Bioxel Pharma Inc.

Bioxel Pharma Inc.

March 29, 2007 08:00 ET

Bioxel Pharma: Results for Fiscal 2006

SAINTE-FOY, QUEBEC--(CCNMatthews - March 29, 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 fiscal year ended December 31, 2006.

"Fiscal 2006 will remain a pivotal year for Bioxel. We achieved significant advances that set the stage for rational, sustainable and profitable sales growth," indicated Pascal Delmas, President and Chief Executive Officer of the Corporation. "We pursued our new taxane development program, thereby moving closer to the commercial scale-up of docetaxel and semi-synthetic paclitaxel. We are thus well positioned to profit from the opportunities offered by gradual opening up of the generic docetaxel market as of 2008. Consistent with our course of action, we carried on our European expansion by signing a third paclitaxel supply agreement with a major generic pharmaceutical company. At our customers' request, we registered our Drug Master Files in 14 new countries in Europe and Asia, a regulatory prerequisite for marketing our paclitaxel. We are also starting to reap the benefits of our manufacturing cost-cutting program, which, coupled with sales growth, should lead to strong improvement of our financial results in 2007. Finally, we carried on our work on new drug delivery systems, which led to the filing of a patent for a nano-emulsion technology designed to improve the transport and tumor targeting of anticancer drugs."

"We are proud of these achievements, as we measure their importance in terms of meeting our profit objective and leveraging the Corporation's business. At the same time, we know we are going through the most demanding period in our strategic plan: Bioxel has made considerable investments in business development and the scale-up of new products, but our efforts have not yet fully paid off. In that sense, 2006 was a transitional year. We must therefore show commitment and perseverance in order to stay on course and build upon our track record in 2007," concluded Mr. Delmas.


- Bioxel successfully completed a private placement of common shares for proceeds of $4.7 million. The exercise of warrants yields an additional $2.7 million in financing. These funds will enable the Corporation to increase its market presence through international expansion, especially in Europe, and to further invest in developing its new taxanes.

- Bioxel manufactures a first pilot lot of docetaxel, confirming that the company can produce taxanes through semi-synthesis on a commercial scale. The Corporation filed two international patent applications for its innovative docetaxel and paclitaxel synthesis processes ; Bioxel intends to market these two new products starting in 2008.

- Breakthrough in Europe upon signing a third paclitaxel manufacturing and supply agreement with a major generic pharmaceutical company.

- Initial paclitaxel sales to European customers, allowing companies to qualify and register Bioxel's paclitaxel with national health agencies, a regulatory prerequisite to broader marketing of Bioxel product.

- At its customers' request, the Corporation registered its Drug Master Files in 12 European countries as well as in Turkey and Russia.

- Filing of a patent application arising from Bioxel's collaboration with the Universite de Montreal and University of Toronto. The application covers a new drug administration technology through nano-emulsions focused on improving the targeting of tumors, hence the efficacy of chemotherapeutic treatments.

- Revenues of $1.3 million, down 30% from 2005 as a result of reduced demand from North American customers currently in the clinical development phase, and regulatory approval delays in Europe that hindered the Corporation's sales growth in that territory.

- The net loss increased by 11% to $4,06 million, due mainly to lower sales revenue and higher research and development expenses related to the scale-up of new taxanes.


- Dr. Rafick Henein, former President and Chief Executive Officer of IVAX Pharmaceuticals Inc., joined Bioxel Pharma's Board of Directors as an observer; his appointment as director will be proposed to shareholders at the Corporation's next Annual General Meeting.

- Bioxel signed a paclitaxel supply agreement with a medical device manufacturer specializing in coated stents. This three-year renewable agreement provides for the exclusive purchase of Bioxel's paclitaxel to fulfill the customer's needs from development through to commercialization.

BROADENING AND LEVERAGING OF PRODUCT MIX: Docetaxel and semi-synthetic paclitaxel

Bioxel's objective in broadening its product mix is to sustain and accelerate its sales growth over the short and medium terms. Fiscal 2006 was highlighted by unprecedented development efforts. The Corporation optimized its processes and manufactured its semi-synthetic taxanes on a pilot scale, thereby producing an initial representative lot of docetaxel and proving it could manufacture this product on a commercial scale. Bioxel concurrently focused on safeguarding its intellectual property rights by filing two new international patent applications for its processes and taxane derivatives. Docetaxel will undoubtedly be a major growth driver for the Corporation, as the first patents to the original molecule marketed by Sanofi-Aventis under the Taxotere brand will expire as of late 2007. Bioxel is hence well positioned to profit from the opportunities offered by the gradual opening of the generic market for Taxotere, a product that yielded sales of over US$2 billion in 2006. Discussions are currently under way with generic pharmaceutical companies for the supply of semi-synthetic taxanes under licensing agreements.

In 2006, we have also pursued our development program on new drug delivery systems. A first patent was filed for a unique technological platform allowing drugs to be administered by injection in the form of nano-emulsions. This drug delivery system consists of small vesicles designed to target certain types of tumor in order to increase the efficacy of chemotherapeutic treatments. In the medium term, Bioxel plans to use this promising technology in order to develop innovative oncology drugs. After completion of the optimisation of the system, the Company will make a decision in 2008 regarding the best approach to maximize further the value of this program.


After signing paclitaxel supply agreements with two major generic pharmaceutical companies in Europe, at their request, the Corporation registered its Drug Master Files in 12 European countries as well as in Turkey and Russia. The number of registrations thus increased fivefold within a one-year period. That will enable Bioxel to extend its geographic coverage, thereby multiplying its market opportunities.

However, lower demand in North America from customers currently in the clinical development phase and regulatory delays that affected the paclitaxel marketing rate in Europe had a material adverse impact on the Corporation's revenues, lowering them to $1.3 million, down 30% from 2005. Bioxel expects its results to gradually improve in 2007 as its customers obtain authorizations to market their paclitaxel-based drugs. For the near term, these authorizations represent key sales growth drivers.

IMPROVEMENT OF MANUFACTURING EFFICIENCY: quality, productivity and competitiveness

In 2006, Bioxel continued to implement its taxane production cost-cutting program, applying a strategy focused on lowering manufacturing costs through sound diversification of suppliers and achieving further manufacturing efficiencies through yield improvements. These initiatives led us to forecast improvement in our profitability in 2007.


Operating Results

The Corporation posted revenues of $468,000 in the fourth quarter of 2006, down from $721,000 in the same period of 2005. The Corporation achieved revenues of $1,292,000 for fiscal 2006, compared with $1,834,000 in 2005. This decline in sales can be explained by lower demand for paclitaxel in North America, due primarily to the existence of sufficient inventories to meet customers' clinical development needs. Conversely, European sales rose significantly as of the third quarter, although this dynamic growth was adversely affected by the significant delays incurred by a European customer in qualifying and registering Bioxel's paclitaxel.

Bioxel achieved a fourth-quarter gross profit of $68,000, as compared to $104,000 for the corresponding period of 2005. For fiscal 2006 as a whole, gross profit totaled $244,000 or 18.9% of revenues, compared with $343,000 or 18.7% of revenues a year earlier. Measures applied by Bioxel in 2006 to lower manufacturing costs and improve efficiency throughout the manufacturing chain are expected to drive up profitability in 2007.

Research and development expenses amounted to $201,000 in the fourth quarter of 2006, compared with $77,000 in the same period of 2005. Research and development expenses totaled $696,000 for fiscal 2006, compared with $432,000 for the corresponding period of 2005. This $264,000 increase reflects the higher resources allocated to the broadening of Bioxel's taxanes mix and, more particularly, the pilot scale-up of the processes used in manufacturing docetaxel, a key product Bioxel expects to market beginning in 2008.

The Corporation recorded selling expenses of $108,000 for the fourth quarter of 2006, compared with $65,000 for the equivalent period of 2005. Selling expenses were up for fiscal 2006 as a whole, rising from $346,000 as at December 31, 2005 to $373,000 as at December 31, 2006. This increase of approximately 8% is due primarily to greater international business development efforts, especially in Europe.

Administrative expenses amounted to $310,000 for the fourth quarter of 2006, compared with $259,000 for the same period the previous year. For fiscal 2006 as a whole, administrative expenses totaled $1.2 million, down slightly from 2005.

Financial expenses of $187,000 were incurred in the fourth quarter of 2006, compared with $278,000 in the corresponding period of 2005. Financial expenses decreased to $715,000 in fiscal 2006, down from $818,000 in 2005. This $103,000 or 13% decline is mainly attributable to the reduction in financing fees, the amortization of financing costs and interest on long-term debt.

Amortization of property, plant and equipment and intangible assets amounted to $203,000 for the fourth quarter of 2006, compared with $242,000 in the equivalent period of 2005. Amortization of property, plant and equipment and intangible assets decreased to $936,000 in fiscal 2006, down by $19,000 from $955,000 in fiscal 2005.

In the fourth quarter of fiscal 2006, the Corporation recorded an allowance for inventory writedown of about $219,000 related to a paclitaxel extraction by-product. Thus, Bioxel incurred a net loss of $1,194,000 or $0.01 per share in the fourth quarter of 2006, versus $843,000 or $0.02 per share in the same period of 2005. For the year as a whole, the Corporation incurred a net loss of $4.06 million or $0.05 per share, compared with $3.65 million or $0.07 per share for fiscal 2005.

Cash Position

The Corporation had cash and a temporary investment of $2.6 million as at December 31, 2006, compared with $440,000 as at December 31, 2005. Working capital amounted to $4.4 million as at December 31, 2006, up from $1.6 million as at December 31, 2005. This increase in liquidity is due mainly to the closing of the $4.7 million financing and the exercise of warrants for proceeds of $2.7 million in the second quarter of 2006.

Complete information, including the Corporation's audited annual financial statements and accompanying notes, Message to Shareholders and Annual Report, is available electronically at and on Bioxel's website at


Fiscal 2006 was a transitional year for Bioxel. Drawing on the agreements signed with European partners, the Corporation laid down the fundamentals needed to drive its sales growth, which started to materialize in the second half of the year. Although the registration delays encountered by a European customer will continue to hinder Bioxel's sales in the first half of 2007, its market positioning should progressively improve and its sales should rise as its paclitaxel is gradually approved by European health agencies, thereby leading to broader marketing of its product. In North America, customers' applications for the authorization to market new paclitaxel-based drugs should be granted in 2008, giving new momentum to the profitable growth of paclitaxel sales.

Concurrently, the Corporation continues to achieve the scheduled milestones leading to the commercial-scale manufacturing of paclitaxel and docetaxel through semi-synthesis. Its objective is to be ready to meet generic pharmaceutical market demands as of 2008, upon expiry of the initial patents for the original molecule marketed by Sanofi-Aventis. Thus, active discussions are under way with business partners seeking licensing agreements entitling them to use Bioxel's manufacturing processes and taxanes in their drugs.

The Corporation is hence confident about its performance in 2007 and remains committed to its three-tiered growth strategy: geographically diversifying its sales; launching new products on its own or in partnership; and further improving the efficiency and productivity of its manufacturing chain.


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.

This announcement includes forward-looking statements that involve a number of risks and uncertainties, the outcome of which could materially and/or adversely affect future results. These include risks and uncertainties that could affect Bioxel's products under development such as regulatory factors, technological developments and competitive factors. Achievement of the objectives set forth in this release is subject to these risks and uncertainties. The Corporation's results, or the measures it adopts, could differ materially from those indicated or underlying these statements, or could have an impact on the realization of financial projections.

Bioxel Pharma Inc.
Selected Financial Data

Quarter Ended Twelve Months Ended
December 31, December 31,
(Unaudited) (Audited)
Earnings 2006 2005 2006 2005
$ $ $ $
Revenues 468,036 720,634 1,292,565 1,834,000
Cost of goods sold 400,098 616,644 1,048,684 1,490,582
Gross profit 67,938 103,900 243,881 343,418
Research and development
expenses 200,853 76,869 695,695 431,692
Selling expenses 107,841 65,087 372,886 346,073
Administrative expenses 309,933 258,998 1,247,410 1,275,003
Stock-based compensation 31,742 35,660 249,044 209,233
Financial expenses 186,541 278,436 714,827 818,467
Exchange loss (gain) 29,042 (7,973) (4,212) (20,134)
Amortization 203,341 242,059 935,620 955,251
Inventory writedown 219,420 219,420
Interest income (30,721) (2,584) (132,054) (26,315)

Net loss 1,193,910 842,562 4,058,611 3,645,852

Net loss and diluted
net loss per share 0.01 0.02 0.05 0.07

Weighted average
number of shares
outstanding 79,365,387 57,535,547 75,624,540 55,698,569

As at December 31, As at December 31,
Balance Sheet 2006 2005
(Audited) (Audited)
$ $

Cash 396,917 440,330
Temporary investment 2,249,151
Other current assets 4,756,871 3,584,997
Total current assets 7,402,939 4,025,327
Property, plant and equipment 4,645,615 4,538,391
Other long-term assets 865,139 1,023,462
Total assets 12,913,693 9,587,180

Current liabilities 3,007,301 2,388,332
Long-term debt 1,049,730 1,782,783
BioLevier note payable 2,803,303 2,544,355
Liability component of convertible
debentures 1,252,469 1,221,402
Shareholders' equity 4,800,890 1,650,308
Total liabilities and shareholders'
equity 12,913,693 9,587,180

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