Bioxel Pharma Inc.
TSX VENTURE : BIP

Bioxel Pharma Inc.

November 27, 2006 11:50 ET

Bioxel Pharma: Results for the Third Quarter of 2006

Bioxel Continues its Penetration of the European Market and Achieves a Key Milestone in Docetaxel Manufacturing

SAINTE-FOY, QUEBEC--(CCNMatthews - Nov. 27, 2006) - Bioxel Pharma Inc. (TSX VENTURE:BIP), a leading manufacturer of taxane active pharmaceutical ingredients and developer of targeted oncology drugs, today announced its results for the third quarter ended September 30, 2006.

"We are pleased with the progress made on several fronts by the Corporation. In the third quarter, we returned to dynamic sales growth and expect to build upon this momentum in upcoming quarters and the next year. The groundwork done over the past year enabled us to achieve, for this watershed year and especially for this third quarter, tangible results leading us to look forward with confidence to 2007," said Pascal Delmas, President and Chief Executive Officer of the Corporation.

THIRD-QUARTER HIGHLIGHTS

Intensified Penetration of European Market

Pursuant to the agreement signed in October 2005, the first deliveries of paclitaxel to one of Europe's largest generic drug manufacturers benefiting from worldwide marketing capabilities raised revenues by more than 80% over the same period last year.

Concurrently, the Corporation filed its European Drug Master File (DMF) in 10 new European Union countries, thereby enabling generic pharmaceutical companies to qualify Bioxel's paclitaxel in their regulatory files. That is a key step toward marketing its product in various EU countries.

Subsequent to the end of the quarter, Bioxel filed its DMF in four other European countries as well as in Russia, bringing to 15 the total number of countries in which the Corporation now markets or plans to market its paclitaxel.

Milestone in the Manufacture of Semi-Synthetic Taxanes

Bioxel achieved a milestone in docetaxel production, as it indeed manufactured its first industrial lot of the key docetaxel intermediate. Doing so is capital as it proves the Corporation can effectively produce semi-synthetic taxanes using its patented processes, meeting the demand of major pharmaceutical companies. It will also be able to supply customers with docetaxel samples in the final quarter of 2006 and intends to validate its manufacturing process in 2007.

Bioxel thereby confirms its scheduled objective of expanding its product portfolio in the next year by introducing two new taxanes: semi-synthetic paclitaxel and docetaxel.

In addition to providing the Corporation with access to new markets, docetaxel and semi-synthetic paclitaxel will enable it to maximize the use of its industrial platform and consequently to improve its competitive edge and profitability.

During the quarter, Bioxel also carried on its marketing initiatives to secure the manufacture and efficient distribution of docetaxel in partnership with major pharmaceutical companies as of 2007.

Filing of Patent Application for an Injectable Nano-Emulsion Technology

Furthermore, the Corporation made progress in perfecting its targeted chemotherapy pharmaceutical platform. At the very end of the quarter, Bioxel announced the filing of a patent application for a nano-emulsion technology designed to improve the transport and tumor targeting of anticancer drugs.

FINANCIAL HIGHLIGHTS

Operating Results

The Corporation achieved revenues of $517,000 for the third quarter of 2006, up from $282,000 in 2005. This 83% increase is related to the first deliveries of paclitaxel pursuant to the agreement signed in October 2005 with a major European manufacturer of generic drugs.

Revenues totaled $825,000 for the nine-month period ended September 30, 2006, compared with $1,113,000 for the equivalent period of 2005. This revenue shortfall can be explained by the existence of paclitaxel inventories currently in use by Bioxel's North American customers and the usual registration delays with regulatory agencies that followed the signing of supply agreements between Bioxel and its European customers. Pursuant to the agreements executed by the Corporation, paclitaxel deliveries in Europe thus increased during the third quarter of 2006.

Third-quarter gross profit amounted to $104,000 or 20.3% of revenues, compared with $56,000 or 19.7% of revenues a year earlier. Gross profit for the first nine months totaled $176,000 or 21.3%, down from $239,000 or 21.5% for the corresponding period of 2005.

Research and development expenses amounted to $125,000 for the third quarter of 2006, down from $140,000 for the equivalent period of 2005. However, for the first nine months of the year, they increased from $355,000 in 2005 to $495,000 in 2006, reflecting the development initiatives aimed at expanding Bioxel's taxane mix, more specifically the pilot scale-up of the docetaxel manufacturing process.

Selling expenses totaled $86,000 for the third quarter, up slightly over the corresponding period of 2005. For the first nine months, selling expenses decreased from $281,000 as at September 30, 2005 to $265,000 as at September 30, 2006. This $16,000 reduction can primarily be explained by a change in compensation structure.

Administrative expenses were lowered by 8% to $282,000 for the quarter, down from $308,000 in the third quarter of 2005. This decline is due to a tightening of payroll and public corporation expenses. For the nine-month period ended September 30, 2006, administrative expenses totaled $937,000, down 8% from the corresponding period of 2005.

Financial expenses for the third quarter of 2006 amounted to $180,000, up from $146,000 in the third quarter of 2005. This increase is due mainly to the rise in repayment fees associated with the BioLevier loan from Investissement Quebec. For the nine-month period, financial expenses totaled $528,000, down slightly from $540,000 for the same period in 2005.

Amortization expenses increased by $22,000 to $263,000 for the third quarter of 2006, up from $241,000 for the third quarter of 2005. For the first nine months of the year, amortization expenses totaled $732,000, up slightly over $713,000 in 2005.

The Corporation incurred a net loss of $821,000 or $0.01 for the third quarter of 2006, an amount comparable to the corresponding period of 2005. For the nine-month period ended September 30, 2006, the net loss was also comparable to the same period in 2005, i.e. about $2.9 million ($0.04 per share in 2006 and $0.05 per share in 2005).



Bioxel Pharma Inc.
Selected Financial Data

Quarter Ended Nine Months Ended
September 30, September 30,
(Unaudited) (Unaudited)
Earnings 2006 2005 2006 2005
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$ $ $ $
Revenues 516,719 282,008 824,529 1,113,366
Cost of goods sold 412,031 226,388 648,586 873,938
Gross profit 104,688 55,620 175,943 239,428
Research and development
expenses 125,267 140,391 494,842 354,823
Selling expenses 85,976 81,655 265,045 280,986
Administrative expenses 282,437 308,302 937,477 1,016,005
Stock-based compensation 25,625 217,302 173,573
Financial expenses 180,417 146,018 528,285 540,031
Exchange loss (gain) 620 (53,455) (33,254) (12,161)
Amortization 262,833 240,519 732,280 713,192
Interest income (37,724) (4,418) (101,333) (23,731)
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Net loss 820,763 803,392 2,864,701 2,803,290
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Net loss and diluted net
loss per share 0.01 0.01 0.04 0.05
--------------------------------------------------------------------------
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Weighted average number of
shares outstanding 79,365,387 56,882,611 74,363,888 55,079,514
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As at As at
Balance September 30, December 31,
2006 2005
(Unaudited) (Audited)
-------------------------------------------------------------------------
$ $
Cash 198,510 440,330
Temporary investment 3,049,151
Other current assets 4,483,737 3,584,997
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Total current assets 7,731,398 4,025,327
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Property, plant and
equipment 4,311,905 4,538,391
Other long-term assets 862,344 1,023,462
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Total assets 12,905,647 9,587,180
-------------------------------------------------------------------------
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Current liabilities 1,853,467 2,388,332
Long-term debt 1,246,020 1,782,783
BioLevier note payable 2,653,303 2,544,355
Liability component of
convertible debentures 1,244,702 1,221,402
Shareholders' equity 5,908,155 1,650,308
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Total liabilities and
shareholders' equity 12,905,647 9,587,180
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-------------------------------------------------------------------------


Cash Position

The Corporation had cash and a temporary investment of $3.2 million as at September 30, 2006, compared with $440,000 as at December 31, 2005. Working capital amounted to $5.9 million as at September 30, 2006, up from $1.6 million as at December 31, 2005. This increase in liquidity is due primarily to the closing of the $4.7 million financing and the exercise of warrants for proceeds of $2.7 million.

Complete information, including Bioxel's audited interim financial statements and notes to interim financial statements for the quarter ended September 30, 2006, its Message to Shareholders, and its Management's Report, is available electronically at www.sedar.com and on the Corporation's website at www.bioxelpharma.com.

OUTLOOK

Bioxel's dynamic sales growth is expected to gain momentum in upcoming quarters and the next year, driven by its customers' and partners' marketing of its naturally-sourced paclitaxel throughout the European Union.

Furthermore, the Corporation continues to complete the scheduled milestones leading to the commercial-scale manufacture of its paclitaxel and docetaxel through semi-synthesis in 2007. Discussions are also ongoing with business partners seeking to use its manufacturing processes and taxanes under license in their drugs.

Bioxel is therefore confident and enthusiastic as it heads toward the end of 2006 which, in view of the efforts and progress made, will enable it not only to look forward to a significant increase in revenues, but also to achieve positive EBITDA in 2007.

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, Alzheimer's disease 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.

The TSX Venture Exchange has not reviewed the contents of this press release and accepts no responsibility for the adequacy or the accuracy thereof.

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