Inflazyme Pharmaceuticals Ltd.
TSX : IZP

Inflazyme Pharmaceuticals Ltd.

August 14, 2007 20:00 ET

Inflazyme Pharmaceuticals Ltd.: Financial Results for the Quarter Ended June 30, 2007

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 14, 2007) - Inflazyme Pharmaceuticals Ltd. (TSX:IZP) today announced its first quarter financial results for the period ended June 30, 2007.

Overview

Since February 2007, the Inflazyme management team and the Board have been exploring and considering a number of strategic alternatives to achieve shareholder value. These alternatives have included options to merge, license or sell the Company's assets. It is expected that a definitive purchase agreement will be signed shortly. However, the Company cannot give any assurance that such a transaction will be completed. If Inflazyme's Board of Directors and management determine, within the upcoming weeks, that a transaction is unlikely, then the Company may choose to terminate its operations so as to conduct an orderly wind down of its operations and liquidate its assets.

Results of operations for quarter ended June 30, 2007

The net loss for the quarter ended June 30, 2007 was $693,000 ($0.01 per common share) compared to a net loss of $2,829,000 ($0.02 per common share) for the quarter ended June 30, 2006. The decrease in the loss of $2,136,000 or 76% for the quarter ended June 30, 2007 was mainly due to decreased loss from operations and the recognition of a gain on the sale of research equipment that took place in May this year.

Loss from operations for the quarter ended June 30, 2007 was $1,374,000 compared to $2,957,000 in the prior year. The decrease of $1,583,000 or 54% in the loss from operations was due primarily to decreased research and development expenses and lower amortization expenses.

Research and development expenses

Research and development expenses for the quarter ended June 30, 2007 were $224,000 compared to $1,629,000 for the corresponding quarter last year, a decrease of $1,405,000 or 86%.

The decrease in R&D related to a reduction in contract research and development expenses, a reduction in personnel expenses and a reduction in laboratory related expenses. Contract research and development expenses were $88,000 for the current quarter, a decrease of $595,000 from the corresponding quarter last year. Contract research expenses for the current quarter related to close down costs following completion of the Phase 2b clinical asthma study (CAPSIC) with IPL512,602. In the corresponding quarter last year, the CAPSIC study accounted for most of the contract research and development expense.

Personnel expenses were $91,000 for the current quarter, a decrease of $420,000 from the corresponding quarter last year. This decrease resulted from the corporate downsizing that took place in February 2007. As a result of the terminations, laboratory related costs for the current quarter were $45,000 a decrease of $356,000 or 89% primarily due to a reduced allocation of general and administration expenses to the research and development area, facility costs that were captured in general and administration expenses and a reduction in consumables.

General and administration expenses

For the quarter ended June 30, 2007, general and administration expenses were $1,087,000 compared to $1,152,000 in the prior year. A decrease of $65,000 or 6% was due to lower personnel expenses partially offset by higher professional fees. Personnel expenses were $312,000 for the current quarter, a decrease of $172,000 from the corresponding quarter last year. The decrease resulted from the staff terminations that were effective in February 2007. Professional fees were $537,000 for the current quarter, an increase of $104,000 compared to the corresponding quarter last year. Professional fees increased because of patent related expenses that were included in general and administration expenses. In the corresponding quarter last year these expenses were capitalized as patent and licenses or they were allocated to research and development.

Amortization expenses

For the quarter ended June 30, 2007, amortization expense was $62,000 compared to $176,000 in the corresponding quarter of the prior year. The amortization expense decreased in the current quarter primarily due to lower amortization expense on patents and licenses. The patent and license asset base was reduced because of the write-downs of patents and licenses in the third quarter of fiscal 2007 and the reclassification of the PDE 4 inhibitor patents to assets held for sale.

Interest income

For the quarter ended June 30, 2007, interest revenue was $46,000 compared to $118,000 in the prior year. The decrease of $72,000 or 61% was due to a lower cash and cash equivalent balances.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2007 the Company's cash and cash equivalents totalled $3,518,000 compared to $5,461,000 at March 31, 2007. Working capital at June 30, 2007 was $2,806,000 compared to $3,439,000 at March 31, 2007. The decrease in working capital primarily reflects the decrease in cash and cash equivalents of $1,944,000 offset by a decrease in accounts payable and accrued liabilities of $1,334,000. The accounts payable and accrued liabilities balance at June 30, 2007 is $1,7367,000.

The Company used $2,644,000 to fund operations during the quarter ended June 30, 2007 compared with $2,524,000 for the quarter ended March 31, 2007.

Cash from investing activities for the quarter ended June 30, 2007 was $700,000 compared to cash used in investing activities of $65,000 for the corresponding quarter in the prior year. In the current quarter, the cash from investing activities relates to the proceeds from the sale of the research equipment.

About Inflazyme

Inflazyme Pharmaceuticals is a biopharmaceutical company pioneering medical breakthroughs to transform the lives of patients with respiratory and inflammatory diseases worldwide. Further information on the Company may be obtained from its website at www.inflazyme.com.

Statements in this news release other than historical information are forward-looking statements subject to risks and uncertainties. Actual results could differ materially depending on factors such as the availability of resources, the timing and effects of regulatory actions, the strength of competition, the outcome of litigation and the effectiveness of patent protection. Additional information regarding risks and uncertainties is set forth in the current Annual Information Form for Inflazyme on file with the Canadian Securities Commissions.



Inflazyme Pharmaceuticals Ltd.
Consolidated Balance Sheets
(Unaudited)

June 30, March 31,
2007 2007
------------- -------------
Assets

Current assets
Cash and cash equivalents $ 3,517,601 $ 5,461,316
Accounts receivable 119,340 109,944
Assets held for sale 605,791 680,760
Prepaid expenses 300,303 257,402
------------- -------------

4,543,035 6,509,422

Property and equipment 114,537 176,833

------------- -------------
$ 4,657,572 $ 6,686,255
------------- -------------
------------- -------------


Liabilities

Current liabilities
Accounts payable and accrued liabilities $ 1,736,816 $ 3,070,645

Deferred licensing revenue 220,369 229,950
------------- -------------
1,957,185 3,300,595
------------- -------------

Shareholders' equity

Capital stock 141,212,889 141,212,889

Contributed surplus 2,211,777 2,204,392

Deficit (140,724,279) (140,031,621)
------------- -------------
2,700,387 3,385,660

------------- -------------
$ 4,657,572 $ 6,686,255
------------- -------------
------------- -------------


On behalf of the board

Kevin Mullane (signed) Louis Drapeau (signed)
--------------------- ---------------------
President and CEO Director
Director


Inflazyme Pharmaceuticals Ltd.
Consolidated Statements of Operations and Deficit
(Unaudited)

For the Year Ended
-------------------------------
June 30, 2007 June 30, 2006
-------------------------------

Revenues
Licensing revenue $ 9,581 $ 9,619
-------------------------------

Expenses

Research and development 224,462 1,629,101
General and administration 1,087,057 1,151,648
Amortization of property, equipment,
patents and licenses 62,297 176,251
-------------------------------

1,373,816 2,957,000
-------------------------------

Loss from operations (1,364,235) (2,947,381)
-------------------------------

Interest income 46,455 117,968

Gain on sale of fixed assets 625,122 -

-------------------------------
Loss for the period (692,658) (2,829,413)

Deficit, beginning of period (140,031,621) (124,647,219)
-------------------------------

Deficit, end of period $(140,724,279) $(127,476,632)
-------------------------------
-------------------------------

Basic and diluted loss per common share $ (0.01) $ (0.02)
-------------------------------
-------------------------------

Weighted average number of
common shares outstanding 131,181,375 113,534,375
-------------------------------
-------------------------------


Inflazyme Pharmaceuticals Ltd.
Consolidated Statements of Cash Flows
(Unaudited)

For the Year Ended
-------------------------------
June 30, 2007 June 30, 2006
-------------------------------

Cash flows from operating activities
Loss for the period $ (692,658) $ (2,829,413)
Items not affecting cash:
Amortization of property, equipment,
patents and licenses 62,297 176,251
Gain on sale of fixed assets (625,122) -
Deferred licensing revenue (9,581) (9,581)
Stock-based compensation 7,385 42,374
-------------------------------
(1,257,679) (2,620,369)

Changes in non-cash working capital (1,386,128) 96,703
-------------------------------
(2,643,807) (2,523,666)
-------------------------------

Cash flows from investing activities
Purchase of property and equipment - (4,235)
Patents and licenses - (60,594)
Proceeds from sale of fixed assets 700,092 -
-------------------------------
700,092 (64,829)

-------------------------------
Decrease in cash and cash equivalents (1,943,715) (2,588,495)

Cash and cash equivalents,
beginning of period 5,461,316 12,809,087
-------------------------------

Cash and cash equivalents,
end of period $ 3,517,601 $ 10,220,592
-------------------------------
-------------------------------

Supplemental disclosure of cash
flow information
Interest paid - -
Interest received 43,638 100,302


The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this information.

Contact Information

  • Inflazyme Pharmaceuticals Ltd.
    Julie Rezler
    Sr. Director, Corporate Development
    1-800-315-3660 or (604) 279-8511
    (604) 279-8711 (FAX)
    Email: ir@inflazyme.com
    Website: www.inflazyme.com