G. Sudovar assumed the functions of Executive Chairman and interim CEO. He left on June 13 and Mr. Frederic Porte, already a member of Ambrilia's Board of Directors, was appointed to the Chairman's position.

- In May, Ambrilia issued by way of private placement 2,417,353 common shares to certain investors, almost all of whom were current shareholders of Ambrilia, at a price of $2.42, for gross proceeds of $5,849,995.

"Ambrilia was honored to receive the (XVI International HIV Drug Resistance Workshop) Chairman's Award for its integrase inhibitors poster. This recognition further validates the Company's R&D know-how in HIV. Though early stage, the preclinical data on our integrase inhibitors are encouraging and therefore this program is at the forefront of our R&D projects", said Dr. Bonabes de Rouge, Senior Executive Vice-President and Chief Scientific Officer, Ambrilia. "The Octreotide Phase III clinical trial is moving ahead as planned and we look forward to completing the efficacy study towards the end of 2007. This will be an important step in meeting our 2008 regulatory filing objectives", he concluded.

"Recruiting Ambrilia's new CEO continues to be one of my top priorities", said Frederic Porte, Chairman of the Board, Ambrilia. "The recruitment process is progressing well and I feel confident we will find the best candidate to lead the Company", he added.

$5.8 MILLION PRIVATE PLACEMENT

On May 18 and May 22, 2007 Ambrilia issued, by way of a private placement, 2,417,353 common shares to certain investors, almost all of whom were current shareholders of Ambrilia, at a price of $2.42 per share, for an aggregate consideration of $5,849,995, before cash issue expenses of $189,127. The issue price of $2.42 per share represents the volume weighted average price of Ambrilia's common shares on the TSX for the five days ending on April 11, 2007.

HIV/AIDS

PPL-100

Ambrilia follows up periodically with Merck in their advancement of PPL-100 towards development in HIV/AIDS patients.

HIV INTEGRASE INHIBITOR PROGRAM

The preclinical data presented recently at the XVI International HIV Drug Resistance Workshop showed that Ambrilia's new series of integrase inhibitors (pyrazolopyridine compounds) had a good activity against HIV-1 viruses, without significant cytotoxicity. Furthermore, cross-competition kinetic studies with known competitive strand transfer inhibitors (such as diketo acid compounds) suggested a different mechanism of action, which may lead to a different resistance profile from known strand transfer inhibitors currently in clinical development by pharmaceutical companies. The Company has currently identified a number of lead compounds for optimization and aims to have a potential preclinical drug candidate within the next 12 months.

ONCOLOGY

IMPROVED FORMULATION OF OCTREOTIDE

Ambrilia's prolonged release formulation of Octreotide is a therapeutic alternative to Novartis' Sandostatin® LAR, developed with a patented technology. Studies to date showed it had a longer bioavailability than the original product and should therefore present an advantage to the patients in terms of convenience. Ambrilia has completed licensing partnerships for the worldwide distribution and commercialization of its improved formulation of Octreotide; Mallinckrodt for the U.S., TEVA for the main European countries and some specialized pharmaceutical and distribution companies for other countries. More recently, the Company signed a licensing agreement with Shin Poong Pharmaceutical for South Korea.

Initiated last February, the Phase III clinical trial in acromegaly patients is ongoing. Ambrilia expects to complete the Phase III clinical efficacy study towards the end of 2007, and the safety studies around mid 2008. Filing for approval by its licensing partners is expected to start during the course of 2008, beginning in Europe and followed by North America.

NEW FORMULATION OF GOSERELIN

Ambrilia's new prolonged release formulation of Goserelin is a therapeutic alternative to Astra Zeneca's Zoladex®, developed in-house. The product is now in the final stages of optimization and the Company expects to begin a single dose Phase I/II study in hormone-sensitive prostate cancer patients before the end of 2007.

THERAPEUTIC PEPTIDE PCK3145

On April 24, 2007 Ambrilia reported encouraging findings of a U.S. Phase I/II study, showing that its therapeutic peptide drug PCK3145 ("Tigapotide") had clinical activity in metastatic prostate cancer patients. These data warrant further development of the drug for these patients, who have very limited treatment options. Ambrilia is currently evaluating various partnering and product development strategies to move forward with Tigapotide.

TUMOR AND TUMOR VASCULATURE TARGETING (TVT) TECHNOLOGY

As previously indicated Ambrilia is advancing its Tumor and Tumor Vasculature Targeting (TVT) Technology, a drug delivery platform that selectively delivers drugs to the vasculature of tumors and surrounding tumor cells. The Company is currently setting up a preclinical program for anticancer agents to be integrated into the TVT delivery system.

BIOMARKER ASSAY PSP94

Ambrilia is pursuing its discussions with diagnostic companies for the partnering of PSP94, its novel diagnostic/prognostic marker for prostate cancer.

FINANCIAL RESULTS

Quarter ended June 30, 2007 compared with the Quarter ended June 30, 2006

The Company incurred a net loss of $6,755,307 or $0.22 per common share for the second quarter of 2007, compared with a net loss of $6,003,787 or $0.22 per common share for the same quarter last year.

Revenues for the second quarter of 2007 were $202,755, compared with $170,549 in the corresponding quarter last year. The higher revenues resulted primarily from an increase in interest income, due to higher interest rates in the current quarter compared to the second quarter of 2006.

Research and development expenses amounted to $2,283,480 in the second quarter of 2007, compared with $3,382,913 in the same quarter last year. The decrease of $1,099,433 resulted primarily from the decreased R&D expenditures for PPL-100 following its licensing to an affiliate of Merck & Co., Inc. in October 2006 and lower spending on Octreotide. Research and development tax credits decreased to $96,300 in the current quarter from $464,076 in the corresponding quarter last year. The reduction in the current quarter reflects the lower spending compared to the second quarter of 2006 and the fact that the Company no longer qualifies for the 20% additional tax credit on the first $2 million of eligible research expenditures in Quebec, since its total assets at December 31, 2006 exceeded $75 million.

General and administrative expenses amounted to $2,361,831 in the second quarter of 2007, an increase of $838,564 over the total of $1,523,267 for the same quarter last year. Increased compensation costs were the principal reason for the increased expenses.

Amortization expense increased to $2,215,816 in the current quarter from $2,101,646 in the same quarter last year. The increase resulted primarily from the added amortization on intellectual property arising from the acquisition of additional shares of Ambrilia France in September and October 2006 and in March 2007, all under the terms of the original offer to Ambrilia France shareholders made in January 2006.

Interest on long-term debt was $261,568 in the second quarter of 2007, compared to $285,977 in the same quarter last year. The decrease was mainly due to the reduced interest expense on the Biolevier loan as a result of the $2 million loan repayment in December 2006, partially offset by interest capitalized to November 2006 and a higher interest rate in the current quarter compared to the second quarter of 2006.

For the second quarter of 2007, a future income tax expense of $180,320 was reported, compared to a recovery of $922,291 in the second quarter of 2006. The expense in the current quarter resulted primarily from the transfer of assets between different tax jurisdictions and was more than offset by a foreign exchange gain on the future income tax liability of $416,147. In the corresponding quarter last year, the foreign exchange gain on the future income tax liability was $44,329.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents and short-term investments totaled $15,891,816 at June 30, 2007, compared with $22,359,604 at December 31, 2006. The decrease of $6,467,788 resulted from the utilization of $10,657,282 to finance operating activities for the first half of 2007, including an increase of $1,781,694 in non-cash working capital. In addition, a net amount of $716,115 was used in the period for additional property, plant and equipment and intellectual property. Also, an amount of $766,391 was utilized to repay an Ambrilia France 12% loan payable on March 1, 2007. Partially offsetting these cash outlays was a private placement of common shares in May 2007 that generated $5,660,868, net of expenses. In addition, an amount of $11,132 was obtained from the exercise of stock options.

Management believes that it will have sufficient funds available to support its ongoing activities for at least 12 months.



AMBRILIA BIOPHARMA INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)

As at
June 30, December 31,
2007 2006
$ $
-------------------------------------------------------------------------

ASSETS
Current assets
Cash and cash equivalents 11,471,071 3,155,854
Short-term investments 4,420,745 19,203,750
Accounts receivable 632,888 847,688
Investment tax credits recoverable 1,001,310 1,902,212
Prepaid expenses 162,327 116,154
-------------------------------------------------------------------------
17,688,341 25,225,658
Long-term receivables 1,141,807 1,095,130
Property, plant and equipment 2,130,360 1,782,558
Intellectual property 51,100,056 53,379,022
Deferred financing costs - 979,534
-------------------------------------------------------------------------
72,060,564 82,461,902
-------------------------------------------------------------------------
-------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities 2,939,896 5,762,426
Deferred license revenues 3,395,960 3,377,976
Loan payable - 768,841
-------------------------------------------------------------------------
6,335,856 9,909,243
Minority interest 1 1
Biolevier loan facility 8,146,727 8,927,466
Future income tax liability 5,379,870 6,295,095
Convertible debentures 2,407,546 2,408,559
-------------------------------------------------------------------------
22,270,000 27,540,364
-------------------------------------------------------------------------

Shareholders' equity
Share capital 121,736,532 114,401,167
Warrants 6,143,141 6,143,141
Contributed surplus 8,321,560 7,920,211
Equity component of convertible debentures 1,920,914 1,920,914
Deficit (88,331,583) (75,463,895)
-------------------------------------------------------------------------
49,790,564 54,921,538
-------------------------------------------------------------------------
72,060,564 82,461,902
-------------------------------------------------------------------------
-------------------------------------------------------------------------



AMBRILIA BIOPHARMA INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS, DEFICIT AND COMPREHENSIVE INCOME
(unaudited)

Three months ended Six months ended
June 30, June 30,
2007 2006 2007 2006
$ $ $ $
--------------------------------------------------------------------------

REVENUES
License revenue 7,101 6,762 14,465 8,988
Interest and other
income 195,654 163,787 396,297 291,882
--------------------------------------------------------------------------
202,755 170,549 410,762 300,870
--------------------------------------------------------------------------

EXPENSES
Research and
development 2,283,480 3,382,913 4,900,231 4,776,695
Research and
development tax
credits (96,300) (464,076) (370,254) (589,064)
--------------------------------------------------------------------------
Net research and
development 2,187,180 2,918,837 4,529,977 4,187,631
General and
administrative 2,361,831 1,523,267 4,769,880 2,655,765
Amortization of
property, plant
and equipment 132,506 111,077 256,466 174,180
Amortization of
intellectual property 2,083,310 1,951,814 4,130,273 2,724,742
Amortization of
deferred financing
fees - 38,755 - 74,446
Accretion on
long-term debt 90,052 61,973 197,782 122,223
Interest on
long-term debt 261,568 285,977 520,934 552,593
Restructuring charges - 251,120 - 251,120
Financial charges 9,357 27,714 38,457 41,685
Foreign exchange
losses (gains) 68,085 (29,578) 54,824 132,354
--------------------------------------------------------------------------
7,193,889 7,140,956 14,498,593 10,916,739
--------------------------------------------------------------------------
Loss before income
taxes (6,991,134) (6,970,407) (14,087,831) (10,615,869)

Future income tax
recovery (expense) (180,320) 922,291 910,985 1,246,876
Foreign exchange gain
on future income tax
liability 416,147 44,329 309,158 402,376
--------------------------------------------------------------------------
235,827 966,620 1,220,143 1,649,252
--------------------------------------------------------------------------

Net loss and
comprehensive loss (6,755,307) (6,003,787) (12,867,688) (8,966,617)
Deficit, beginning
of period (81,576,276) (76,087,260) (75,463,895) (73,124,430)
--------------------------------------------------------------------------

Deficit, end of
period (88,331,583) (82,091,047) (88,331,583) (82,091,047)
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Basic and diluted
loss per share (0.22) (0.22) (0.43) (0.42)

Weighted average
number of common
shares outstanding 30,648,112 27,483,987 30,033,368 21,605,997
--------------------------------------------------------------------------
--------------------------------------------------------------------------



AMBRILIA BIOPHARMA INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

Three months ended Six months ended
June 30, June 30,
2007 2006 2007 2006
$ $ $ $
--------------------------------------------------------------------------

OPERATING ACTIVITIES
Net loss (6,755,307) (6,003,787) (12,867,688) (8,966,617)
Items not affecting
cash
Amortization of
property, plant
and equipment 132,506 111,077 256,466 174,180
Amortization of
intellectual
property 2,083,310 1,951,814 4,130,273 2,724,742
Amortization of
deferred financing
fees - 38,755 - 74,446
Accretion on
long-term debt 90,052 61,973 197,782 122,223
Loan interest
capitalized - 224,727 - 430,093
Interest paid by
issuance of common
shares 122,164 122,164 122,164 122,164
Future income tax
recovery and related
foreign exchange
gain (235,827) (966,620) (1,220,143) (1,649,252)
Foreign exchange loss
(gain) (9) 3,850 (2,451) 36,149
Services paid by
issuance of stock
options 88,476 64,654 408,009 136,035
Compensation paid
in shares (24,800) - 100,000 -
--------------------------------------------------------------------------
(4,499,435) (4,391,393) (8,875,588) (6,795,837)
Net change in non-cash
balances relating
to operations (260,371) (350,250) (1,781,694) (1,947,546)
--------------------------------------------------------------------------
Cash flows related to
operating activities (4,759,806) (4,741,643) (10,657,282) (8,743,383)
--------------------------------------------------------------------------

INVESTING ACTIVITIES
Acquisition of
intellectual property (41,841) (139,282) (143,157) (147,161)
Acquisition of
property, plant and
equipment (361,440) (115,420) (573,458) (301,687)
Proceeds on disposal
of property, plant
and equipment 500 315 500 315
Cash and cash
equivalents obtained
on acquisition of
business - - - 174,625
Business acquisition
costs - - - (1,979,031)
Purchase of short-term
investments (4,420,745) (3,935,960) (5,410,025) (3,935,960)
Maturities of
short-term
investments 3,438,005 986,730 20,193,030 4,942,205
--------------------------------------------------------------------------
Cash flows related to
investing activities (1,385,521) (3,203,617) 14,066,890 (1,246,694)
--------------------------------------------------------------------------

FINANCING ACTIVITIES
Issuance of common
shares 5,849,995 - 5,861,127 18,095,904
Share issuance costs (189,127) (10,181) (189,127) (1,223,610)
Repayment of loan - - (766,391) -
--------------------------------------------------------------------------
Cash flows related
to financing
activities 5,660,868 (10,181) 4,905,609 16,872,294
--------------------------------------------------------------------------

Net increase
(decrease) in cash
and cash equivalents (484,459) (7,955,441) 8,315,217 6,882,217
Cash and cash
equivalents, beginning
of period 11,955,530 15,255,611 3,155,854 417,953
--------------------------------------------------------------------------
Cash and cash
equivalents, end of
period 11,471,071 7,300,170 11,471,071 7,300,170
--------------------------------------------------------------------------
--------------------------------------------------------------------------


CONFERENCE CALL INFORMATION

Ambrilia will be hosting a conference call and webcast on Friday, August 10th at 10:00 AM ET, to discuss its second quarter 2007 financial results and give an update on its development program. Interested parties may access the conference call by way of telephone or webcast. The number to access the conference call is 1(866) 250-4877 (toll free). The webcast will be available at www.ambrilia.com, Investors section, Conference calls and webcasts. A replay of the call will be available at www.ambrilia.com, 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 21242944.

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, unless obligated to do so by applicable securities laws.

ABOUT AMBRILIA BIOPHARMA

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 an 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 and 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.

www.ambrilia.com

Contact Information