Mistral Pharma Inc.
TSX VENTURE : MIP

Mistral Pharma Inc.

February 28, 2008 10:06 ET

Mistral Pharma Announces its Financial Results for the Third Quarter Ended December 31, 2007

MONTREAL, QUEBEC--(Marketwire - Feb. 28, 2008) - Mistral Pharma Inc. (TSX VENTURE:MIP) (the "Corporation", "Mistral") announces today its financial results and review of operating highlights for the third quarter and for the nine-month period ended December 31, 2007. "The highlights of Mistral's third quarter were the successful pilot clinical trial of our MIST-BO4 product, and of course, the launch of our first approved product Instillagel®", said Bertrand Bolduc, the Corporation's President & CEO.

Highlights of the third quarter

During the third quarter, Mistral worked on the development on its branded product MIST-B04 and successfully launched the Corporation's first commercial product Instillagel®. Mistral recorded its first sales of Instillagel® in January 2008. Mistral announced the results of a pilot study showing that MIST-B04, which is formulated using a internally developed new drug delivery platform named TRIZERO™, presents a pharmacokinetic profile leading to a once daily dosing schedule compared to the three times daily immediate-release formulation presently on the market. MIST-B04 is a controlled-delivery branded product in the rheumatology / inflammation field. According to Drug Topics, sales for the branded product targeted by MIST-B04 were more than US$ 200 M in the US in 2006.

Results for the quarter ended December 31, 2007

The loss for the quarter was $ 920,014 ($0.01 per share) compared to $ 781,344 for the same period in the previous year ($0.00 per share). Research and development costs, net of tax credits, were $ 237,376 for the quarter compared to $ 304,550 for the quarter ended December 31, 2006. The increase is the result of higher wages and increased staffing as well as higher spending for subcontractors, material and rent.

For the quarter ended December 31, 2007, Administration expenses totaled $ 204,033 compared to $ 192,395 in 2006. The increase for the quarter is the result of higher wages and higher rental and office expenses resulting from the move to the new location. Sales and business development expenses were $ 232,109 compared to $ 29,898 a year earlier. The acquisition of CuraMedica and higher expenses incurred to hire sales representatives and to bring the product Instillagel® to market explain the increase. Stock based compensation was $ 65,533 for the quarter ended December 31, 2007 compared to $ 143,537 for the same period in the previous year. These amounts represent the expense portion of the grant of options made in the previous periods over the award's vesting period. Amortization was $ 141,172 for the quarter ended December 31, 2007 compared $ 51,357 for the same period a year earlier. Mistral started in April 2007 to amortize the production equipment valued at $1.1 million over a 10 year period. The increase is also the result of the addition of R&D equipment and leasehold improvements made to our new facilities in the past 12 months. Interest expense totaled $ 40,003 for the quarter ended December 31, 2007 compared to $ 35,685 for the same quarter a year earlier. The higher amount of long term debt explains this increase. Also, Mistral generated higher interest revenues during the same quarter in the previous year because of higher liquidities. The gain on exchange was $ 212 for the quarter ended December 31, 2007 compared to a loss of $ 23,922 a year earlier because Mistral had more US denominated long term debt and because of the appreciation of the Canadian dollar compared to the US dollar during the quarter ended December 31, 2007.

As at December 31, 2007, the Corporation had cash and cash equivalents of $ 737,509 compared to $ 4,253,128 as at December 31, 2006 providing the Corporation with the required liquidity to meet its financial obligations and continue its operating activities at the current level for approximately three months. The cash balance was higher last year because Mistral had completed the last tranche of its $ 5 million Private Placement realized in May 2006. During the quarter ended December 31, 2007, the funds were used for operating activities including the preparation for the launch of Instillagel®, for the purchase of certain equipment and intangible assets and for the normal repayment of long-term debt.

Results for the nine-month period ended December 31, 2007

The loss for the nine-month period ended December 31, 2007 was $ 2,504,507 ($0.01 per share) compared to $ 1,938,713 for the same period in the previous year ($0.01 per share). Research and development costs, net of tax credits, were $ 739,991 for the nine-month period compared to $ 602,486 for the nine-month period ended December 31, 2006. The increase is the result of an increase in wages and staffing as well as higher spending for subcontractors, material and rent.

For the nine-month period ended December 31, 2007, administration expenses totaled $ 676,855 compared to $ 648,324 in 2006. The increase is the result of higher wages and higher rental and office expenses resulting from the move to the new location. Sales and business development expenses were $ 399,151 compared to $ 92,844 a year earlier. The acquisition of CuraMedica and higher expenses incurred to hire sales representatives and to bring the product Instillagel® to market explain the increase. Stock based compensation was $ 225,300 for the nine-month period ended December 31, 2007 compared to $ 434,802 for the same period in the previous year. These amounts represent the expense portion of the grant of options made in the previous periods over the award's vesting period. Stock-Based Compensation was higher in the previous year because new options had been granted in the period. Amortization was $ 403,568 for the nine-month period ended December 31, 2007 compared $ 149,036 for the same period a year earlier. Mistral started in April 2007 to amortize the production equipment valued at $1.1 million over a 10 year period. The increase is also the result of the addition of R&D equipment and leasehold improvements made to our new facilities in the past 12 months. Interest expense totaled $ 169,554 for the nine-month period ended December 31, 2007 compared to $ 12,816 for the same period a year earlier. As explained previously, the higher amount of long term debt explains this increase. Also, Mistral generated higher interest revenues in the previous year because of higher liquidities. The gain on exchange was $ 109,912 for the nine-month period ended December 31, 2007 compared to a gain of $ 1,595 a year earlier because Mistral had more US denominated long term debt and because of the important appreciation of the Canadian dollar compared to the US dollar during the nine-month period ended December 31, 2007.



Selected Financial
Information Three months ended Nine months ended
December 31st December 31st
2007 2006 2007 2006
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
------------------------------------------------------------------------
------------------------------------------------------------------------
$ $ $ $

Expenses
Research and
development costs 237,376 304,550 739,991 602,486
Administration 204,033 192,395 676,855 648,324
Sales & Business
development 232,109 29,898 399,151 92,844
Stock-based
compensation 65,533 143,537 225,300 434,802
Interest 40,003 35,685 169,554 12,816
Exchange loss (gain) (212) 23,922 (109,912) (1,595)
Amortization & other 141,172 51,357 403,568 149,036
------------------------------------------------------------------------
Net loss 920,014 781,344 2,504,507 1,938,713
------------------------------------------------------------------------
------------------------------------------------------------------------
Deficit, beginning 14,786,567 11,780,169 13,185,539 9,459,019
Accounting change - - 12,800 -
Share issue costs - - 3,735 1,163,781
------------------------------------------------------------------------
Deficit, end 15,706,581 12,561,513 15,706,581 12,561,513
------------------------------------------------------------------------
------------------------------------------------------------------------
Net loss per share
basic and diluted 0.01 0.00 0.01 0.01
------------------------------------------------------------------------
------------------------------------------------------------------------
Weigthed average
number of common
shares
outstanding 176,045,905 166,095,155 174,851,815 153,150,553


2007-12-30 2007-03-31
(Unaudited) (Audited)
------------------------------------------------------------------------
$ $
Assets
Cash and Cash equivalent 737,509 3,731,911
Receivable and other current assets 444,370 341,205
------------------------------------------------------------------------
1,181,879 4,073,116
Equipment 1,787,949 1,949,000
Deposit 197,620 230,580
Intangible and other assets 1,552,542 889,112
------------------------------------------------------------------------
4,719,990 7,141,808
------------------------------------------------------------------------
------------------------------------------------------------------------
Liabilities
Accounts payable and accrued liabilities 159,665 128,680
Other current liabilities 516,488 320,920
Current portion of long term debt 727,867 899,808
------------------------------------------------------------------------
1,404,020 1,349,408
Long term debt 1,072,810 1,841,951
Shareholders' Equity
Share capital 14,507,981 13,910,936
Contributed surplus 3,441,760 3,225,052
Deficit (15,706,581) (13,185,539)
------------------------------------------------------------------------
2,243,160 3,950,449
------------------------------------------------------------------------
4,719,990 7,141,808
------------------------------------------------------------------------
------------------------------------------------------------------------


About Mistral Pharma Inc.

Mistral Pharma Inc. is an innovative pharmaceutical company that is active in the reformulation and the commercialization of already-marketed drugs. Its branded drug delivery products, MIST-B01, MIST-B02, MIST-B03 & MIST-B04, showed positive results at their respective first pilot clinical trials. Mistral also markets INSTILLAGEL® in Canada, a local anesthetic and antiseptic combination product used for urology procedures. Mistral has also in-licensed TAMALIS™ (Rupatadine) a new antihistamine, INSTILLAQUILL®, a single use extension tube used in gynecology as well as 6 generic injectable products which should be filed with Health Canada in 2008. Mistral positions itself as a specialty pharmaceutical company with a focus on hospital products. More information is available on Mistral's website at www.mistralpharma.com

Forward-looking Statements

Except for historical information provided herein, this press release may contain information and statements of a forward-looking nature concerning the future performance of Mistral Pharma. These statements are based on assumptions and uncertainties as well as on management's best possible evaluation of future events. Such factors may include, without excluding other considerations, fluctuations in quarterly results, evolution in customer demand for Mistral Pharma's products, the impact of price pressures exerted by competitors, and general market trends or economic changes. As a result, readers are advised that actual results may differ from expected results.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this press release.

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