Ambrilia Biopharma Inc.

Ambrilia Biopharma Inc.

November 14, 2007 08:01 ET

Ambrilia Announces Third Quarter 2007 Results and Provides Update on its Development Program

Attention Business/Financial/Health Editors

MONTREAL, QUEBEC--(Marketwire - Nov. 14, 2007) - Ambrilia Biopharma Inc. (TSX:AMB) announced today the third quarter 2007 financial results and provided an update on its development program.


- Ambrilia completed patient enrollment for the Phase III clinical study of its improved formulation of Octreotide in acromegalics.

- The Company reported data from the first clinical study of its Octreotide formulation in acromegalic patients showing normalization of the major marker for acromegaly, Insulin- like Growth Factor 1 ("IGF-1"), and suppression of high Growth Hormone ("GH") plasma levels, with no serious adverse events observed. The results also support a 42-day dosing interval for Ambrilia's Octreotide in comparison to Novartis' Sandostatin® LAR 28-day dosing interval.

- Ambrilia presented the latest preclinical data on its new series of HIV integrase inhibitors at the 47th ICAAC (Sept. 17-20) suggesting synergies, against enzymatic activities of HIV-1 integrase, with some of the known diketo acid-based integrase inhibitors either approved by the U.S. Food and Drug Administration ("FDA") or in late-stage clinical development.

- On October 14, the Company co-presented with Merck & Co. the steps which lead to the licensing partnership for PPL-100 (Ambrilia's HIV protease inhibitor program) at the 2007 Licensing Executives Society Annual Meeting (Oct.14-17).

- Clinical data from the Memorial Sloan Kettering Cancer Center ("MSKCC") Phase I/II pilot study with Ambrilia's PCK3145 ("Tigapotide") were presented at the 2007 Annual Fall Conference on Antiangiogenesis (October 22-23) and at the AACR-NCI-EORT International Conference (October 22-26).

- Ambrilia's Board of Directors recently approved a new corporate strategic plan according to which the Company will progressively refocus its R&D activities on anti-virals. During this process, the Company will continue to evaluate the best possible alternatives to ensure continuity and enhanced value for its oncology programs.

- On October 30, Ambrilia announced the closing of its public offering of 13,072,500 units at a price of $1.25 per unit. The offering included 622,500 units issued pursuant to the underwriters exercising their underwriter option in full. Also, on November 8, the over- allotment option for an additional 1,867,500 units was exercised in full by the underwriters, resulting in total gross proceeds of $18.7 million.

- On November 13, Dr. Paul-Henry Schmelck, Director, Investments, OTC Asset Management, was appointed to the Board of Directors.

"A significant milestone was reached with the completion of enrolment into the Phase III efficacy trial of Octreotide in acromegalics, but more importantly, we are on track to complete this study before year-end", said Dr. Bonabes de Rouge, Senior Executive Vice-President and Chief Scientific Officer, Ambrilia. "The recent financing provides the Company with the needed resources to execute its new strategic plan. More precisely, to complete the Phase III safety studies of Octreotide, to finalize Goserelin's formulation for the clinic and to accelerate the development of the HIV integrase inhibitor program and other early-stage anti-viral programs in HIV and HCV", he concluded.

"We now have significant investments from some high quality biotech-focused U.S. institutional funds, supporting the business plan", said Frederic Porte, Chairman of Ambrilia's Board. "The Company's new CEO, expected to be appointed by year-end, together with the management team are therefore in a favorable position to execute such plan", he continued. "I wish to welcome Dr. Paul-Henry Schmelck to the Board, a highly accomplished executive in international finance, pharmaceutical and biotech research and clinical development, who will undoubtedly be an asset to Ambrilia", he concluded.


On October 30, Ambrilia announced the closing of its public offering of 13,072,500 units at a price of $1.25 per unit, for gross proceeds of $16.3 million. The offering included 622,500 units issued pursuant to the underwriters exercising their underwriter option in full. On November 8, the underwriters exercised in full the over-allotment option for an additional 1,867,500 units at the same price, resulting in gross proceeds increasing to $18.7 million.

Each unit consists of one common share of the Company and one-half of one warrant. Each whole warrant will entitle its holder to acquire one common share at an exercise price of $1.35 within the 36-month period following the date of the closing. The offering was made through a syndicate of underwriters led by Canaccord Capital Corporation and which included Dundee Securities Corporation and Loewen, Ondaatje, McCutcheon Limited.


The management team and the Board of Directors believe that building the strategy on Ambrilia's strength and recognition in anti-virals will be instrumental in enhancing the Company's valuation over the long-term. The strategic intent is to become a company dedicated to anti-viral drug research and development by the end of 2008. During this process, Ambrilia will continue to evaluate the best possible alternatives to ensure continuity and enhanced value for its other programs.


Dr. Paul-Henry Schmelck has more than 10 years of experience in biotech and pharmaceutical financing, and 20 years in medical practice and research as well as in pharmaceutical and biotech development. Before joining OTC Asset Management, a Paris-based venture capital fund with more than 250 million EUR under management, he was the founder, President & CEO, of PrimeBioTech a gene therapy company developing therapeutic products to treat genetic diseases of the retina. He also managed banking operations related to the biotech, pharmaceutical, medical and cosmetic industries for the Union d'etudes et Investissements ("UI"), Credit Agricole's investment branch. In that capacity, Dr. Schmelck advised and assisted numerous European and U.S. companies in Mergers & Acquisitions, licensing and research agreements, joint-ventures and technology transfers. In addition, Dr. Schmelck headed a scientific group of 150 professionals at Elf Sanofi as Biotechnology Research Director. He practiced in general pediatrics, nephrology and endocrinology at the Hopital Necker Enfants Malades. He published over thirty articles in scientific and medical journals and has participated to lectures on a numerous number of subjects in France and abroad. He received his M.D. with specialization in pediatrics and a Masters degree of advanced studies in molecular and cellular pharmacology from the University of Paris. He followed INSEAD's Advanced Management Program (1987).



Ambrilia follows up periodically with Merck in their advancement of the development of PPL-100 (under the name MK-8122) for the treatment of HIV/AIDS.


Ambrilia has developed a novel series of pyrazolopyridine compounds which demonstrated potent inhibition against HIV-1 integrase strand transfer activity. Drug combination studies performed with some of the known diketo acid inhibitors currently approved by the FDA or in clinical development suggest that there are synergies of inhibiting HIV integrase enzymatic activities when pyrazolopyridine and diketo acid inhibitors are combined. Furthermore, inhibitor cross-competition studies indicate that Ambrilia's pyrazolopyridine compounds bind to a different site on the HIV integrase enzyme from that of the known competitive active site inhibitors such as the diketo acid derivatives, suggesting a different mechanism of strand transfer inhibition which could lead to a distinct resistance profile.

The Company will continue to make further progress in its HIV integrase inhibitor program, with the goal of having a potential preclinical drug candidate within the next 12 months.


The Company has several early-stage anti-viral programs. Some of these programs address early steps of the HIV replication cycle and others are designed for the discovery and development of new classes of molecules for the treatment of HCV and Influenza. Ambrilia intends to accelerate these programs now since PPL-100's clinical development is assumed by Merck & Co.



Ambrilia's prolonged release formulation of Octreotide is a therapeutic alternative to Novartis' Sandostatin® LAR, developed with a patented technology. Data reported recently confirmed the efficacy and safety of the formulation in acromegalic patients. Furthermore, the 42-day dosing
interval for Ambrilia's formulation in comparison to the 28-day dosing interval for Sandostatin® LAR should represent an advantage to the patients in terms of convenience.

The Phase III clinical trials in acromegaly patients are ongoing and the efficacy study is expected to be completed before the end of 2007. Follow-on safety studies are expected to be concluded around mid 2008, allowing the filings for approval by Ambrilia's licensing partners to start during the course of 2008, beginning in Europe and followed by North America.


Ambrilia's Goserelin is a therapeutic alternative to Astra Zeneca's Zoladex® three months biodegradable implant, for which the Phase I/II single-dose study in hormone-sensitive prostate cancer patients was expected to start towards the end of 2007. The Company is currently working on fine tuning its formulation in order to achieve the desired pharmacokinetic profile. Ambrilia expects to be in a position to initiate clinical testing in patients during the first half of 2008. A partner will then be selected for the commercialization of this product in Europe.


Ambrilia expects to identify a co-development partner for Tigapotide who would finance the planned Phase IIb studies in advanced prostate cancer patients, and further clinical development. As well, the Company is pursuing its discussions with diagnostic companies for the partnering of PSP94, its novel diagnostic/prognostic marker for prostate cancer.


The Company plans to license-out its TVT drug delivery system.


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

The Company incurred a net loss of $6,145,067 or $0.19 per common share for the third quarter of 2007, compared with a net loss of $6,174,436 or $0.22 per common share for the same quarter last year.

Revenues for the third quarter of 2007 were $183,268, compared with $134,611 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 third quarter of 2006 and a higher average level of cash and cash equivalents and short-term investments.

Research and development expenses amounted to $2,850,151 in the third quarter of 2007, compared with $3,025,841 in the same quarter last year. The decrease of $175,690 resulted primarily from the decreased R&D expenditures for PPL-100 following its licensing to an affiliate of Merck & Co., Inc. in October 2006, partially offset by increased spending primarily on the Goserelin and integrase technologies.

General and administrative expenses amounted to $1,569,610 in the third quarter of 2007, a decrease of $87,004 from the total of $1,656,614 for the same quarter last year. Reduced professional fees were the principal reason for the lower expenses.

Amortization expense increased to $2,270,265 in the current quarter from $2,177,128 in the same quarter last year. The amount in the third quarter of 2006 included amortization of deferred financing costs of $40,288. The increase resulted primarily from the added amortization on intellectual property arising from the acquisition of additional shares of Ambrilia France progressively during the past twelve months by the exercise of acquisition warrants issued under the terms of the original offer made to Ambrilia France shareholders in January 2006.

Interest on long-term debt was $267,499 in the third quarter of 2007, compared to $302,191 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 third quarter of 2006.

Accretion expense on long-term debt amounted to $108,026 in the third quarter of 2007 compared to $63,745 in the same quarter of 2006. The increase in the current quarter results primarily from the change in accounting policy for deferred financing costs in accordance with CICA handbook section 3855, "Financial Instruments - Recognition and Measurement." This ongoing non-cash accounting charge for imputed interest will increase the carrying value of long-term debt to face value by the maturity date of each item.

Restructuring charges amounted to $208,341 in the current quarter, representing severance payments in connection with the Company's decision to progressively refocus its research and development activities on anti-virals. No restructuring charges were incurred in the same period last year.

For the third quarter of 2007, a future income tax recovery of $469,839 was reported, compared to $585,514 in the third quarter of 2006. The recovery in the current quarter was supplemented by a foreign exchange gain on the future income tax liability of $259,601. In the corresponding quarter last year, a foreign exchange loss on the future income tax liability of $56,615 was incurred.


Cash and cash equivalents and short-term investments totaled $12,667,072 at September 30, 2007, compared with $22,359,604 at December 31, 2006. The decrease of $9,692,532 resulted from the utilization of $13,578,760 to finance operating activities for the first nine months of 2007, including an increase of $299,870 in non-cash working capital. In addition, a net amount of $1,008,255 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 $5,649,742, net of expenses.

With the inclusion of the net proceeds of approximately $17.1 million from the financing that closed on October 30 and November 8, 2007, management believes that it has sufficient funds available to support its ongoing activities for at least the next 20 months, based on the Company's current burn rate.

As at
September 30, December 31,
2007 2006
$ $

Current assets
Cash and cash equivalents 9,235,527 3,155,854
Short-term investments 3,431,545 19,203,750
Accounts receivable 324,168 847,688
Investment tax credits recoverable 69,075 1,902,212
Prepaid expenses 130,842 116,154
13,191,157 25,225,658
Long-term receivables 1,107,431 1,095,130
Property, plant and equipment 2,214,561 1,782,558
Intellectual property 50,770,764 53,379,022
Deferred financing costs - 979,534
67,283,913 82,461,902

Current liabilities
Accounts payable and accrued liabilities 2,981,081 5,762,426
Deferred license revenues 3,529,783 3,377,976
Loan payable - 768,841
6,510,864 9,909,243
Minority interest 1 1
Biolevier loan facility 8,175,830 8,927,466
Future income tax liability 4,949,868 6,295,095
Convertible debentures 2,486,469 2,408,559
22,123,032 27,540,364

Shareholders' equity
Share capital 123,159,947 114,401,167
Warrants 6,143,141 6,143,141
Contributed surplus 8,413,529 7,920,211
Equity component of convertible debentures 1,920,914 1,920,914
Deficit (94,476,650) (75,463,895)
45,160,881 54,921,538
67,283,913 82,461,902


Three months ended Nine months ended
September 30, September 30,
2007 2006 2007 2006
$ $ $ $

License revenue 10,615 6,857 25,080 15,845
Interest and
other income 172,653 127,754 568,950 419,636
183,268 134,611 594,030 435,481

Research and
development 2,850,151 3,025,841 7,750,382 7,802,536
Research and development
tax credits (226,110) (389,042) (596,364) (978,106)
Net research and
development 2,624,041 2,636,799 7,154,018 6,824,430
General and
administrative 1,569,610 1,656,614 6,339,490 4,312,379
Amortization of
property, plant
and equipment 154,304 122,623 410,770 296,803
Amortization of
intellectual property 2,115,961 2,014,217 6,246,234 4,738,959
Amortization of
deferred financing
fees - 40,288 - 114,734
Accretion on
long-term debt 108,026 63,745 305,808 185,968
Interest on long-term
debt 267,499 302,191 788,433 854,784
Restructuring charges 208,341 - 208,341 251,120
Financial charges 10,349 43,838 48,806 85,523
Foreign exchange
losses (gains) (356) (42,369) 54,468 89,985
7,057,775 6,837,946 21,556.368 17,754,685
Loss before income
taxes (6,874,507) (6,703,335) (20,962,338) (17,319,204)

Future income tax
recovery 469,839 585,514 1,380,824 1,832,390
Foreign exchange gain
(loss) on future
income tax liability 259,601 (56,615) 568,759 345,761
729,440 528,899 1,949,583 2,178,151

Net loss and
comprehensive loss (6,145,067) (6,174,436) (19,012,755) (15,141,053)
Deficit, beginning
of period (88,331,583) (82,091,047) (75,463,895) (73,124,430)

Deficit, end
of period (94,476,650) (88,265,483) (94,476,650) (88,265,483)

Basic and diluted
loss per share (0.19) (0.22) (0.62) (0.64)

Weighted average
number of common
shares outstanding 32,113,545 27,543,885 30,656,308 23,607,043


Three months ended Nine months ended
September 30, September 30,
2007 2006 2007 2006
$ $ $ $

Net loss (6,145,067) (6,174,436) (19,012,755) (15,141,053)
Items not
affecting cash
Amortization of
property, plant and
equipment 154,304 122,623 410,770 296,803
Amortization of
property 2,115,960 2,014,217 6,246,233 4,738,959
Amortization of
deferred financing
fees - 40,288 - 114,734
Loss on disposal of
property, plant and
equipment 944 - 944 -
Accretion on
long-term debt 108,026 63,745 305,808 185,968
Loan interest
capitalized - 240,941 - 671,034
Interest paid by
issuance of common
shares - - 122,164 122,164
Future income tax
recovery and related
exchange gain (729,440) (528,899) (1,949,583) (2,178,151)
Foreign exchange loss
(gain) 1 (8,086) (2,450) 28,063
Services paid by
issuance of stock
options 91,969 36,820 499,978 172,855
Compensation paid
in shares - - 100,000 -
(4,403,303) (4,192,787) (13,278,891) (10,988,624)
Net change in non-cash
balances relating to
operations 1,481,824 1,682,529 (299,870) (265,017)
Cash flows related to
operating activities (2,921,479) (2,510,258) (13,578,761) (11,253,641)

Acquisition of
intellectual property (78,512) (42,712) (221,669) (189,873)
Acquisition of
property, plant and
equipment (213,877) (139,353) (787,335) (441,040)
Proceeds on disposal
of property, plant
and equipment 250 - 750 315
Cash and cash
equivalents obtained
on acquisition of
business - - - 174,625
Business acquisition
costs - - - (1,979,031)
Purchase of short-term
investments - - (5,410,025) (3,935,960)
Maturities of
short-term investments 989,200 1,978,320 21,182,230 6,920,525
Cash flows related to
investing activities 697,061 1,796,255 14,763,951 549,561

Issuance of common
shares - - 5,861,127 18,095,904
Share issuance costs (11,126) (7,513) (200,253) (1,231,123)
Repayment of loan - - (766,391) -
Cash flows related to
financing activities (11,126) (7,513) 4,894,483 16,864,781

Net increase
(decrease) in cash
and cash equivalents (2,235,544) (721,516) 6,079,673 6,160,701
Cash and cash
equivalents, beginning
of period 11,471,071 7,300,170 3,155,854 417,953
Cash and cash
equivalents, end
of period 9,235,527 6,578,654 9,235,527 6,578,654

Supplemental cash flow
Cash paid during the
period for interest 209,120 8,068 692,871 17,963


Ambrilia will be hosting a conference call and webcast on Wednesday, November 14 at 9:00 am ET, to discuss its third 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 numbers to access the conference call are (416) 644-3420 (international) and 1(800) 732-6179 (toll free). The webcast will be available on the Company's website at, Investors' section, Conference calls and webcasts, and will be archived for 365 days. A replay of the call will be available on the Company's website at, Investors' section, Conference calls and webcasts, from November 14, 11:00 am ET to Wednesday, November 21, 11:59 pm ET, and the numbers to access the replay are (416) 640-1917 (local) and 1(877) 289-8525 (toll free) with access code 21250782.


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.


Ambrilia Biopharma Inc. (TSX:AMB) is a biopharmaceutical company dedicated to the discovery and development of novel treatments for viral diseases and cancer. Ambrilia's product portfolio includes an HIV protease inhibitor program (with lead compound PPL-100), an HIV integrase inhibitor program, two new formulations of existing peptides (Octreotide and Goserelin), other tumor targeted peptides such as PCK3145 and the Tumor and tumor Vasculature Targeting (TVT) technology platform, as well as other anti-viral programs. Exclusive worldwide rights to PPL-100 and its related compounds have been granted to Merck & Co., Inc. in return for milestone payments 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:

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