Chemokine Therapeutics Corp.
TSX : CTI
OTC Bulletin Board : CHKT

Chemokine Therapeutics Corp.

August 14, 2007 19:07 ET

Chemokine Therapeutics Announces Second Quarter 2007 Financial and Operating Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 14, 2007) - Chemokine Therapeutics Corp. (the "Company") (TSX:CTI)(OTCBB:CHKT), a biotechnology company developing chemokine-based therapies to treat cancer, blood disorders and vascular diseases, today announced the financial and operating results of the second quarter ended June 30, 2007.

Second Quarter Highlights:

- Positive data from M.D. Anderson's study using CTCE-9908 in pre-clinical models of breast cancer.

- Dr. Anthony Tolcher, renowned oncology expert, joins Clinical Advisory Board.

"With encouraging results from the study conducted by M.D. Anderson with CTCE-9908, Chemokine continues to make progress in the development of its lead anti-cancer candidate," said C. Richard Piazza, Chairman and CEO of Chemokine Therapeutics. "The Company is on schedule to move forward with a multi-center Phase II clinical study in the United States for CTCE-9908 by the end of the year."

Financial Results - Unaudited

(All amounts in U.S. dollars and in accordance with U.S. GAAP unless otherwise specified)

The Company incurred a net loss of $306,078 ($0.01 per share) for the three months ended June 30, 2007 compared to a net loss of $1,701,685 ($0.04 per share) for the three months ended June 30, 2006. The decrease in net loss was principally caused by the decrease in research and development expenditures as described below. If these cost recoveries were excluded then our net loss for the three months ended June 30, 2007 would have been $1,383,989 ($0.03 per share).

The Company had no revenues in the three months ended June 30, 2007, and the three months ended June 30, 2006.

Research and development expenses include contract research, manufacturing, laboratory supplies, and staff salaries. Research and development expenses for the three months ended June 30, 2006 were $1,015,108 compared to a net recovery of $394,661 for the three months ended June 30, 2007. The decrease of $1,409,769 in research and development expenses in the current three month period was primarily attributable to the recovery of costs of $506,911 for fiscal 2005 and $571,000 for fiscal 2006 from Globe Laboratories Inc. (Globe) under the terms of the development agreement with Globe which the Company terminated on January 1, 2007 and pursuant to the terms of a settlement agreement with Globe. The Company's normalized research and development costs, excluding the above mentioned cost recoveries would have amounted to $683,250 for the three months ended June 30, 2007 compared to $1,015,108 for the corresponding period in 2006, a decrease of $331,858, attributable to clinical trial startup costs, production of drug supplies, and supportive and analytical work that was incurred in the comparative quarter in 2006.

Normalized direct costs (excluding the cost recoveries of $1,077,911 referred to above) for CTCE-9908 were $515,483 for the three months ended June 30, 2007 compared to $250,427 for the three months ended June 30, 2006. The increase of $265,056 in CTCE-9908 normalized direct costs in the current period reflects increased spending on clinical trials and for manufacturing of the compound.

Direct costs for CTCE-0214 were $75,411 for the three months ended June 30, 2007 compared to $458,263 for the three months ended June 30, 2006. The decrease of $382,852 in CTCE-0214 direct costs in the current period reflects a reduction of spending on preclinical studies in keeping with a progression to a clinical phase of development.

The Company expects that research and development expenses will increase in the future as and when the Company incurs costs for clinical trials. Completion dates and completion costs to bring a drug candidate to market vary significantly for each drug candidate given the nature of the clinical trials and the fact that more clinical trials may need to be conducted to advance a drug candidate based upon the results of each phase. In addition, the Company anticipates partnering with larger pharmaceutical companies to conduct and finance later stage clinical trials and therefore the timing of completion of the approval of a drug will likely not be within the Company's control. Based on these factors the Company cannot reasonably estimate the completion dates and completion costs required to gain regulatory approval of its compounds for sale. Drug candidates are required to successfully complete Phase III clinical trials before gaining regulatory approval for sale which for the Company's drug candidates is not expected to occur for several years.

General and administrative expenses for the three months ended June 30, 2007 were $926,795, compared to $1,058,947 for the three months ended June 30, 2006. The decrease of $132,152 was primarily a result of decreased salaries and investor relations expenditures.

Interest income was $42,812 for the three months ended June 30, 2007 compared with $112,051 for the three months ended June 30, 2006. The decrease of interest income of $69,239 was due to decreases in short-term investments and cash equivalents.

Foreign exchange gain was $288,513 for the three months ended June 30, 2007, compared to $338,253 in the three months ended June 30, 2006. These gains principally resulted from short-term investments and foreign currency transactions.

At June 30, 2007, the Company had approximately $3.4 million in cash and cash equivalents and short-term investments on hand, compared to approximately $6.1 million as of December 31, 2006, a decrease of approximately $2.7 million. The Company's working capital at June 30, 2007 was approximately $3.3 million, compared to approximately $5.9 million at December 31, 2006, a decrease of approximately $2.6 million.

About Chemokine Therapeutics Corp. (TSX:CTI)(OTCBB:CHKT)

Chemokine Therapeutics is a product-focused biotechnology company developing drugs in the field of chemokines. Chemokines are a class of signaling proteins which play a critical role in the growth, differentiation, and maturation of cells necessary for fighting infection as well as tissue repair and regeneration. Chemokines also have an important role in cancer metastasis and growth. Chemokine Therapeutics is a leader in research in the field of chemokines and has several products in various stages of development.

Safe Harbor Statement under the U. S. Private Securities Litigation Reform Act of 1995: Statements in this document regarding management's future expectations, beliefs, goals, plans or prospects constitute forward-looking statements that involve risks and uncertainties, which may cause actual results to differ materially from the statements made. For this purpose, any statements that are contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words "believes", "anticipates", "plans", "intends", "will", "should", "expects", "projects", and similar expressions are intended to identify forward-looking statements. You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause actual results, future circumstances, or events to differ materially from those projected in the forward-looking statements. These risks include, but are not limited to, those associated with the success of research and development programs, the regulatory approval process, competition, securing and maintaining corporate alliances, market acceptance of the Company's products, the availability of government and insurance reimbursements for the Company's products, the strength of the Company's intellectual property, the ability of the Company to obtain adequate financing to fund its operations, the potential dilutive effects of any financing, reliance on subcontractors and key personnel and other risks detailed from time-to-time in the Company's public disclosure documents and other filings with the U.S. Securities and Exchange Commission and Canadian securities regulatory authorities. Forward-looking statements are made as of the date hereof, and the Company disclaims any intention and has no obligation or responsibility, except as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.



CHEMOKINE THERAPEUTICS CORP.
(A Development Stage Company)

INTERIM CONSOLIDATED BALANCE SHEETS

June 30, December 31,
2007 2006
------------- --------------
(Unaudited) (Audited)
ASSETS

CURRENT ASSETS
Cash and cash equivalents $ 3,332,970 $ 4,446,668
Short-term investments 71,631 1,642,308
Amounts receivable 65,202 60,366
Amount due from affiliate 738,618 -
Prepaid expense and deposits 54,923 103,816
------------- --------------

TOTAL CURRENT ASSETS 4,263,344 6,253,158

PROPERTY AND EQUIPMENT, net 542,146 332,440

LICENSE COSTS, net 12,452 16,299

DEFERRED FINANCING COSTS 713,655 -

AMOUNT DUE FROM AFFILIATE - 253,263
------------- --------------
$ 5,531,597 $ 6,855,160
------------- --------------
------------- --------------
LIABILITIES

CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 914,480 $ 377,915
Current portion of capital lease obligation 13,997 12,392
------------- --------------

TOTAL CURRENT LIABILITIES 928,477 390,307

CAPITAL LEASE OBLIGATION 2,430 8,722
------------- --------------
930,907 399,029
------------- --------------

COMMITMENTS

STOCKHOLDERS' EQUITY

PREFERRED STOCK
Authorized - 6,000,000 shares; par
value $ 0.001 per share
Issued and outstanding shares: June 30, 2007
and December 31, 2006 - Nil - -

COMMON STOCK
Authorized - 200,000,000 shares; par
value $ 0.001 per share at June 30, 2007 and
100,000,000 shares at December 31, 2006
Issued and outstanding shares: June 30, 2007
and December 31, 2006 - 42,183,748 42,184 42,184

ADDITIONAL PAID-IN CAPITAL 31,019,933 30,957,359

(DEFICIT) ACCUMULATED DURING THE DEVELOPMENT
STAGE (26,461,427) (24,543,412)
------------- --------------
4,600,690 6,456,131
------------- --------------
$ 5,531,597 $ 6,855,160
------------- --------------
------------- --------------

See Edgar or Sedar for accompanying notes


CHEMOKINE THERAPEUTICS CORP.
(A Development Stage Company)

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Cumulative
from
inception
on
July 15,
Three months ended Six months ended 1998 to
June 30, June 30, June 30,
----------------------- ------------------------ ------------
2007 2006 2007 2006 2007
----------------------- ------------------------ ------------

REVENUE $ - $ - $ - $ - $ 275,000
----------------------- ------------------------ ------------

EXPENSES
Research
and devel-
opment (394,661) 1,015,108 320,585 2,436,116 14,916,310
(recovery)
General
and admin-
istrative 926,795 1,058,947 1,789,600 1,689,652 12,043,196
Stock-
based
compen-
sation 27,739 37,584 62,574 72,231 620,693
Amortiz-
ation
of license 1,924 1,923 3,847 3,847 38,151
Depreci-
ation
and
amortiz-
ation of
property
and
equipment 75,606 38,697 150,167 74,430 496,258
----------------------- ------------------------ ------------
637,403 2,152,259 2,326,773 4,276,276 28,114,608
----------------------- ------------------------ ------------

OTHER
INCOME
Interest 42,812 112,051 99,384 161,252 701,862
Foreign
exchange
gain
(loss) 288,513 338,523 309,374 302,952 676,319
331,325 450,574 408,758 464,204 1,378,181
NET LOSS $(306,078) $(1,701,685) $(1,918,015) $(3,812,072) $(26,461,427)
----------------------- ------------------------ ------------
----------------------- ------------------------ ------------

NET LOSS
PER COMMON
SHARE FOR
THE
PERIOD -
BASIC $ (0.01) $ (0.04) $ (0.05) $ (0.10)
AND DILUTED
----------------------- ------------------------ ------------
----------------------- ------------------------ ------------

WEIGHTED
AVERAGE
NUMBER
OF
COMMON
SHARES 42,183,748 40,988,420 42,183,748 37,043,990
OUTSTAN-
DING
----------------------- ------------------------ ------------
----------------------- ------------------------ ------------

See Edgar or Sedar for accompanying notes


CHEMOKINE THERAPEUTICS CORP.
(A Development Stage Company)

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)

Cumulative
from
inception on
July 15,
Three months ended Six months ended 1998 to
June 30, June 30, June 30,
----------------------- ------------------------ ------------
2007 2006 2007 2006 2007
----------------------- ------------------------ ------------

CASH FLOW
FROM
OPERATING
ACTIVITIES
Net loss $ (306,078) $(1,701,685) $(1,918,015) $(3,812,072) $(26,461,427)
Adjustments
to
reconcile
net cash
provided
by oper-
ating
activities
Depreciation
and amort-
ization 77,530 40,620 154,014 78,277 534,409
Common
shares
issued for
consulting
services - - - - 1,033,669
Warrants
issued for
consulting
services - - - - 404,842
Options
issued for
consulting
services - - - - 87,968
Stock-
based
compensation 27,739 37,584 62,574 72,231 620,693
Decrease
(increase)
in Amounts
receivable 2,338 (47,104) (4,836) (60,140) (65,202)
Prepaid
expense
and
deposits 32,513 17,318 48,893 52,574 (54,923)
Increase
(decrease)
in Accounts
payable
and accrued
liabilities 422,459 (95,392) 536,565 21,965 914,480
----------------------- ------------------------ ------------

CASH
PROVIDED
(USED) BY
OPERATING 256,501 (1,748,659) (1,120,805) (3,647,165) (22,985,491)
ACTIVITIES
----------------------- ------------------------ ------------

CASH FLOW
FROM
FINANCING
ACTIVITIES
Stock issued
for cash - 674,156 - 7,489,823 31,647,476
Stock
issued for
settlement
of debt - - - - 200,000
Offering
costs (to) - (24,140) - (426,228) (2,974,596)
Net
advances
(to)
from
affiliates (474,689) (295,344) (485,355) 229,900 (691,800)
Promissory
note
payable (219,778) - - - -
Deferred
financing
costs (713,655) - (713,655) - (713,655)
Capital
lease
payments (1,832) (1,625) (4,687) (4,595) (18,223)

----------------------- ------------------------ ------------
CASH
PROVIDED
(USED) BY
FINANCING (1,409,954) 353,047 (1,203,697) 7,288,900 27,449,202
ACTIVITIES
----------------------- ------------------------ ------------

CASH FLOW
FROM
INVESTING
ACTIVITIES
Cash held
by disposed
subsidiary - - - - (4,754)
Purchase
of short-
term
investments (5,534) (933,360) (933,617) (6,650,438) (17,305,225)
Redemption
of
short-
term
investments 926,340 2,719,770 2,504,295 2,719,770 17,233,596
Payment
under
license
agreement - - - - (50,603)
Purchase
of
property
and
equipment (5,358) (68,192) (359,874) (146,812) (1,003,755)

----------------------- ------------------------ ------------
CASH
PROVIDED
(USED) BY
INVESTING 915,448 1,718,218 1,210,804 (4,077,480) (1,130,741)
ACTIVITIES
----------------------- ------------------------ ------------

INCREASE
(DECREASE)
IN CASH
AND CASH
EQUIVALENTS
DURING
THE PERIOD (238,005) 322,606 (1,113,698) (435,745) 3,332,970

CASH
AND
CASH
EQUIV-
ALENTS,
beginning 3,570,975 2,960,812 4,446,668 3,719,163 -
of period

----------------------- ------------------------ ------------
CASH
AND CASH
EQUIV-
ALENTS,
end of $3,332,970 $ 3,283,418 $ 3,332,970 $ 3,283,418 $ 3,332,970
period
----------------------- ------------------------ ------------
----------------------- ------------------------ ------------

See Edgar or Sedar for accompanying notes


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