Bioxel Pharma Inc.
TSX VENTURE : BIP

Bioxel Pharma Inc.

August 20, 2007 08:30 ET

Bioxel Pharma Inc.: Second-Quarter 2007 Results

Bioxel Continues to Set the Stage for its Growth by Registering its Docetaxel with the FDA and Health Canada and Expanding its Commercial Footprint in Europe

SAINTE-FOY, QUEBEC--(Marketwire - Aug. 20, 2007) - Bioxel Pharma Inc. (TSX VENTURE:BIP), a leading manufacturer of taxane active pharmaceutical ingredients (APIs) and developer of targeted oncology drugs, today announced its results for the second quarter ended June 30, 2007.

"We have achieved an important milestone in our development plan during the second quarter: the registration of our Drug Master Files (DMF) for docetaxel with US FDA and Health Canada. These regulatory successes contribute to Bioxel's favorable supply position ahead of the generic docetaxel market opening," indicated Pascal Delmas, President and Chief Executive Officer of Bioxel. "In addition, while we are still affected by delays encountered by our customers in obtaining their generic paclitaxel drug approvals, the Company has made significant progress in paclitaxel DMF registrations. Several DMF submissions made this quarter, particularly in Europe, will strengthen sales growth potential for this product. We are confident of a gradual increase in revenues and profitability in the coming months," concluded Mr. Delmas.

SECOND-QUARTER HIGHLIGHTS

Docetaxel Registered with the US FDA and Health Canada

The Corporation registered its Docetaxel Drug Master File (DMF) with the US FDA during the quarter and subsequently made the corresponding filing with Health Canada. This is one of the most critical milestones in the commercial development of this product. Sanofi-Aventis patents protecting docetaxel will begin to expire in late 2007, gradually paving the way for the development of the generic market. Docetaxel is the active ingredient in Taxotere®, a chemotherapeutic drug marketed by Sanofi-Aventis that generated sales of over US$2 billion in 2006. Benefiting from strong intellectual property and early regulatory registrations, Bioxel is very well positioned to offer its worldwide partners a reliable and sustainable docetaxel procurement solution.

Expansion of Bioxel's Commercial Footprint in Europe

Pursuant to its commitment to strengthen market presence in Europe, Bioxel announced during the quarter that it was extending its paclitaxel registration to 10 additional countries, bringing to 23 the total number of European countries in which the Corporation plans to sell its product in the near term.

Achieving this objective involves the registration of our paclitaxel in each of the countries where our customers intend to use Bioxel's active ingredient in their generic drug product. In the past few months, these generic pharmaceutical companies have renewed their confidence in the Corporation by requesting that it extend its DMF registration to the five largest European markets: Germany, France, Italy, Spain and the United Kingdom. The Corporation confirms its objective to build a strong commercial presence across Europe, a market estimated at 200 kilograms of paclitaxel annually.

First Paclitaxel Delivery in Asia

During the quarter, the Corporation reported its first significant paclitaxel sales in Asia. This transaction is the result of the marketing push begun in late 2006 in this region, with the goal of further expanding Bioxel's global footprint in taxane APIs. This initiative resulted in identifying drug manufacturers in key countries offering strong growth opportunities. This paclitaxel delivery valued at approximately $200,000, was made to a South-East Asian generic pharmaceutical company whose market presence extends into Europe, North America, Latin America and other Asia-Pacific countries. It is one of the fastest growing companies in the region, with product registrations in more than 50 countries, including oncology drugs. Paclitaxel from this sale will be used by the customer for registration and commercialization of its generic paclitaxel drug in regulated markets.

HIGHLIGHTS SUBSEQUENT TO THE CLOSE OF THE QUARTER

Share Purchase by Directors and Officers

On July 5, 2007, Bioxel announced that its directors and officers intended to purchase in the aggregate approximately $150,000 worth of common shares of the Corporation on the market at prevailing market prices. The purchase was made through the TSX Venture Exchange and attests the confidence of the latter in the Corporation's growth strategy and development potential.

Filing of a Preliminary Short-Form Prospectus for a Public Offering

In June 2007, Bioxel announced that it intended to complete a public offering for expected aggregate gross proceeds of $8 million. The Corporation filed on July 6, 2007 a preliminary short-form prospectus with the securities regulatory authorities in British Columbia, Alberta, Ontario and Quebec with respect to a proposed offering of units of the Corporation. The net proceeds from the offering will be used primarily to fund product development, marketing and working capital.

Award of common share purchase options to a board member

On August 20, 2007, the Corporation's Board of Directors awarded 15,000 common share purchase options at an exercise price of $0.155 per share, to Dr. Rafick Henein, consistent with the Option Plan of the Corporation for a new member of the Board.

FINANCIAL HIGHLIGHTS

Operating Results

The Corporation recorded second-quarter revenues of $237,000, compared with $307,000 for the equivalent period of 2006. Revenues for the six-month period ended June 30, 2007 totaled $281,000, down by approximately 8% from $308,000 for the same period in 2006. This decline is due mainly to the delays encountered by Bioxel's customers in qualifying and registering their generic drugs, particularly in Europe.

Second-quarter gross profit slipped to $47,000 or 20% of revenues, compared with $71,000 or 23% of revenues a year earlier. For the first six months, gross profit totaled $56,000 or 20% of revenues, compared with $71,000 or 23% for the corresponding period of 2006.

Research and development expenses amounted to $61,000 for the second quarter of 2007, compared with $218,000 for the corresponding period of 2006, a decline of $157,000. For the first six months, R&D expenses went from $370,000 in 2006 to $187,000 in 2007. The $183,000 reduction was due primarily to an increase in research and development tax credits and a decrease in professional fees and supply costs compared with the same period of 2006.

Second-quarter selling expenses decreased to $94,000, down by $18,000 from the same quarter of 2006. For the six-month period, selling expenses were comparable, standing at $199,000 as of June 30, 2007 compared with $196,000 for the same period in 2006.

Administrative expenses increased by $25,000 to $387,000, up from $362,000 in the second quarter of 2006. For the six-month period ended June 30, 2007, administrative expenses totaled $686,000, compared with $638,000 for the corresponding period of 2006, an increase of $48,000. This difference is due to an increase in professional fees, total payroll and public corporation costs.

The Corporation lowered its second-quarter operating loss by 20% to $496,000, down from $620,000 a year earlier. By the end of the first half, the operating loss had been reduced to $1,016,000 from $1,132,000 as of June 30, 2006.

Financial expenses amounted to $168,000 for the second quarter of 2007, down from $173,000 in 2006. For the six-month period, financial expenses totaled $350,000, versus $348,000 for the year earlier. Financial variations were due mainly to an increase in repayment charges related to the BioLevier loan from Investissement Quebec and a decrease in interest on the equipment loan.

Amortization amounted to $218,000 for the second quarter of 2007, down by $10,000 from $228,000 in the equivalent period of 2006. Amortization totaled $432,000 for the first six months of 2007, compared with $469,000 for the first half of 2006.

The Corporation incurred a net loss of $931,000 or $0.01 per share for the second quarter of 2007, representing an improvement over the net loss of $972,000 or $0.01 posted in the corresponding period of 2006. For the six-month period ended June 30, 2007, the net loss totaled $1.86 million, also reflecting an improvement over the first half of 2006, when the loss amounted to $2.04 million ($0.02 per share in 2007 and $0.03 per share in 2006).

Shareholders' Equity

As of June 30, 2007, the Corporation posted a year-to-date deficit of $30.2 million and contributed surplus of $2.6 million pursuant to the Canadian accounting standard regarding stock-based compensation and the cancellation of warrants. The value of shareholders' equity and convertible debentures amounted to $4.5 million, compared with $6.1 million as at December 31, 2006.

Cash Position and Sources of Financing

The Corporation had cash and a temporary investment of $38,000 as at June 30, 2007, down from $2.6 million as at December 31, 2006. Working capital amounted to $2.0 million, compared with $4.4 million as at December 31, 2006.

Bioxel's operating activities used cash flows of $1.4 million in the first half of 2007, reflecting the net loss of $1.1 million excluding non-cash items and a $311,000 increase in working capital requirements. Cash flows used for operations were mainly allocated to business development efforts, research and development and administrative expenses. The monthly burn rate was $196,000 for the first half of 2007, compared with $207,000 for the same period a year earlier.

Complete information, including the Corporation's unaudited interim financial statements and accompanying notes for the second quarter ended June 30, 2007, Message to Shareholders and Management's Report, is available electronically at www.sedar.com and on Bioxel's website at www.bioxelpharma.com.

OUTLOOK

Bioxel continues to accomplish milestones leading to the future growth of its paclitaxel business. In fact, the anticipated near-term approval of its customers' generic drugs should lead to a gradual increase in paclitaxel orders in the coming months. Furthermore, the industrial scale-up of its docetaxel by the end of 2007 will enhance its taxane portfolio and provide the Corporation with a new revenue stream. On the strength of our manufacturing supply chain, the quality of our products and the satisfaction of our clients, we have confidence in achieving our growth and earnings objectives.

ABOUT BIOXEL PHARMA

Bioxel Pharma Inc. is an emerging leader in biopharmaceuticals, focused on developing, manufacturing and marketing taxane pharmaceutical ingredients and proprietary products for improved cancer therapy. Taxanes are used in drug products for the treatment of cancer and other diseases, including psoriasis, rheumatoid arthritis and cardiovascular disease.




Bioxel Pharma Inc.
Selected Financial Data (Unaudited)

Quarter Ended Six Months Ended
June 30, June 30,
Earnings 2007 2006 2007 2006
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$ $ $ $
Revenues 236,685 306,998 281,353 307,810
Cost of goods sold 189,956 235,947 225,834 236,555
Gross profit 46,729 71,051 55,519 71,255
Net research and development
expenses 61,347 218,066 187,380 369,575
Selling expenses 94,165 111,538 198,968 195,757
Administrative expenses 387,183 361,830 685,891 638,352
EBITDA (495 966) (620 383) (1 016 720) (1 132 429)

Financial expenses 167,693 172,681 350,015 347,868
Stock-based compensation 74,223 32,500 74,223 191,677
Exchange gain (42,184) (34,989) (39,367) (33,874)
Amortization of property,
plant, equipment and
intangible assets 218,324 228,198 432,361 469,447
Inventory write-down 26,686 53,222
Interest income (13,062) (46,360) (30,733) (63,609)
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Net loss 930,584 972,413 1,857,904 2,043,938
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Net loss and diluted net
loss per share 0.01 0.01 0.02 0.03
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Weighted average number of
shares outstanding 79,365,387 78,735,426 79,365,387 71,821,690
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As at June 30, As at December 31,
2007 2006
Balance Sheet (Unaudited) (Audited)
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$ $

Cash 37,968 396,917
Temporary investment 2,249,151
Other current assets 4,319,554 4,756,871
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Total current assets 4,357,522 7,402,939
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Property, plant and equipment 5,022,253 4,645,615
Other long-term assets 929,887 865,139
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Total assets 10,309,662 12,913,693
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Current liabilities 2,403,553 3,007,301
Long-term debt 589,433 1,049,730
BioLevier note payable 2,803,303 2,803,303
Liability component of convertible
debentures 1,371,565 1,252,469
Shareholders' equity 3,141,808 4,800,890
Total liabilities and shareholders'
equity 10,309,662 12,913,693
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