Microbix Biosystems Inc.
TSX : MBX

Microbix Biosystems Inc.

May 15, 2015 08:42 ET

Microbix Revenue Grows 23% in Second Quarter

Company Reports Court's Decisions in Novartis Litigation and Provides Corporate Update

TORONTO, ONTARIO--(Marketwired - May 15, 2015) - Microbix Biosystems Inc. (TSX:MBX), an innovator of biological products and technologies, today reported financial results for its second quarter ending March 31, 2015.

Second Quarter Financial Results

Total revenue was $2,544,900 in the second quarter compared to $2,073,097 in the second quarter last year, or an increase of 23%. Total revenue was made up entirely of Virology products as there was no R & D Contract revenue in the quarter. This improvement was mainly attributable to increased sales of the company's core antigen products. To a lesser extent, sales were positively impacted by the net effects of foreign currency fluctuations versus the Canadian dollar year-over-year, and the initial sale of the Company's new molecular diagnostic products. Operating income in the second quarter was $86,335 compared to an operating income of $269,620 in the second quarter of 2014. The lower operating income was the result of increased operating expenses to support the VIRUSMAX litigation during the quarter.

Cash generated from operations was $496,135 positive in the second quarter compared to $312,696 negative in the same period last year, primarily due to improved management of working capital compared to the prior year (lower accounts receivable and higher accounts payable). Cash generated from financing activities was $2,002,015 in the second quarter compared to $1,867,332 last year, due to the exercise of $1,998,376 of warrants and stock options. Cash used in investing activities was $2,172,645 in the second quarter compared to $613,245 in the same period last year, primarily due to development of the LumiSort prototype instrument. As a result, net cash flow was $325,506 positive in the second quarter compared to $941,391 positive in the second quarter of last year.

Six-Month Financial Results

Microbix reported total revenue of $4,540,733 in the first six months of 2015 compared to $4,000,982 for the same period in 2014, or an increase of 14%. Virology products revenue was $4,421,331 in the first six months compared to $3,812,613 in the same period last year, or an increase of 16%. Strong customer demand accounted for the majority of this increase, in addition to a favourable foreign currency impact. R&D contract revenue was $119,402 in the first six months compared to $188,369 for the same period in 2014. Operating income in the first six months was $176,888 compared to an operating income of $484,026 in the first six months of last year. The lower operating income is the result of increased operating expenses to support the VIRUSMAX litigation, which more than offset the impact of higher revenues in the first six months of 2014 compared to the same period last year.

Cash generated from operations in the first six months was $691,341 compared to $404,149 of cash used in operations in the first six months 2014. Cash generated from financing activities in the first six months was $3,210,513, due to the exercise of common share warrants ($1,738,433) and stock options ($901,830), as well as the receipt of net proceeds from an equipment loan ($665,000); This compared to $1,993,410 of cash generated from financing activities in the first six months of last year. Cash used in investing activities was $3,332,951 compared to $699,642 in the first six months of last year. The increase was largely due to the investment in the LumiSort prototype in the first six months of 2015. Net cash flow in the first six months was $569,543 positive compared to $889,619 positive in the same period last year.

Vaughn Embro-Pantalony, Chief Executive Officer commented, "I am very pleased with the continued strong revenue growth in our Virology products business. The strong performance this quarter helped to fund higher operating expenses, while also contributing an operating profit and positive operating cash flow. We also benefited during the quarter from the exercising of common share warrants and stock options, which generated an additional $2 million that will help drive shareholder value. We are anticipating continued growth in our Virology business as we reach full stride with our recently announced initiatives."

Financial Highlights

3 months ended March 31 6 months ended March 31
2015 2014 2015 2014
Revenue $ 2,544,900 2,073,097 4,540,733 4,000,982
Operating income $ 86,335 269,620 176,888 484,026
Net income $ 126,773 193,872 128,713 310,033
Net income per share $ 0.002 0.003 0.002 .004
Cash Flow $ 325,506 941,391 547,356 889,619

Court Decisions - Novartis Litigation

On May 14th the Eastern District Court in Texas announced its decisions on the patent infringement lawsuit between Microbix and Novartis Vaccines and Diagnostics, ruling in favour of Novartis and declaring that their manufacturing processes related to only the 18 patent claims asserted in the lawsuit do not infringe Microbix' VIRUSMAX patents in the U.S. Court administration costs, which are not expected to be material, are the responsibility of Microbix. Both of the parties have the right to appeal the decisions. Management is reviewing the Court's decisions and will provide further comments in the near future.

Corporate Update

LumiSort

Microbix also confirmed that it is continuing discussions with large animal genetics companies with the goal of securing a partner to better position the Company to satisfy the needs of the animal genetics and livestock industries. During the second quarter the Company completed the first phase of the LumiSort development program and filed several new patents based on the recently completed prototype. The filing of those new patents significantly expanded the LumiSort intellectual property estate.

Kinlytic®

The Company also announced that discussions continue with several parties interested in working with Microbix to re-launch Kinlytic in the U.S. and Canadian markets. These partner candidates all share the same vision, namely that there remains a significant unmet medical need in both countries to treat blood clots and related conditions. Vaughn Embro-Pantalony commented, "I am very encouraged by the enthusiasm these groups share regarding the commercial potential of Kinlytic and remain optimistic that we will secure a partner in the coming months."

Please visit www.sedar.com for recent Microbix Biosystems, Inc. filings and financial information.

About Microbix Biosystems

Microbix Biosystems Inc. specializes in the research and development of biological solutions, including products for human health applications, namely in the vaccine, therapeutic and diagnostic markets, as well as animal reproductive markets worldwide. The Company manufactures and distributes a wide range of infectious disease antigens to a worldwide customer base. The Company's pipeline of innovative technologies and products includes LumiSort semen sexing technology for the livestock industries, Kinlytic, a thrombolytic drug with several approved and potential applications including the treatment of life-threatening blood clots, and VIRUSMAX, a proprietary technology for increasing virus yields in the manufacture of influenza vaccine. Established in 1988, Microbix is a publicly traded company, listed on the Toronto Stock Exchange, and headquartered in Mississauga, Ontario.

Forward-Looking Information

This news release includes "forward-looking information", as such term is defined in applicable securities laws. Forward-looking information includes, without limitation, the risks associated with development projects, operations in foreign jurisdictions, risks associated with engineering and construction generally, risks associated with production including control over costs, quality, quantity and timeliness of delivery of products, foreign currency and exchange rate risk, and risks of raising capital on acceptable terms or at all, and other similar statements concerning anticipated future events, conditions or results that are not historical facts. These statements reflect management's current estimates, beliefs, intentions and expectations; they are not guarantees of future performance. The Company cautions that all forward looking information is inherently uncertain and that actual performance may be affected by a number of material factors, many of which are beyond the Company's control. Accordingly, actual future events, conditions and results may differ materially from the estimates, beliefs, intentions and expectations expressed or implied in the forward-looking information. All statements are made as of the date of this news release and represent the Company's judgement as of the date of this new release, and the Company is under no obligation to update or alter any forward-looking information.

Please visit www.sedar.com for recent Microbix Biosystems Inc. filings.

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