AURORA, ON--(Marketwired - Jun 18, 2013) - Helix BioPharma Corp. (
HIGHLIGHTS
- On June 13, 2013, the Company announced the appointment of Mr. Stace Wills to the Board of Directors of the Company. Mr. Wills's appointment was effective as of June 12, 2013.
- On May 29, 2013 and April 4, 2013, the Company announced the initiation of patient enrollment for the fourth and third cohort, respectively, in the Company's phase I/II clinical safety, tolerability and preliminary efficacy study of L-DOS47 in Poland.
- Effective February 22, 2013, Mr. Bill White voluntarily resigned from the Company's Board of Directors.
- On February 21, 2013, the Company announced the application to the Toronto Stock Exchange to extend the expiry date of warrants issued on September 8, 2009 pursuant to a private placement, by an additional six months, from March 7, 2013 to September 7, 2013. The Company subsequently announced that its proposal had been approved by the Toronto Stock Exchange, and that the warrant extension had become effective, on March 7, 2013.
- Effective February 21, 2013, Mr. Andrew J. MacDougall was appointed to the Company's Board of Directors in order to satisfy the statutory requirement for resident Canadians to comprise at least 25 percent of the Board of Directors pending completion of the Board's director nomination process. Subsequent to the fiscal third quarter, Mr. MacDougall voluntarily resigned from the board of directors following the appointment of Mr. Wills.
- Effective February 8, 2013, Mr. John A. Rogers voluntarily resigned from the Company's Board of Directors.
RESULTS FROM OPERATIONS
Net income (loss) for the period
The Company recorded net loss of $2,224,000 and net income of $368,000, respectively for the three and nine month periods ended April 30, 2013 for loss per common share of $0.03 and earnings per common share of $0.01, respectively. For the comparative three and nine month periods ended April 30, 2012, the Company recorded a net loss of $2,868,000 and $15,568,000, respectively for a loss per common share of $0.04 and $0.23.
Included in the net loss for the three month period ended April 30, 2013 is a $69,000 loss adjustment to the overall gain on sale from discontinued operations which is the result of a post-closing adjustment to the purchase price. For the nine month period ended April 30, 2013, the gain on sale from discontinued operations totalled $6,014,000. On January 25, 2013, the Company announced the sale of its distribution business in Canada.
In addition, the Company incurred special committee and settlement agreement expenditures of $25,000 and $6,430,000 in the three and nine month periods ended April 30, 2012, respectively. No such costs were incurred in the three and six month periods ended January 31, 2013.
The Company recorded net loss from continuing operations of $2,155,000 and $6,281,000, respectively for the three and nine month periods ended April 30, 2013 for a loss per common share of $0.03 and $0.09, respectively. For the comparative three and nine month periods ended April 30, 2012, the Company recorded a net loss from continuing operations of $3,236,000 and $16,613,000, respectively for a loss per common share on continuing operations of $0.05 and $0.25.
Research & development
Research and development costs totalled $1,303,000 and $3,960,000, respectively for the three and nine month periods ended April 30, 2013. For the three and nine month periods ended April 30, 2012, research and development costs totalled $2,138,000 and $6,480,000, respectively.
L-DOS47 research and development expenses for the three and nine month periods ended April 30, 2013 totalled $683,000 and $2,092,000, respectively ($1,215,000 and $2,943,000 respectively for the three and nine month periods ended April 30, 2012). L-DOS47 research and development expenditures mainly reflect expenditures associated with the Polish Phase I/II clinical study.
Topical Interferon Alpha-2b research and development expenses for the three and nine month periods ended April 30, 2013 totalled $87,000 and $599,000, respectively ($363,000 and $1,313,000 respectively for the three and nine month periods ended April 30, 2012). The Company's research and development expenditures associated with Topical Interferon Alpha-2 for the current fiscal quarter have been limited and mainly reflect overhead costs associated with supporting the program. The Company has now limited ongoing activities to sourcing and qualifying alternative interferon alpha-2b raw material samples, and finding suitable strategic partner(s) who would be willing to license or acquire the product and support the remaining development costs through to commercial launch. Beginning in Q4 of fiscal 2012, the Company initiated a downsizing of the staff in the Saskatoon. The Company proceeded with additional staff downsizing at its Saskatoon laboratory in October 2012, including a decision to close the Saskatoon laboratory by the end of November 2012. Costs associated with the downsizing were charged in Q1 of fiscal 2013.
Corporate research and development expenses for the three and nine month periods ended April 30, 2013 totalled $339,000 and $803,000 respectively ($419,000 and $1,109,000 respectively for the three and nine month periods ended April 30, 2012). The lower expenses can be attributed to a reduction in payroll expense associated with headcount reductions of corporate research and development employees in addition to a reduction in travel and consulting expenses.
Trademark and patent related expenses for the three and nine month periods ended April 30, 2013 totalled $94,000 and $118,000 respectively ($18,000 and $127,000 respectively for the three and nine month periods ended April 30, 2012). The increase in trademark and patent related expenses in the quarter is the result of the Company's attempt to seek additional patent protection in connection with its Biphasix™ technology.
Operating, general & administration
Operating, general and administration expenses for the three and nine month periods ended April 30, 2013 totalled $911,000 and $2,379,000 respectively and represents a decrease of $148,000 (14.0%) and $1,323,000 (35.7%) when compared to the three and nine month periods ended April 30, 2012. Lower operating, general and administration expenses are the result of ongoing cost cutting measures by the Company, with the most significant reductions related to lower legal and audit fees as a result of the Company having voluntarily surrendered its listing on the NYSE-MKT exchange in the United States, lower stock-based compensation expenses, reduced headcount and investor relations activities.
2012 AGM, Special Committee and Settlement
All expenses relating to the special committee of independent directors (the "Special Committee") formed in connection with the Company's contested annual general meeting of shareholders held on January 30, 2012 (the "2012 AGM") and the subsequent settlement agreement entered into with certain of the concerned shareholders (the "Settlement") were incurred during fiscal 2012.
Finance income and expense
Finance income and expense combined for the three and nine month periods ended April 30, 2013 totalled $8,000 and $16,000 ($15,000 and $94,000 for the three and nine month periods ended April 30, 2012). The decrease in fiscal 2013 reflects lower finance income associated with lower cash balances.
Foreign exchange loss
The Company realized a foreign exchange gain of $51,000 and $24,000 for the three and nine month periods ended April 30, 2013, respectively. For the three and nine month periods ended April 30, 2012, the Company realized foreign exchange losses of $29,000 and $95,000, respectively. Foreign exchange gains and losses result mainly from the sales and purchases that are denominated in currencies other than functional currencies. In addition, they can arise from purchase transactions, as well as recognized monetary financial assets and liabilities denominated in foreign currencies.
CASH FLOW
Operating activities from continuing operations
Cash used in operating activities from continuing operations for the three and nine month periods ended April 30, 2013 totalled $1,576,000 and $5,667,000 respectively and includes net loss from continuing operations of $2,155,000 and $6,281,000 respectively. Cash used in operating activities from continuing operations for the three and nine month periods ended April 30, 2012 totalled $6,286,000 and $14,084,000 respectively, and includes a net loss from continuing operations of $3,236,000 and $16,613,000 respectively.
Significant adjustments for the three and nine month periods ended April 30, 2013 include depreciation of property, plant and equipment of $104,000 and $310,000 respectively (2012 - $176,000 and $524,000), deferred lease credits of $(6,000) and $(19,000) (2012 - $(6,000) and $(19,000)), stock-based compensation of $68,000 and $240,000 respectively (2012 - $239,000 and $1,392,000), foreign exchange gain of $51,000 and $24,000 respectively (2012 - foreign exchange losses of $29,000 and $95,000 respectively) and changes in non-cash working capital balances related to continuing operations of $464,000 and $125,000 (2012 - $3,488,000 and $476,000).
Financing activities from continuing operations
Cash provided from financing activities for the three and nine month periods ended April 30, 2013 totalled $nil and $nil respectively (three and nine month periods ended April 30, 2012 totalled $nil and $43,000 respectively). Cash provided from financing activities for the nine month period ended April 30, 2012 is attributable to proceeds from the exercise of stock options.
Investing activities from continuing operations
Cash used in investing activities for the three and nine month periods ended April 30, 2013 totalled $9,000 and $5,000 respectively. For the three and nine month periods ended April 30, 2012 cash used in investing activities totalled $21,000 and $39,000 respectively.
Cash flows from discontinued operations
The impact of discontinued operations on the condensed consolidated statement of cash flows for the three and nine months ended April 30, 2013 and 2012 are as follows:
| For the three month | For the nine month | ||||||||||||
| periods ended April 30 | periods ended April 30 | ||||||||||||
| In thousands | 2013 | 2012 | 2013 | 2012 | |||||||||
| Cash provided by (used) in operating activities | $ | (201 | ) | $ | 284 | $ | 1,446 | $ | 998 | ||||
| Cash provided by (used) in investing activities (net) | (69 | ) | - | 6,014 | - | ||||||||
| Net increase in cash from discontinued operations | $ | 7,095 | $ | 284 | $ | 7,460 | $ | 998 | |||||
Cash provided by investing activities includes all costs associated with closing the sale of the distribution business against the gross proceeds received.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has financed its operations from public and private sales of equity, proceeds received upon the exercise of warrants and stock options, and, to a lesser extent, from 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, as well as economic conditions relating to the state of the capital markets generally.
At April 30, 2013, the Company had cash and cash equivalents of $6,674,000 (July 31, 2012 - $4,862,000). The total number of common shares issued as at April 30, 2013 was 67,226,337 (July 31, 2012 - 67,226,337).
The Company's cash resources have been severely strained by the costs incurred in connection with the Company's 2012 AGM, Special Committee and Settlement. On January 24, 2013 the Company's shareholders approved the Rivex Transaction. Even after the closing of the Rivex Transaction on January 25, 2013, the Company does not have sufficient cash reserves to meet anticipated cash needs for working capital and capital expenditures through the next twelve months. Since the Company's cash and cash equivalents as at April 30, 2013 of $6,674,000 are not sufficient to see the current research and development initiates through to completion, the Company will require additional financing in the near term. The Company has taken various cost cutting measures and cost-deferral initiatives and will continue to do so, where necessary, but any future cost cutting measures and cost-deferral initiatives will be limited and will not obviate the need for additional financing.
Securing additional financing continues to be of utmost importance to the Company.
Equity financing has historically been the Company's primary source of funding. However, the market for equity financings for companies such as Helix is challenging, especially in the current economic environment. While the Company has been able to raise equity financing in recent years, there can be no assurance that additional funding by way of equity financing will continue to be available. Any additional equity financing, if secured, would result in dilution to the existing shareholders, which may be significant. The Company may also seek additional funding from or through other sources, including grants, technology licensing, co-development collaborations, mergers and acquisitions, joint ventures, and other strategic alliances, which, if obtained, may reduce the Company's interest in its projects or products or result in significant dilution to existing shareholders. There can be no assurance, however, that any alternative sources of funding will be available. The failure of the Company to obtain additional financing on a timely basis may result in the Company reducing, delaying or cancelling one or more of its planned research, development and/or marketing programs, including clinical trials, further reducing overhead, or monetizing non-core assets, any of which could impair the current and future value of the business or cause the Company to consider ceasing operations and undergoing liquidation.
Given the Company's conclusion about the insufficiency of its cash reserves, significant doubt may be cast about the Company's ability to continue operating as a going concern. The continuation of the Company as a going concern for the foreseeable future depends mainly on raising sufficient capital, and in the interim, reducing, where possible, operating expenses (including making changes to the Company's research and development plans), including the delay of one or more of the Company's research and development programs, and further reducing overhead expenses.
The following table depicts the Company's condensed unaudited interim consolidated statement of financial position as at April 30, 2013 and July 31, 2012:
| In thousands | April 30, 2013 | July 31, 2012 | ||||
| ASSETS | ||||||
| Non-current assets | 1,206 | 1,493 | ||||
| Current assets | 6,945 | 6,123 | ||||
| Total assets | $ | 8,151 | $ | 7,616 | ||
| SHAREHOLDERS' EQUITY AND LIABILITIES | ||||||
| Shareholders' Equity | 6,832 | 6,224 | ||||
| Non-current liabilities | 4 | 23 | ||||
| Current liabilities | 1,315 | 1,369 | ||||
| Total liabilities and shareholders' equity | $ | 8,151 | $ | 7,616 | ||
The following table depicts the Company's condensed unaudited interim consolidated statement of net loss and comprehensive loss for the three and nine month periods ending April 30, 2013 and 2012:
| For the three month | For the nine month | ||||||||||||||||
| periods ended April 30 | periods ended April 30 | ||||||||||||||||
| In thousands | 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Expenses | |||||||||||||||||
| Research and development | $ | 1,303 | $ | 2,138 | $ | 3,960 | $ | 6,480 | |||||||||
| Operating, general and administration | 911 | 1,059 | 2,379 | 3,702 | |||||||||||||
| Special committee and settlement agreement | - | 25 | - | 6,430 | |||||||||||||
| (Gain) on disposal of property, plant and equipment | - | - | (18 | ) | - | ||||||||||||
| Income (loss) before finance items | (2,214 | ) | (3,222 | ) | (6,321 | ) | (16,612 | ) | |||||||||
| Finance items | |||||||||||||||||
| Finance income | 14 | 20 | 30 | 107 | |||||||||||||
| Finance expense | (6 | ) | (5 | ) | (14 | ) | (13 | ) | |||||||||
| Foreign exchange gain (loss) | 51 | (29 | ) | 24 | (95 | ) | |||||||||||
| 59 | (14 | ) | 40 | (1 | ) | ||||||||||||
| Net income (loss) and total comprehensive income (loss) from continuing operations | (2,155 | ) | (3,236 | ) | (6,281 | ) | (16,613 | ) | |||||||||
| Net income (loss) and total comprehensive income (loss) from discontinued operations | - | 368 | 635 | 1,045 | |||||||||||||
| Gain (loss) from sale of discontinued operations (net) | (69 | ) | - | 6,014 | - | ||||||||||||
| Net income (loss) and total comprehensive income (loss) | $ | (2,224 | ) | $ | (2,868 | ) | $ | 368 | $ | (15,568 | ) | ||||||
The following table depicts the Company's condensed unaudited interim consolidated statement of cash flows for the three and six month periods ending April 30, 2013 and 2012:
| For the three month | For the nine month | |||||||||||||||
| periods ended April 30 | periods ended April 30 | |||||||||||||||
| In thousands | 2013 | 2012 | 2013 | 2012 | ||||||||||||
| Net income (loss) and total comprehensive income (loss) from continuing operations | $ | (2,155 | ) | $ | (3,236 | ) | $ | (6,281 | ) | $ | (16,613 | ) | ||||
| Items not involving cash | 115 | 438 | 489 | 2,053 | ||||||||||||
| Change in non-cash working capital | 464 | (3,488 | ) | 125 | 476 | |||||||||||
| Net cash provided by (used in) operating activities | (1,576 | ) | (6,286 | ) | (5,667 | ) | (14,084 | ) | ||||||||
| Net cash provided by (used in) financing activities | - | - | - | 43 | ||||||||||||
| Net cash provided by (used in) investing activities | (9 | ) | (21 | ) | (5 | ) | (39 | ) | ||||||||
| Exchange gain (loss) on cash and cash equivalents | 51 | (29 | ) | 24 | (95 | ) | ||||||||||
| Net increase (decrease) in cash and cash equivalents from continuing operations | (1,534 | ) | (6,336 | ) | (5,648 | ) | (14,175 | ) | ||||||||
| Net increase (decrease) in cash and cash equivalents from discontinued operations | (270 | ) | 284 | 7,460 | 998 | |||||||||||
| Cash and cash equivalents, beginning of period | 8,478 | 11,919 | 4,862 | 19,044 | ||||||||||||
| Cash and cash equivalents, end of period | $ | 6,674 | $ | 5,867 | $ | 6,674 | $ | 5,867 | ||||||||
The Company's condensed unaudited interim consolidated financial statements and management's discussion and analysis are being filed with the Canadian Securities Administrators and will be available under the Company's profile on SEDAR at www.sedar.com as well as on the Company's website at www.helixbiopharma.com. Shareholders have the ability to receive a hard copy of the Company's unaudited condensed interim consolidated financial statements free of charge upon request at the address below.
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 currently listed on the TSX and FSE under the symbol "HBP".
Forward-Looking Statements and Risks and Uncertainties
This news release contains forward-looking statements and information (collectively, "forward-looking statements") within the meaning of applicable Canadian securities laws. Forward-looking statements are statements and information that are not historical facts but instead include financial projections and estimates; statements regarding plans, goals, objectives, intentions and expectations with respect to the Company's future business, operations, research and development, including the focus of the Company on its two drug candidates, L-DOS47 and Topical Interferon Alpha-2b (cervical lesions indication); and other information in future periods.
Forward-looking statements include, without limitation, statements concerning (i) the Company's ability to operate on a going concern being dependent mainly on obtaining additional financing; (ii) the Company's growth and future prospects being dependent on the success of one or both of L-DOS47 and Topical Interferon Alpha-2b; (iii) the Company's priority continuing to be L-DOS47; (iv) the Company's development programs for Topical Interferon Alpha-2b, DOS47 and L-DOS47; (v) future expenditures, insufficiency of the Company's current cash resources and the need for financing and cost-cutting and/or cost-deferral measures; and (vi) future financing requirements, the seeking of additional funding and anticipated future revenue and operating losses. Forward-looking statements can further be identified by the use of forward-looking terminology such as "expects", "plans", "designed to", "potential", "is developing", "believe", "intended", "continues", "opportunities", "anticipated", "2013", "2014", "next", ongoing", "pursue", "to seek", "proceed", "objective", "estimate", "future", "wish", or the negative thereof or any other variations thereon or comparable terminology referring to future events or results, or that events or conditions "will", "may", "could", "would", or "should" occur or be achieved, or comparable terminology referring to future events or results.
Forward-looking statements are statements about the future and are inherently uncertain, and are necessarily based upon a number of estimates and assumptions that are also uncertain. Although the Company 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. Forward-looking statements, including financial outlooks, are intended to provide information about management's current plans and expectations regarding future operations, including without limitation, future financing requirements, and may not be appropriate for other purposes. Certain material factors, estimates or assumptions have been applied in making forward-looking statements in this news release, including, but not limited to, the safety and efficacy of L-DOS47 and Topical Interferon Alpha-2b (low-grade cervical lesions); that sufficient financing will be obtained in a timely manner to allow the Company to continue operations; that sufficient cost-deferral and/or cost-cutting measures will be taken; the timely provision of services and supplies, including Interferon alpha-2b raw materials, or other performance of contracts by third parties; future revenue and costs; the absence of any material changes in business strategy or plans, other than the implementation of cost-deferral and/or cost-cutting measures; the timely receipt of required regulatory approvals, and strategic partner support; and that there will be no changes in market, economic, industry or regulatory conditions.
The Company's actual results could differ materially from those anticipated in the forward-looking statements contained in this news release as a result of numerous known and unknown risks and uncertainties, including without limitation, the risk that the Company's assumptions may prove to be incorrect; the risk that additional financing may not be obtainable in a timely manner, or at all, and that the Company may be unsuccessful in its cost-cutting and cost-deferral initiatives; clinical trials may not commence or complete within anticipated timelines or may fail; third party suppliers of necessary services or of drug product and other materials may fail to perform or be unwilling or unable to supply the Company, which could cause delay or cancellation of the Company's research and development or distribution activities; necessary regulatory approvals may not be granted or may be withdrawn; the Company may not be able to secure necessary strategic partner support; general economic conditions, intellectual property and insurance risks; changes in business strategy or plans; and other risks and uncertainties referred to elsewhere in this news release, any of which could cause actual results to vary materially from current results or the Company's anticipated future results. Certain of these risks and uncertainties, and others affecting the Company, are more fully described in the Helix's Annual Information Form, in particular under the headings "Forward-looking Statements" and "Risk Factors", and other reports filed with the Canadian Securities Administrators from time to time under the Company's profile on SEDAR at www.sedar.com. Forward-looking statements and information are based on the beliefs, assumptions, opinions and expectations of Helix's management on the date of this news release, and Helix does not assume any obligation to update any forward-looking statement or information should those beliefs, assumptions, opinions or expectations, or other circumstances change, except as required by law.
Contact Information:
Investor Relations:
Helix BioPharma Corp.
3-305 Industrial Parkway South
Aurora, Ontario, Canada, L4G 6X7
Tel: 905 841-2300
Email: ir@helixbiopharma.com