Helix BioPharma Corp.

Helix BioPharma Corp.

March 10, 2005 08:00 ET

Helix Announces 2nd Quarter 2005 Financial Results


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: HELIX BIOPHARMA CORP.

TSX, FRANKFURT SYMBOL: HBP

MARCH 10, 2005 - 08:00 ET

Helix Announces 2nd Quarter 2005 Financial Results

AURORA, ONTARIO--(CCNMatthews - March 10, 2005) - Helix BioPharma
(TSX:HBP)(FRANKFURT:HBP) today announced financial results and a review
of operational highlights for its second quarter ended January 31, 2005.

Operational highlights for the quarter ended January 31, 2005 included:

- Initiation of the Company's Topical Interferon Alpha-2b Phase II
clinical study in Germany for the treatment of women with low-grade
squamous intraepithelial lesions that are positive for Human Papilloma
Virus (HPV) infection;

- Canadian sales growth of 34% and 47% over the second quarter and first
half of fiscal 2004 respectively driven by Orthovisc® and
Klean-Prep™;

- Signing of license agreement with Lumera Corporation on January 20,
2005 for commercialization of the Company's Biochip technology.

Subsequent to the end of the quarter, the Company entered into agreement
with Apotex Inc. to identify and characterize a lead formulation for
Apotex's topical therapeutic product line.

"In the second quarter we continued to invest in the advancement of our
core therapeutic programs for the treatment of cancer and pre-cancerous
conditions, initiating a clinical trial for our lead product, Topical
Interferon Alpha-2b, and completing additional work on DOS47," said Dr.
Don Segal, President and CEO of Helix BioPharma.

Financial results for the period ended January 31, 2005

Revenue from the sale of pharmaceutical products for the three-month
period ended January 31, 2005 increased $153,000, or 34%, to $597,000 as
compared with $444,000 for the quarter ended January 31, 2004. Building
on the growth of prior quarters, this increase reflects the continued
success of the Company's two leading products, Orthovisc® and
Klean-Prep™ in the Canadian marketplace.

For the first six months of 2005, product sales totalled $1.3 million
representing a $405,000, or 47%, an increase over six-month 2004 sales
of $856,000. Consistent with the growth seen in the recent quarter, the
six-month increase continues to reflect strong performance of both
Orthovisc® and Klean-Prep™ products in Canada.

Royalty revenue for the quarter ended January 31, 2005 was $286,000,
representing a $13,000, or 5%, increase over revenue for the same period
in 2004 of $273,000. Royalty revenue for the first six months of 2005
was $600,000, representing an increase of $76,000, or 15%, over $524,000
in the same period of 2004. Effective January 1, 2005, the Company's
royalty rate earned from Helsinn-Birex on its European sales of
Klean-Prep™ was reduced by half. Royalties from the sale of
Klean-Prep™ in Europe for the quarter ended January 31, 2005 were
$267,000 compared with $273,000 for the same period in the prior year.
This reduction reflects the one-month impact of the reduced royalty
rate, partially offset by continued volume improvements in this
marketplace. In subsequent quarters, the Company expects royalty revenue
from these sales to further decline as the impact of the rate reduction
becomes fully reflected. Also included in royalty revenue for the
quarter ended January 31, 2005 are initial licensing fees resulting from
the Company's January 2005 licensing agreement of its Biochip technology
to Lumera Corporation.

Research and development spending for the three-month period ended
January 31, 2005 was $1.2 million representing a $0.1 million, or 12%,
increase over the $1.1 million recorded in the three-month period ended
January 31, 2004. Spending changes within the quarter include the impact
of increased activity related to DOS47. Offsetting these increased
expenditures is a reduction in spending associated with completion of
development work for the Company's Biochip technology, as well as the
completion of pre-clinical development for Topical Interferon Alpha-2b.
On November 1, 2004 the Company announced initiation of its Phase II
clinical study for the treatment of low-grade squamous intraepithelial
lesions in patients that are positive for HPV infection.

Research and development spending for the first six months of 2005 was
$2.4 million representing a $0.3 million, or 13%, increase over the $2.1
million in research and development spending for the same period in
2004. This increase reflects the Company's growing scientific and patent
activity surrounding DOS47 as well as increased spending for the
manufacturing of clinical material for its recently initiated phase II
trial for Topical Interferon Alpha-2b that began in the first quarter of
2005.

Marketing, general and administration expenses for the quarter ended
January 31, 2005 were $952,000, representing an increase of $145,000, or
18%, over expenditures for the quarter ended January 31, 2004 of
$807,000. Marketing, general and administrative spending for the
six-month period ended January 2005 was $1.7 million, representing an
increase of $0.1 million, or 9%, over $1.6 million in the prior year.
Increased spending reflects the impact of higher marketing expenditures
in support of sales growth, costs associated with having the Company's
auditors review its quarterly results, as well as the impact of wage
increases.

For the three-month period ended January 31, 2005, Helix incurred a net
loss of $1.5 million, or ($0.06) per share compared with a net loss of
$1.3 million, or ($0.05) per share for the three-month period ended
January 31, 2004. Net loss for the first six months of 2005 was $2.9
million, or ($0.11) per share, compared with a net loss of $2.7 million,
or ($0.11) per share, for the same period in the prior year. For both
the most recent quarter as well as the year to date results, increased
margins resulting from the growth of Orthovisc® and Klean-Prep™
sales in Canada as well as increased royalty incomes from the sale of
Klean-Prep™ and the sub-license of the Company's Biochip technology
were offset by increased investments in research and development and
marketing and infrastructure costs.

Liquidity and Capital Resources

Cash, cash equivalents and short-term investments increased by $2.6
million to $9.2 million during the six-month period ended January 31,
2005 from $6.6 million at July 31, 2004. In September 2004, the Company
issued 2,415,000 common shares and 2,415,000 common share purchase
warrants for net proceeds of $5.3 million in a series of private
placements. Cash used in operations during the six-month period was $2.7
million.

While the Company is generating royalty revenue and revenue from the
distribution of pharmaceutical products, such revenue will not be
sufficient to fund all of the Company's planned research, development
and marketing activities. Accordingly, the Company expects to incur
losses in fiscal 2005 and reduce its holdings of cash, cash equivalents
and short-term investments. After taking into account the Company's
recent private placements, the scheduled decrease in royalty rate from
the Helsinn license and planned expenditures, the Company expects that
its current working capital will be sufficient to finance operations for
the next 16 - 20 months. The Company intends to actively seek additional
funding in calendar 2005.

The unaudited consolidated financial statements for the second quarter
are summarized below:



January 31 July 31
2005 2004
CONSOLIDATED BALANCE SHEETS ($'000)

Assets
Cash and cash equivalents 9,233 3,597
Short-term investments - 2,986
Other current assets 1,205 698
Non-current assets 4,635 5,229
--------------------
Total Assets 15,073 12,510
--------------------
--------------------
Liabilities and Equity
Current liabilities 1,462 1,254
Non-current liabilities 22 37
Share capital, options and warrants 45,945 40,709
Deficit (32,356) (29,490)
--------------------
Total Liabilities and Equity 15,073 12,510
--------------------
--------------------



Three-month Six-month
periods ended periods ended
January 31, January 31,
2005 2004 2005 2004
Consolidated Statements of
Operations ($'000 except per
share amounts)

Total Revenue 883 717 1,861 1,380

Cost of Sales 297 225 612 438
Research and development 1,236 1,101 2,405 2,132
Marketing, General and
Administration 952 807 1,699 1,556
Other expenses (income) - net (89) (148) 11 (59)
------------------------------------

Loss for the period (1,513) (1,268) (2,866) (2,687)
------------------------------------
------------------------------------
Loss per share - basic and
fully diluted (0.06) (0.05) (0.11) (0.11)
------------------------------------
------------------------------------



Three-month Six-month
periods ended periods ended
January 31, January 31,
2005 2004 2005 2004
Consolidated Statements of
Cash Flows ($'000)

Cash (used in) operating
activities (1,343) (794) (2,434) (1,450)
Cash provided by (used in)
financing activities (5) 1,348 5,221 1,337
Cash provided by (used in)
investing activities (28) 1,168 2,796 1,879
Effect of foreign exchange on
cash and cash equivalents 123 156 53 68
------------------------------------
Increase (Decrease) in cash and
cash equivalents (1,253) 1,878 5,636 1,834
Cash and cash equivalents-
beginning of period 10,486 1,841 3,597 1,885
------------------------------------
Cash and cash equivalents-
end of period 9,233 3,719 9,233 3,719
------------------------------------
------------------------------------


The foregoing is only a summary of the financial results of the
Company's quarter ended January 31, 2005. The full unaudited interim
financial statements and accompanying Management's Discussion and
Analysis are being filed on SEDAR (www.sedar.com).

During the first and fourth quarters of fiscal 2004, the Company
recorded stock based compensation charges of $254,000 related to stock
options granted to non-employees on October 1, 2003 and July 31, 2003.
These charges should have been amortized throughout the fiscal year 2004
over their vesting period. The Company's quarterly results for fiscal
2004, after taking into account this change in amortization are shown
below. This resulted in no change to the Company's audited financial
statements for the fiscal year ended July 31, 2004.



October 31, January 31, April 30, July 31,
2003 2004 2004 2004

Net loss, as
previously reported $(1,387) $(1,205) $(1,379) $(1,831)

Stock based compensation
expense as previously
recognized 32 nil nil 222

Stock based compensation
expense as amortized
over fiscal 2004 (64) (63) (64) (63)
---------------------------------------------
Restated net loss $(1,419) $(1,268) $(1,443) $(1,672)
---------------------------------------------
---------------------------------------------
Basic and diluted loss
per share, previously
reported $(0.06) $(0.05) $(0.06) $(0.07)
Impact of amortized
stock-based compensation
expense - - - -
---------------------------------------------
Restated basic
and diluted
loss per share $(0.06) $(0.05) $(0.06) $(0.07)
---------------------------------------------
---------------------------------------------


About Helix BioPharma

Helix BioPharma Corp. is a biopharmaceutical company specializing in the
field of cancer therapy. The Company is actively developing innovative
products for the prevention and treatment of cancer based on its
proprietary technologies. Helix's main product development programs are
for its Interferon-alpha Cream and its novel DOS47 new drug candidate.
Helix is listed on the TSX under the symbol "HBP".

The Toronto and Frankfurt Stock Exchanges have not reviewed and do not
accept responsibility for the adequacy or accuracy of the content of
this News Release. This News Release contains forward-looking statements
regarding the Company's future revenues, expenditures, operations,
liquidity and capital resources, which statements can be identified by
the use of forward-looking terminology such as "expects", "will",
"allow", "continues" or "intends" or the negative thereof or any other
variations thereon or comparable terminology referring to future events
or results. Forward looking statements are statements about the future
and are inherently uncertain, and the Company's actual results could
differ materially from those anticipated in these forward-looking
statements as a result of numerous factors, including without
limitation, the Company's need for additional funds, which may not be
available on acceptable terms or at all; the Company's dependence on a
few customers and a few suppliers; research and development risks; the
Company's dependence on third parties for research, development and
commercialization assistance and support; government regulation and the
need for regulatory approvals, which are not assured; uncertainty that
the Company's products will be accepted in the marketplace; rapid
technological change and competition from others; the need to attract
and retain skilled employees; intellectual property risks; risks
inherent in manufacturing (including upscaling) and marketing; product
liability and insurance risks; risks associated with clinical trials,
including the possibility that trials may be terminated early, delayed
or unsuccessful; exchange rate fluctuations; political, economic and
environmental risks; the need for performance by buyers and suppliers of
products; the Company's dependency on performance by its licensees; and
the risk of unanticipated expenses or unanticipated reductions in
revenue, or both; as well as a description of other risks and
uncertainties affecting the Company and its business, as contained in
news releases and filings with the Canadian Securities Regulatory
Authorities, any of which could cause actual results to vary materially
from current results or the Company's anticipated future results.
Forward-looking statements are based on the beliefs, opinions and
expectations of the Company's management at the time they are made, and
the Company does not assume any obligation to update its forward-looking
statement if those beliefs, opinions or expectations, or other
circumstances should change.

WKN: 918 846

-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    The Equicom Group Inc.
    Nick Hurst
    Investor Relations
    (416) 815-0700 ext. 226 or Toll free: (800) 385-5451
    (416) 815-0080 (FAX)
    nhurst@equicomgroup.com