Ambrilia Biopharma Inc.
TSX : AMB

Ambrilia Biopharma Inc.

May 14, 2008 08:01 ET

Ambrilia Reports First Quarter 2008 Results

MONTREAL, QUEBEC--(Marketwire - May 14, 2008) - Ambrilia Biopharma Inc. (TSX:AMB) today reported its financial results for the first quarter ended March 31, 2008, and provided an update on its development programs.

Ambrilia's strategy is to capitalize on its broad product portfolio and original expertise in virology. During the course of 2008, execution of the strategy aims to monetize the non-virology assets through third parties agreements, in turn strengthening the Company's financial position to continue building its novel pipeline of antivirals.

NON-VIROLOGY ASSETS

Improved formulation of Octreotide C2L: Positive Phase III 24-week results (Study 301)

Ambrilia reported earlier this morning, in a separate press release, the details of the 24-week Phase III top-line results for its C2L, confirming its safety and efficacy in acromegaly patients, and its ability to replace Sandostatin LAR® with less frequent injections and non-inferior efficacy on Growth Hormone (GH) and Insulin-like Growth Factor 1 (IGF-1). Concurrently, the Company announced the termination of the U.S. licensing agreement with Covidien Ltd., therefore regaining all license and marketing rights for its C2L formulation in the U.S. The termination agreement also provides for a one time payment of US$1.2M to Ambrilia.

In light of these results, and as reported previously, the Company is moving forward with its planned clinical development of C2L. The Company still expects the regulatory filings to be initiated during the second half of 2008 (H2/08). Pursuant to its termination agreement with Covidien, Ambrilia is exploring different options with third parties, aiming to extract the maximum value from this mature asset by year end.

New 3-month Formulation of Goserelin: Preclinical

Ambrilia's Goserelin is potentially the first-to-market generic to Astra Zeneca's Zoladex® 3-month biodegradable implant, a European market leader for the treatment of hormone-sensitive prostate cancer. The Company is currently completing reproducibility and validation of its formulation. Pending successful completion of the formulation work, clinical testing of the product in patients could be initiated during the first half of 2008 (H1/08). The Company aims at divesting Goserelin by the end of 2008.

Therapeutic Peptide PCK3145: Phase I/II

Ambrilia's PCK3145 is a patented, non-toxic, therapeutic peptide for the treatment of advanced metastatic prostate cancer. The Company is pursuing its discussions with potential licensing partners.

NGR-Delivery Platform: Preclinical

Ambrilia's targeted delivery technology uses a proprietary peptide (NGR peptide) coupled with a carrier. The Company is working on completing and validating its proof-of-concept with a siRNA in vivo, aimed at showing efficient delivery to tumor cells, by the end of the third quarter of 2008 (Q3/08). Successful outcome of the validation work will allow the Company to divest its NGR-Delivery Platform by the end of 2008.

ANTIVIRAL ASSETS

PPL-100 (MK-8122): Phase I

Ambrilia has regular interactions with Merck in their advancement of the development of PPL-100 (renamed MK-8122) for the treatment of HIV/AIDS.

Other antivirals: Discovery

HIV Integrase Inhibitor Program

Ambrilia will present a Poster on its novel series of HIV integrase inhibitors (non-pyrazolopyridine compounds), entitled "Small Molecule Inhibitors of HIV-1 Integrase" during the XVII International HIV Drug Resistance Workshop to be held, June 10-14, in Sitges, Spain. The Company continues to advance this program.

R&D activities are also ongoing in Ambrilia's other early-stage antivirals including the HIV entry inhibitor and HCV polymerase inhibitor programs. The Company's goal is to generate at least one preclinical drug candidate by the first half of 2009 (H1/09) among its lead antivirals.

RESULTS OF OPERATIONS

Quarter ended March 31, 2008 compared with the Quarter ended March 31, 2007

The Company incurred a net loss of $7,184,141 or $0.15 per common share for the first quarter of 2008, compared with a net loss of $6,112,381 or $0.21 per common share for the same quarter last year.

Revenues for the first quarter of 2008 were $260,490, compared with $208,007 in the corresponding quarter last year. The higher revenues resulted primarily from an increase in interest income, due to higher average cash balances.

Research and development expenses amounted to $3,094,262 in the first quarter of 2008, compared with $2,616,751 in the same quarter last year. The increase of $477,511 resulted primarily from increased R&D expenditures on C2L, Goserelin, HIV integrase inhibitor and HCV polymerase inhibitor programs. Research and development tax credits increased to $293,823 in the current quarter from $273,954 in the corresponding quarter last year.

General and administrative expenses amounted to $2,013,513 in the first quarter of 2008, a decrease of $394,536 from the total of $2,408,049 for the same quarter last year. The decrease was due primarily to a reduction in investor relations costs and miscellaneous expenses.

Amortization expense increased to $2,335,748 in the current quarter from $2,170,923 in the same quarter last year. The increase resulted 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. The final tranche was acquired on March 3, 2008.

Interest on long-term debt was $257,362 in the first quarter of 2008, compared to $259,366 in the same quarter last year. This includes the interest on the Biolevier loan facility, which is at bank prime plus 3%, and on the convertible debentures at a fixed rate of 7% on the face value of $3,500,000.

Restructuring charges amounted to $608,901 in the current quarter and resulted from a decision by the Company to streamline its activities. This resulted in the departure of the Executive Vice-President, Business Development, Licensing and IP and all related severance costs have been recorded in the current quarter.

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 in 2006 as part of the acquisition equation for accounting purposes, which was increased by a total of $1,401,026 as a result of the additional shares of Ambrilia France acquired in 2006 and 2007 and by $299,453 due to the shares acquired on March 3, 2008. This future income tax liability 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 $439,292 for the first quarter of 2008, compared to a recovery of $1,091,305 in the first quarter of 2007. The recovery in the current quarter was supplemented by a foreign exchange gain on the future income tax liability of $189,851, whereas in the corresponding quarter last year the recovery was partially offset by a foreign exchange loss on the future income tax liability of $106,989.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents and short-term investments totaled $19,999,749 at March 31, 2008, compared with $25,399,921 at December 31, 2007. The decrease of $5,400,172 resulted from the utilization of $5,131,310 to finance operating activities for the first quarter of 2008, net of a decrease of $28,338 in non-cash working capital. In addition, a net amount of $268,862 was used in the quarter for additional property, plant and equipment and intellectual property.

Management believes that it has sufficient funds available to support its ongoing activities for at least the next 12 months.

OUTSTANDING SHARE DATA

As of May 13, 2008 the number of common shares outstanding is 47,963,634, an increase of 448,318 from December 31, 2007, resulting from the issue of 448,318 shares in connection with the acquisition of additional shares of Ambrilia France. The number of stock options outstanding at May 13, 2008 is 1,341,517, an increase of 318,250 from December 31, 2007. The increase resulted from a total of 326,250 new options having been granted during the period, partially offset by 8,000 options which were forfeited. In addition, 15,877,037 warrants are outstanding on May 13, 2008, a decrease of 1,188,604 from December 31, 2007, resulting from the expiry of broker compensation warrants and warrants attached thereto, and from the exercise of the remainder of the acquisition warrants associated with the acquisition of Ambrilia France.



AMBRILIA BIOPHARMA INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)

As at

March 31, December 31,
2008 2007

$ $
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ASSETS
Current assets
Cash and cash equivalents 11,187,409 10,795,297
Short-term investments 8,812,340 14,604,624
Accounts receivable 476,062 411,892
Investment tax credits recoverable 807,207 642,352
Prepaid expenses 157,360 175,738
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21,440,378 26,629,903
Long-term receivables 1,480,479 1,214,712
Property, plant and equipment 2,131,756 2,133,196
Intellectual property 48,326,205 48,657,580
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73,378,818 78,635,391
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities 4,262,062 3,743,044
Deferred license revenues 3,513,692 3,527,958
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7,775,754 7,271,002
Minority interest 1 1
Biolevier loan facility 8,234,350 8,205,038
Future income tax liability 4,018,072 4,347,762
Convertible debentures 2,652,329 2,568,034
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22,680,506 22,391,837
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Shareholders' equity
Share capital 139,385,753 137,951,135
Warrants 8,610,715 8,610,715
Contributed surplus 8,706,825 8,502,544
Equity component of convertible debentures 1,920,914 1,920,914
Deficit (107,925,895) (100,741,754)
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50,698,312 56,243,554
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73,378,818 78,635,391
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AMBRILIA BIOPHARMA INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS, DEFICIT AND COMPREHENSIVE LOSS
(unaudited)

Three months ended
March 31,
2008 2007
$ $
-------------------------------------------------------------------------

REVENUES
License revenue 10,946 7,364
Interest revenue on cash, cash equivalents and
short-term investments 246,544 185,246
Other income 3,000 15,397
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260,490 208,007
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EXPENSES
Research and development 3,094,262 2,616,751
Research and development tax credits (293,823) (273,954)
-------------------------------------------------------------------------
Net research and development 2,800,439 2,342,797
General and administrative 2,013,513 2,408,049
Amortization of property, plant and equipment 137,886 123,960
Amortization of intellectual property 2,197,862 2,046,963
Accretion on Biolevier loan facility 29,312 28,817
Accretion on convertible debentures 84,295 78,913
Interest on Biolevier loan facility 196,112 198,116
Interest on convertible debentures 61,250 61,250
Financial charges 2,694 29,100
Restructuring charges 608,901 -
Foreign exchange gains (58,490) (13,261)
-------------------------------------------------------------------------
8,073,774 7,304,704
-------------------------------------------------------------------------
Loss before income taxes (7,813,284) (7,096,697)

Future income tax recovery 439,292 1,091,305
Foreign exchange gain (loss) on future
income tax liability 189,851 (106,989)
-------------------------------------------------------------------------

629,143 984,316
-------------------------------------------------------------------------

Net loss and comprehensive loss for the period (7,184,141) (6,112,381)
Deficit, beginning of period (100,741,754) (75,463,895)
-------------------------------------------------------------------------
Deficit, end of period (107,925,895) (81,576,276)
-------------------------------------------------------------------------
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Basic and diluted loss per share (0.15) (0.21)
Weighted average number of common shares
outstanding 47,650,555 29,207,370
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AMBRILIA BIOPHARMA INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

Three months ended
March 31,
2008 2007
$ $
-------------------------------------------------------------------------

OPERATING ACTIVITIES
Net loss for the period (7,184,141) (6,112,381)
Items not affecting cash
Amortization of property, plant and equipment 137,886 123,960
Amortization of intellectual property 2,197,862 2,046,963
Accretion on Biolevier loan facility 29,312 28,817
Accretion on convertible debentures 84,295 78,913
Future income tax recovery and related
exchange (gain) loss (629,143) (984,316)
Unrealized foreign exchange gain on loan
payable - (2,442)
Services paid by issuance of stock options 204,281 319,533
Compensation paid by issuance of common shares - 124,800
-------------------------------------------------------------------------
(5,159,648) (4,376,153)
Net change in non-cash balances relating to
operations 28,338 (1,521,323)
-------------------------------------------------------------------------
Cash flows related to operating activities (5,131,310) (5,897,476)
-------------------------------------------------------------------------

INVESTING ACTIVITIES
Acquisition of intellectual property (158,239) (101,316)
Acquisition of property, plant and equipment (110,893) (212,018)
Proceeds from disposal of property, plant and
equipment 270 -
Purchase of short-term investments - (989,280)
Maturities of short-term investments 5,792,284 16,755,025
-------------------------------------------------------------------------
Cash flows related to investing activities 5,523,422 15,452,411
-------------------------------------------------------------------------

FINANCING ACTIVITIES
Issuance of common shares - 11,132
Repayment of loan payable - (766,391)
-------------------------------------------------------------------------
Cash flows related to financing activities - (755,259)
-------------------------------------------------------------------------

Net increase in cash and cash equivalents 392,112 8,799,676
Cash and cash equivalents, beginning of period 10,795,297 3,155,854
-------------------------------------------------------------------------
Cash and cash equivalents, end of period 11,187,409 11,955,530
-------------------------------------------------------------------------
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CONFERENCE CALL AND WEBCAST DETAILS

Ambrilia will be hosting a conference call and webcast today at 9:00 am ET to discuss its first quarter financial results as well as the 24-week Phase III results for its C2L. The call will be moderated by Dr. Philippe Calais, President and Chief Executive Officer, who will be joined by Dr. Bonabes de Rouge, Senior Executive Vice-President and Chief Scientific Officer, and Ms. Monique Letourneau, Executive Vice-President, Finance and Chief Financial Officer, who will review the Company's financial results for the first quarter ended March 31, 2008.

Interested parties may access the conference call by way of telephone or webcast. The numbers to access the conference call are 416 644 3426 (international) and 1 800 590 1508 (toll free). The webcast will be available on the Company's website at www.ambrilia.com, 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 www.ambrilia.com, Investors' section, Conference calls and webcasts, from Wednesday, May 14, 2008, 11:00 am ET to Wednesday, May 21, 2008, 11:59 pm ET, and the numbers to access the replay are 416 640 1917 (international) and 1 877 289 8525 (toll free) with access code 21271117.

AMBRILIA'S FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements that reflect the Company's current expectation regarding future events. There is a risk that expectations and forward looking statements will not prove to be accurate. Readers are cautioned not to place undue reliance on these forward-looking statements as they involve risks and uncertainties, which could make actual results 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 annual information form which contains 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 biotechnology company focused on the discovery and development of novel treatments for viral diseases and cancer. In the latter part of 2007, Ambrilia adopted a new strategic plan, the primary objective of which is to progressively refocus R&D activities solely on antivirals. The strategy aims to capitalize on the Company's broad portfolio and original expertise in virology. Today, Ambrilia's product portfolio is comprised of oncology and antiviral assets, including two new formulations of existing peptides for cancer treatment, a therapeutic peptide for prostate cancer, a targeted delivery platform for cancer, a HIV protease inhibitor program (exclusive worldwide rights granted to Merck & Co., Inc.), HIV integrase inhibitor and entry inhibitor programs, and a HCV polymerase inhibitor program. 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: www.ambrilia.com

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