IBEX TECHNOLOGIES INC.
TSX : IBT

IBEX TECHNOLOGIES INC.

March 15, 2007 12:23 ET

IBEX Reports Fiscal 2007 Second Quarter Results, Company Moving Forward With Acquisition of Garvinci Inc.

MONTREAL, QUEBEC--(CCNMatthews - March 15, 2007) - IBEX Technologies Inc. (TSX:IBT), an innovator in the development of diagnostics for the management of cancer and arthritis, and a supplier of high-purity glycobiology enzymes, today reported its financial results for the three and six-month periods ended January 31, 2007.

During the quarter the Company has devoted significant attention to the steps necessary to conclude an acquisition which promises to transform IBEX into a revenue driven specialty pharmaceutical company.

On January 30, 2007, IBEX announced that it entered into an agreement for the acquisition of 100% of the shares of Garvinci Inc., a private Montreal specialty pharmaceutical company with the Canadian distribution rights for a pipeline of arthritis and women's health products. One of these, an osteoarthritis product, is currently approved and being marketed by Garvinci in Canada, while a second, an emergency contraceptive pill has recently been approved and is expected to be introduced in the second half of 2007 through one of Canada's leading pharmaceutical companies.

The closing of the transaction is subject to regulatory approval, including that of the Toronto Stock Exchange, IBEX shareholder approval, and the satisfaction of certain conditions by Garvinci. Closing is expected to occur in April 2007.

Operational Results

During the three-month ended January 31, 2007 and up to the date of this release, the IBEX activities include the following developments:

- As announced on January 30, 2007, IBEX entered into an agreement for the acquisition of 100% of the shares of Garvinci Inc., a private Montreal specialty pharmaceutical company with the Canadian distribution rights for a pipeline of arthritis and women's health products.

- The Company has introduced for sale an improved version of its already-marketed C2C arthritis assay. This assay is more cost-effective to produce and will provide the end-user greater precision and ease of use.

- The Company completed development of the Urine C2C ELISA assay at the end of January 2007. This assay is now in production and will be ready for sale in March 2007.

- The Company has developed a new version of the CP II ELISA assay with pre-coated plates. This version will be introduced in Q1 of calendar 2007 after testing has been completed.

- IBEX has made substantial progress in the development of a sandwich CP II ELISA assay. This assay will utilize recombinant human CP II as a standard instead of bovine CP II purified from cartilage. This will greatly simplify the manufacturing process as sandwich ELISAs are intrinsically more robust than competitive ELISAs. This assay is now targeted for introduction in Q2 of calendar 2007.

- IBEX, in collaboration with a diagnostic company, continues to investigate the diagnostic utility of human kallikreins in oncology.

Financial Results

Solely for the convenience of the reader, selected financial results expressed in Canadian dollars on the financial statements, have been translated into U.S. dollars at the January 31, 2007 month-end rate C$1.00 equals US$ 0.8496. This translation should not be construed as an application of the recommendations relating to the accounting for foreign currency translation, but rather as supplemental information for the reader.

Revenue for the three-month period ended January 31, 2007 totaled $627,387 (US$533,000) compared to $530,282 in the second quarter of fiscal 2006, representing an increase of 18 percent driven by research tax credits recorded based on management's best estimate. IBEX's sales revenues decreased 10.6% over the same period last year. Sales revenues of IBEX enzyme products increased while arthritis products sales decreased, when compared to the same period last year.

Revenue for the six-month period ended January 31, 2007 totaled $1,055,455 (US$897,000) compared to $1,017,973 for the same period in the prior year, representing an increase of 4 percent. There was a change in revenue mix in the period when compared to prior year, as research tax credit revenue increased, while sales revenue decreased by $115,628. The sale revenue shortfall of $115,628 was fully compensated in February of 2007, as total sales revenues for the seven-month period ended February 2007 is level with the same period in the prior year.

Net loss for the second quarter of fiscal 2007 was $310,808 (US$264,000) or ($0.01) per share, compared to a net loss of $753,569 or ($0.03) per share for the same period in fiscal 2006. The Company's decreased net loss is primarily attributable to an increase in revenues and a significant decrease in both research and development expense and selling, general and administrative expenses.

Net loss for the six-months ended January 31, 2007 was $1.1 million (US$922,000) or ($0.05) per share compared to a net loss of $1.4 million or ($0.06) per share for the same period in fiscal 2006. The decreased net loss in the first six months of fiscal 2007 is primarily attributable to a decrease in research and development expenses.

As part of its preparation for the pending Garvinci transaction IBEX has focused its expenditures on activities which will have the most strategic relevance post transaction. As a consequence, for the six-month period ended January 31, 2007 the IBEX operational expenditures (other than expenses related to the Garvinci transaction) are $300,000 below the same period of the prior year.

Research and development expenses for the three-months ended January 31, 2007 were $382,725 (US$325,000) versus $558,314 in the same period a year ago. For the six-months ended January 31, 2007, R&D expenses were $766,977 (US$652,000) versus $1.1 million in the same period a year ago.

The decrease in R&D expenses in both the three and six-month periods ended January 31, 2007 is entirely due to the previously announced decision of the company not to further pursue its pre-clinical kallikrein therapeutic program.

Selling, general and administrative expenses and cost of goods sold for the three-month period ended January 31, 2007 were $804,981 (US$684,000) versus $708,423 in the same period a year ago. Selling, general and administrative expenses and cost of goods sold for the six-months ended January 31, 2007 totaled $1.6 million (US$1.4 million) compared to $1.3 million for the same period in fiscal 2006.

The primary contributor to the increase in expenses both in the three and six-month periods ended January 31, 2007 were due diligence consulting and legal expenses relating to merger and acquisition candidates.

Current income taxes for the three and six-month periods ended January 31, 2007 were $211,792 favorable due to a nonrecurring reduction in the Company's provision for tax liabilities relating to the resolution of an uncertain tax position.

Pursuant to a non-binding letter of intent in connection with the announced Garvinci transaction, the Company disbursed $375,000 for the three-months ended January 31, 2007 and a total of $625,000 for the six-months ended January 31, 2007 as exclusivity fees during the negotiation period. The fees are paid as a loan bearing interest to be reimbursed to the Company, in the event the transaction does not close.

At January 31, 2007, IBEX cash, cash equivalents and marketable securities totaled $2.8 million (US$2.4 million), and the Company's net working capital was $2.6 million (US$2.25 million). The Company believes it has adequate financial resources to support its current on-going programs for the next 15 months.

About IBEX

IBEX markets a number of products, including its high-purity proprietary enzymes (heparinases and chondroitinases), as well as a series of arthritis and kallikrein-based assays. IBEX Heparinase I is used in many leading hemostasis monitoring devices, while IBEX arthritis assays are used by leading pharmaceutical companies for research purposes.

As part of a strategic review initiated in the summer of 2006, IBEX decided to move away from its traditional discovery and development model in favour of a revenue driven specialty pharmaceutical model.

The new IBEX will focus on acquiring rights to prescription products which are already approved in Canada or other jurisdictions. The Company will continue to benefit from its profitable specialty enzymes and arthritis assays business.

For more information, please visit the Company's web site at www.ibex.ca.

Safe Harbor Statement

All of the statements contained in this news release, other than statements of fact that are independently verifiable at the date hereof, are forward-looking statements. Such statements, based as they are on the current expectations of management, inherently involve numerous risks and uncertainties, known and unknown. Some examples of known risks are: the impact of general economic conditions, general conditions in the pharmaceutical industry, changes in the regulatory environment in the jurisdictions in which IBEX does business, stock market volatility, fluctuations in costs, and changes to the competitive environment due to consolidation or otherwise. Consequently, actual future results may differ materially from the anticipated results expressed in the forward-looking statements. IBEX disclaims any intention or obligation to update these statements.



CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------
January 31, July 31,
unaudited 2007 2006
--------------------------------------------------------------------------
$ $

ASSETS

Current assets
Cash and cash equivalents 544,688 816,452
Marketable securities (note 2) 2,289,611 3,674,489
Accounts receivable 494,457 551,385
Inventories 140,601 181,796
Prepaid expenses 109,907 138,149
--------------------------------------------------------------------------
3,579,264 5,362,271
Property and equipment 559,561 635,994
Identifiable intangible assets 3,959,540 4,102,154
Other assets (note 6) 639,629 -
--------------------------------------------------------------------------
8,737,994 10,100,419
--------------------------------------------------------------------------
--------------------------------------------------------------------------

LIABILITIES

Current liabilities
Accounts payable and accrued liabilities 739,323 1,042,033
Balance of payments (note 3) 190,900 181,800
--------------------------------------------------------------------------
930,223 1,223,833
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SHAREHOLDERS' EQUITY

Capital stock 52,496,759 52,496,759
Contributed surplus 315,322 298,802
Deficit (45,004,310) (43,918,975)
--------------------------------------------------------------------------
7,807,771 8,876,586
--------------------------------------------------------------------------
8,737,994 10,100,419
--------------------------------------------------------------------------
--------------------------------------------------------------------------


CONSOLIDATED STATEMENTS OF DEFICIT
--------------------------------------------------------------------------
For the six months ended January 31st (unaudited) 2007 2006
--------------------------------------------------------------------------
$ $

Balance - Beginning of period (43,918,975) (41,038,603)
Net loss for the period (1,085,335) (1,399,915)
--------------------------------------------------------------------------
Balance - End of period (45,004,310) (42,438,518)
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--------------------------------------------------------------------------


CONSOLIDATED STATEMENTS OF LOSS
Three months ended Six months ended
January 31st January 31st
-------------------------------------------------------------------------
(unaudited) 2007 2006 2007 2006
-------------------------------------------------------------------------
$ $ $ $

Revenue (note 8) 627,387 530,282 1,055,455 1,017,973
-------------------------------------------------------------------------

(Expenses) income
Research and
development
expenditures (382,725) (558,314) (766,977) (1,097,166)
Selling, general
and administrative
expenses and cost
of goods sold (804,981) (708,423) (1,617,160) (1,302,924)
Amortization of
property and
equipment (33,401) (32,103) (66,912) (62,097)
Amortization of
identifiable
intangible assets (809) (809) (1,618) (1,618)
Other interest
and bank charges (7,172) (15,762) (15,831) (27,157)
Foreign exchange
gain (loss) 23,718 (13,955) 21,088 (25,134)
Investment income 55,383 45,515 94,828 98,764
Loss on sale of
marketable securities - - - (556)
-------------------------------------------------------------------------
(1,149,987) (1,283,851) (2,352,582) (2,417,888)
-------------------------------------------------------------------------
(522,600) (753,569) (1,297,127) (1,399,915)
Current Income
taxes (211,792) - (211,792) -
-------------------------------------------------------------------------
Net loss (310,808) (753,569) (1,085,335) (1,399,915)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net loss per share
Basic and diluted $(0.01) $(0.03) $(0.05) $(0.06)
-------------------------------------------------------------------------
-------------------------------------------------------------------------



CONSOLIDATED CASH FLOW STATEMENTS
Three months ended Six months ended
January 31st January 31st
------------------------------------------------------------------------
(unaudited) 2007 2006 2007 2006
------------------------------------------------------------------------
$ $ $ $

Cash flows provided by
(used in):
Operating activities
Net loss for the period (310,808) (753,569) (1,085,335) (1,399,915)

Items not affecting cash
Amortization of property
and equipment 42,173 42,812 84,456 83,597
Amortization of
identifiable intangible
assets 71,307 71,307 142,614 142,616
Stock-based
compensation costs 4,520 14,446 16,520 34,463
Accretion of interest on
balance of payments 4,550 8,700 9,100 17,400
Loss on sale of
marketable securities - - - 556
------------------------------------------------------------------------
(188,258) (616,304) (832,645) (1,121,283)
------------------------------------------------------------------------

Net changes in non-cash
working capital items
Decrease (increase) in
accounts receivable (84,858) 103,141 56,928 356,021
Decrease (increase) in
inventories 22,390 (13,542) 41,195 (120,248)
Decrease (increase) in
prepaid expenses (14,469) (52,123) 28,242 (17,758)
Decrease in accounts
payable and accrued
liabilities (290,974) (102,269) (302,710) (185,049)
------------------------------------------------------------------------
(367,911) (64,793) (176,345) 32,966
------------------------------------------------------------------------
(556,169) (681,097) (1,008,990) (1,088,317)
------------------------------------------------------------------------
Investing activities
Additions to marketable
securities (1,817,283) (5,283,308) (3,639,334) (5,283,308)
Proceeds on disposal of
marketable securities 2,612,573 6,219,321 5,024,212 6,593,977
Additions to property and
equipment (7,370) (65,159) (8,023) (119,656)
Increase in other assets
(note 6) (389,629) - (639,629) -
------------------------------------------------------------------------
398,291 870,854 737,226 1,191,013
------------------------------------------------------------------------

Increase (decrease) in
cash and cash equivalents
during the year (157,878) 189,757 (271,764) 102,696
Cash and cash equivalents
- Beginning of period 702,566 281,139 816,452 368,200
------------------------------------------------------------------------
Cash and cash equivalents
- End of period 544,688 470,896 544,688 470,896
------------------------------------------------------------------------
------------------------------------------------------------------------

Contact Information

  • IBEX Technologies Inc.
    Paul Baehr
    President & CEO
    514-344-4004
    or
    LaVoie Group
    Donna LaVoie
    978-745-4200 X103