-- Helix announced that it had received approval for its investigational
new drug ("IND") application from the United States Food and Drug
Administration ("FDA") to perform its planned U.S. Phase I clinical
safety and tolerability study of its lung cancer drug candidate
L-DOS47.
-- Helix announced that it had filed a clinical trial application ("CTA")
with the Central Register of Clinical Trials at the Polish Ministry of
Health seeking approval to perform its planned Phase I/II clinical
safety, tolerability and preliminary efficacy study of its lung cancer
drug candidate L-DOS47.
-- Helix announced that the United States Patent & Trademark Office
issued a patent (U.S. Patent No. 7,872,105 B2) to the National
Research Council of Canada for the non-small cell lung cancer
("NSCLC")-specific antibody component of Helix's L-DOS47 drug candidate
Other:
-- Helix entered into an agreement to assign certain international
Klean-Prep® rights to Helsinn Birex Pharmaceuticals Limited
("Helsinn"). The sale of the worldwide rights, except the U.S. and
Canada, was completed. The sale of the U.S. rights remains subject
to license terms as previously announced. The parties also entered
into a new supply agreement where Helsinn will supply Klean-Prep®
to Helix with terms extending over a ten year period, subject to
certain performance conditions. Helix has retained the Canadian rights
to Klean-Prep® and continues to distribute the product in Canada.
-- Helix signed an extension with its supplier of Orthovisc® and
Monovisc™, extending the distribution agreement to 2014 and
amending certain terms.
-- Helix retained New York-based Cooper Global Communications (CGC) to
help Helix raise its visibility among various constituency groups,
especially those specialized in issues concerning women's health,
as one of Helix's therapeutic areas. Together, Helix and CGC will
develop and implement a women's advocacy relations campaign intended
to increase awareness about Helix and its developmental Topical
Interferon Alpha-2b drug candidate in particular, in addition to its
programs in general.
RESULTS FROM OPERATIONS
Three and six month periods ended January 31, 2011 compared to the same
period in the previous year
Loss for the period
The Company recorded a loss of $2,231,000 and $5,794,000, respectively for
the three and six month periods ended January 31, 2011 for a loss per
common share of $0.03 and $0.09, respectively. In the comparative three and
six month periods ended January 31, 2010, the Company recorded a loss of
$3,675,000 and $7,148,000, respectively for the three and six month periods
ended January 31, 2010 for a loss per common share of $0.06 and $0.12,
respectively.
Revenues
Revenues totaled $1,188,000 and $2,393,000 respectively for the three and
six month periods ended January 31, 2011 and represent an increase of
$67,000 (6.0%) and $252,000 (11.8%) when compared to the three and six
month periods ended January 31, 2010.
Product revenues totaled $1,162,000 and $2,267,000 respectively for the
three and six month periods ended January 31, 2011 and represent an
increase of $150,000 (14.8%) and $352,000 (18.4%) when compared to the
three and six month periods ended January 31, 2010. Except for
Normacol®, product revenues were higher across all other products.
Monovisc™ and Orthovisc® on a combined basis continue to reflect the
majority of the increase product revenues. The Company commenced
distribution of Monovisc™ in Canada during the fiscal first quarter of
2010. During the second quarter of fiscal 2011, Helix entered into a new
supply agreement with Helsinn, where Helsinn will supply Klean-Prep® to
the Company with terms extending over a ten year period, subject to certain
performance conditions. The Company also signed an extension of its
agreement with Anika Therapeutics Inc., its supplier of Orthovisc® and
Monovisc™, extending it to 2014 and amending certain terms, including
minimum sales targets.
License fees and royalties totaled $26,000 and $126,000 respectively for
the three and six month periods ended January 31, 2011 and represent a
decrease of $83,000 (76.1%) and $100,000 (44.2%) when compared to the three
and six month periods ended January 31, 2010. License fees and royalty
revenues are comprised solely of royalties related to sales of Klean-Prep®
outside of Canada. Due to the December 1, 2010 sale and license to Helsinn
of certain international Klean-Prep® rights, license fees and royalties
were down over the same periods in the previous year as the sale occurred
prior to the end of the quarter, and Helix no longer earns royalty
revenue associated with Klean-Prep®.
Cost of sales and margins
Cost of sales totaled $376,000 and $790,000 respectively for the three and
six month periods ended January 31, 2011(three and six month periods ended
January 31, 2010 were $461,000 and $879,000 respectively). As a percentage
of product revenues, cost of sales were 32.4% and 34.8% for the three and
six month periods ended January 31, 2011(three and six month periods ended
January 31, 2010 were 45.6% and 45.9% respectively). Products for sale are
purchased in U.S dollars and Euros. The decrease in cost of sales reflects
the appreciation of the Canadian dollar versus both the U.S dollar and Euro
in addition to goods sold through in the quarter with a cost base of zero.
Research and development
Research and development costs for the three and six month periods ended
January 31, 2011 totaled $2,211,000 and $4,612,000 respectively (three and
six month periods ended January 31, 2010 were $2,335,000 and $5,260,000
respectively).
Topical Interferon Alpha-2b research and development costs for the three
and six month periods ended January 31, 2011 totaled $761,000 and
$1,816,000 respectively (three and six month periods ended January 31, 2010
were $1,340,000 and $2,887,000 respectively). Lower research and
development expenditures are associated with both of the Company's Topical
Interferon Alpha-2b clinical programs having been completed and the Company
concentrating its efforts on resolving the FDA clinical hold associated
with its application to conduct a U.S. Phase II/III IND trial for low-grade
cervical lesions.
DOS47 research and development costs for the three and six month periods
ended January 31, 2011 totaled $1,450,000 and $2,796,000 respectively
(three and six month periods ended January 31, 2010 were $995,000 and
$2,373,000 respectively). The higher L-DOS47 research and development
expenditures reflect collaborative scientific research and clinical
research expenditures associated with the recent applications for a Phase I
IND in the U.S. and a Polish Phase I/II CTA filing. The Company received
approval for its IND application from the FDA in the quarter and subsequent
to the quarter completed the application with Polish authorities.
Operating, general and administration
Operating, general and administration expenses for the three and six month
periods ended January 31, 2011 totaled $1,141,000 and $2,117,000
respectively (three and six month periods ended January 31, 2010 were
$770,000 and $1,446,000 respectively). The increase in operating, general
and administration expenditures is the result of higher legal and audit
fees associated with the filing of a base shelf prospectus and the sale and
license to Helsinn of certain international Klean-Prep® rights.
Sales and marketing
Sales and marketing expenses for the three and six month periods ended
January 31, 2011 totaled $289,000 and $547,000 respectively (three and six
month periods ended January 31, 2010 were $298,000 and $559,000
respectively). The Company incurred higher sales commissions and sales
agent expenses as a result of increased sales in fiscal 2011 compared to
fiscal 2010, which were offset by lower marketing and promotion activities
associated with the Canadian product launch of Monovisc™ which occurred
in fiscal 2010 resulting in a net decrease from prior year's comparative
figures.
Amortization of capital assets
Amortization of capital assets for the three and six month periods ended
January 31, 2011 totaled $105,000 and $212,000 respectively (three and six
month periods ended January 31, 2010 were $107,000 and $205,000
respectively).
Stock-based compensation
Stock-based compensation expense for the three and six month periods ended
January 31, 2011 totaled $336,000 and $1,030,000 respectively (three and
six month periods ended January 31, 2010 were $605,000 and $765,000
respectively). The stock-based compensation expense in fiscal 2011 relates
to the ongoing amortization of compensation costs of stock options granted
on August 17, 2010, December 14, 2009 and December 17, 2008, over their
vesting period.
Interest income
Interest income for the three and six month periods ended January 31, 2011
totaled $44,000 and $94,000 respectively (three and six month periods ended
January 31, 2010 were $10,000 and $24,000 respectively). The increase in
interest income in fiscal 2011 reflects higher cash balances and higher
interest rates earned on deposits.
Foreign exchange gain/loss
Foreign exchange for the three and six month periods ended January 31, 2011
reflects an $8,000 loss and $27,000 gain respectively (three and six month
periods ended January 31, 2010 reflect losses of $230,000 and $188,000,
respectively). Foreign exchange gains and losses are mainly the result of
the foreign currency translation of the Company's integrated foreign
operation in Ireland as well as a value added tax receivable, both
denominated in Euros.
Gain on sale of license
Effective December 1, 2010, the Company sold to Helsinn certain world-wide
rights to Klean-Prep® excluding the U.S. and Canada, for 1 million Euros,
and realized a gain of $1,336,000.
Income taxes
Income tax expense for the three and six month periods ended January 31,
2011 totaled $333,000 and $336,000 respectively (three and six month
periods ended January 31, 2010 were $nil and $11,000 respectively). The
increase is attributable to the taxes payable as a result of the agreement
to sell certain international Klean-Prep® rights to Helsinn. All income
taxes are attributable to the Company's operations in Ireland.
CASH FLOW
Operating activities
Cash used in operating activities for the three and six month periods ended
January 31, 2011 totaled $874,000 and $3,957,000 respectively, including a
net loss of $2,231,000 and $5,794,000 respectively. Cash used in operating
activities for the three and six month periods ended January 31, 2010
totaled $3,098,000 and $5,446,000 respectively, including a net loss of
$3,675,000 and $7,148,000 respectively.
Significant adjustments for the three and six month periods ended January
31, 2011 include amortization of capital assets of $105,000 and $212,000
respectively (2010 -- $107,000 and $205,000), deferred lease credits of
$6,000 and $12,000 (2010 -- $5,000 and $13,000), stock-based compensation
related to earlier stock option grants of $336,000 and $1,030,000
respectively (2010 -- $605,000 and $765,000), foreign exchange loss of
$8,000 and gain of $27,000 respectively (2010 -- losses of $230,000 and
$188,000) and changes in non-cash working capital balances related to
operations of $914,000 and $634,000 (2010 -- $(360,000) and $557,000).
Financing activities
Financing activities for the three and six month periods ended January 31,
2011 totaled $4,000 and $9,461,000 respectively (three and six month
periods ended January 31, 2010 were $nil and $11,597,000 respectively).
All financing activities reflect the net proceeds of two separate private
placements as well as stock option exercises.
Investing activities
Use of cash in investing activities for the three and six month periods
ended January 31, 2011 totaled $71,000 and $80,000 respectively (three and
six month periods ended January 31, 2010 were $239,000 and $484,000
respectively) and represents capital acquisitions in both fiscal periods.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has financed its operations from public and
private sales of equity, the exercise of warrants and stock options, and,
to a lesser extent, interest income from funds available for investment,
government grants, investment tax credits, and revenues from distribution,
licensing and contract services. Since the Company does not have net
earnings from its operations, the Company's long-term liquidity depends on
its ability to access the capital markets, which depends substantially on
the success of the Company's ongoing research and development programs.
At January 31, 2011, the Company had cash and cash equivalents totaling
$18,576,000 (July 31, 2010 -- $13,125,000). The increase in cash and cash
equivalents in fiscal 2011 is the result of a private placement completed
on August 6, 2010 where the Company issued 4,530,000 units at $2.43 per
unit, for net proceeds of $9,457,000. Each unit consists of one common
share and one common share purchase warrant with each whole common share
purchase warrant entitling the holder to purchase, subject to adjustment,
one common share at a price of $3.40 until 5pm (Toronto time) on August 5,
2013. The total number of common shares issued and outstanding as at
January 31, 2011 was 64,507,835 (July 31, 2010 -- 59,975,335).
Based on our planned expenditures and assuming no material unanticipated
expenses, our forecasts indicate that our cash reserves and expected cash
from operations will be sufficient to meet our anticipated cash needs for
working capital and capital expenditures through at least the next twelve
months. These planned expenditures do not include those necessary to
conduct the proposed U.S. Phase I and Polish Phase I/II clinical trials for
L-DOS47 or the proposed U.S. Phase II/III and European Phase III clinical
trials for Topical Interferon Alpha-2b. These trials will require
substantial funding beyond the Company's current resources.
The Company will continue to seek additional funding to carry out its
business plan and to minimize risks to its operations. Equity financing
has historically been Helix's primary source of funding, however, the
market for equity financings for companies such as Helix is challenging,
and the global economic downturn and credit crisis have added further
challenges. There can be no assurance that additional funding by way of
equity financing will be available. Any additional equity financing, if
secured, may result in significant dilution to the existing shareholders at
the time of such financing. The Company may also seek additional funding
from other sources, including technology licensing, co-development
collaborations, and other strategic alliances, which, if obtained, may
reduce the Company's interest in its projects or products. There can be no
assurance, however, that any alternative sources of funding will be
available. The failure of the Company to obtain additional funding on a
timely basis may result in the Company reducing, delaying or cancelling one
or more of its planned research, development and marketing programs and
reducing related personnel, any of which could impair the current and
future value of the business. It may also have a material adverse effect on
the Company's ability to continue as a going concern.
The Company's unaudited interim consolidated Statements of Operations and
Cash Flows for the three and six month periods ended January 31, 2011 and
2010 are summarized below:
Consolidated Statements of Operations
for the three and six month periods ended January 31, 2011 and 2010
($ thousands, except for per share data)
Three months Six months
ended January 31 ended January 31
2011 2010 2011 2010
-------- -------- -------- --------
Revenue:
Product revenue 1,162 1,012 2,267 1,915
License fees & royalties 26 109 126 226
-------- -------- -------- --------
1,188 1,121 2,393 2,141
Expenses:
Cost of sales 376 461 790 879
Research and development 2,211 2,335 4,612 5,260
Operating, general and admin 1,141 770 2,117 1,446
Sales and marketing 289 298 547 559
Amortization of capital assets 105 107 212 205
Stock-based compensation 336 605 1,030 765
Interest income, net (44) (10) (94) (24)
Foreign exchange loss/(gain) 8 230 (27) 188
Gain on sale of trademark (1,336) - (1,336) -
-------- -------- -------- --------
3,086 4,796 7,851 9,278
Loss before income taxes (1,898) (3,675) (5,458) (7,137)
Income taxes 333 - 336 11
-------- -------- -------- --------
Loss for the period (2,231) (3,675) (5,794) (7,148)
======== ======== ======== ========
-------- -------- -------- --------
Loss per share:
Basic & diluted (0.03) (0.06) (0.09) (0.12)
Consolidated Statements of Cash Flows
for the three and six month periods ended January 31, 2011 and 2010
($thousands)
Three months Six months
ended January 31 ended January 31
2011 2010 2011 2010
-------- -------- -------- --------
Cash provided by (used in):
Loss for the period (2,231) (3,675) (5,794) (7,148)
Items not involving cash:
Amortization of capital assets 105 107 212 205
Deferred lease credit (6) (5) (12) (13)
Stock-based compensation 336 605 1,030 765
Foreign exchange loss/(gain) 8 230 (27) 188
-------- -------- -------- --------
(1,788) (2,738) (4,591) (6,003)
Change in non-cash working capital 914 (360) 634 557
-------- -------- -------- --------
Operating activities (874) (3,098) (3,957) (5,446)
Financing activities 4 - 9,461 11,597
Investing activities (71) (239) (80) (484)
Effect of exchange rate changes
on cash and cash equivalents (8) (230) 27 (188)
-------- -------- -------- --------
Increase in cash (949) (3,567) 5,451 5,479
Cash:
Beginning of the period 19,525 23,540 13,125 14,494
-------- -------- -------- --------
End of the period 18,576 19,973 18,576 19,973
======== ======== ======== ========
The Company's unaudited interim consolidated balance sheet as at January
31, 2011 and audited consolidated balance sheet as at July 31, 2010 are
summarized below:
Consolidated Balance Sheets as at
(thousand $)
31-Jan 31-Jul
2011 2010
--------- ---------
Current assets:
Cash and cash equivalents 18,576 13,125
Accounts receivable 1,018 1,365
Inventory 766 780
Prepaid and other 210 398
--------- ---------
20,570 15,668
Non current assets 2,314 2,446
--------- ---------
Total assets 22,884 18,114
========= =========
31-Jan 31-Jul
2011 2010
--------- ---------
Current liabilities:
Accounts payable 1,549 1,392
Accrued liabilities 446 821
Income tax payable 346 43
Deferred lease credit 25 25
--------- ---------
2,366 2,281
Non current liabilities 60 72
--------- ---------
Total liabilities 2,426 2,353
Shareholders' equity 20,458 15,761
--------- ---------
Total liabilities & Shareholders' Equity 22,884 18,114
========= =========
The Company's unaudited interim consolidated financial statements and
management's discussion and analysis of financial condition and results of
operations have been filed, today, with Canadian securities regulatory
authorities and will be available at SEDAR at www.sedar.com
About Helix BioPharma Corp.
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 product development initiatives include
its novel L-DOS47 new drug candidate and its Topical Interferon Alpha-2b.
Helix is listed on the TSX, NYSE Amex and FSE under the symbol "HBP".
Forward-Looking Statements and Risks and Uncertainties
This News Release contains certain forward-looking statements and
information (collectively, "forward-looking statements") within the meaning
of applicable securities laws, regarding the development of products by
Helix for the prevention and treatment of cancer based on its proprietary
technologies, sufficiency of the Company's cash reserves and expected cash
flow from operations; seeking additional financing, the Company's plans to
increase awareness about the Company and its products, especially Topical
Interferon Alpha-2b, the extension of supply agreements of certain products
Helix distributes, the transfer of U.S. rights to Klean-Prep®, and other
information in future periods. Although Helix believes that the
expectations reflected in such forward-looking statements are reasonable,
such statements involve risks and uncertainties, and undue reliance should
not be placed on such statements. Certain material factors or assumptions
are applied in making forward-looking statements, including, but not
limited to, receipt of necessary additional funding, strategic partner
support and regulatory approvals; GMP manufacturing and other activities;
the timely provision of services and performance of contracts by third
parties; and future revenue, costs and expenditures. Helix's actual results
could differ materially from those anticipated in these forward-looking
statements as a result of numerous risks and uncertainties including
without limitation, Helix's need for additional capital, which may not be
available; uncertainty whether the Company's products under development,
including L-DOS47 and Topical Interferon Alpha-2b, will be successfully
developed and commercialized; uncertainty whether the CTA will be approved;
uncertainty whether clinical trials will proceed as planned or at all, and
the risk that clinical trial results may be negative; uncertainty whether
Helix will be able to achieve targets required to maintain supply of the
products Helix distributes; uncertainty whether the transfers of U.S.
Klean-Prep® rights to Helsinn will occur in a timely manner or at all;
insurance and intellectual property risks; research and development risks;
the need for further regulatory approvals, which may not be obtained; the
Company's dependence on its third-party service providers; upscaling and
manufacturing risks; partnership / strategic alliance risks; the effect of
competition; the risk of technical obsolescence; uncertainty over the
Company's planned campaigns to increase awareness; uncertainty of the size
and existence of a market opportunity for Helix's products; uncertainty
whether the Company will be able to obtain an appropriate pharmaceutical or
strategic partner for the drug candidates, which are not assured; changes
in business strategy or plans; and the risk factors that are discussed
under Item 3.D. -- "Risk Factors" in the Company's latest Form 20-F Annual
Report or identified in the Company's other public filings with the
Canadian securities administrators at www.sedar.com or with the SEC at
www.sec.gov. Forward-looking statements and information are based on the
beliefs, assumptions and expectations of Helix's management at the time
they are made, and Helix does not assume any obligation to update any
forward-looking statement or information should those beliefs, assumptions
or expectations, or other circumstances change, except as required by law.
Contact Information: Investor Relations: Stanley Wunderlich Consulting for Strategic Growth 1 Ltd. Tel: 800-625-2236 ext. 7770 Email: Web Site: www.cfsg1.com Media Relations: Richard Stern Stern & Co. Tel: 212 888-0044 Email: Web Site: www.sternco.com Women's Health Advocacy Relations: Jennifer Zimmons Cooper Global Communications Tel: 212 317-1400 Email: Web Site: www.cooperglobalcommunications.com