Mistral Pharma Inc.

Mistral Pharma Inc.

June 09, 2006 16:28 ET

Mistral Pharma Announces its Financial Results for the Year Ended March 31, 2006 and the Appointment of a New Director

MONTREAL, QUEBEC--(CCNMatthews - June 9, 2006) - Mistral Pharma Inc. (TSX-VENTURE:MIP) (the "Corporation", "Mistral") announces today its financial results and review of operating highlights for the year ended March 31, 2006. "The highlight of Mistral's first year as a publicly traded company was MIST-B01's successful pilot clinical study which positions Mistral as a proven branded product developer" said Mr. Bertrand Bolduc, the Corporation's President & CEO. "The successful private placement of $5 million closed in May 2006 will allow us to focus on the development of our product line" he added.

Appointment of a new director

Mr. Mark Busgang, Chairman of the board is glad to announce the appointment of Mr. Daniel Pharand as a member of Mistral's board of directors, subject to regulatory and TSX Venture approval. Mr. Pharand is a chartered accountant with over 25 years of experience in the pharmaceutical, biotech and life sciences industries where he has also a proven track record as portfolio Manager. Mr. Pharand was the Chief Financial Officer of Pharmacia Canada and of Pharmacia KK (Japan). He subsequently became an entrepreneur with a successful Canadian distribution of innovative orthopaedic systems. Mr. Pharand was later involved in the Biotech Venture with Innovatech Grand Montreal for over 5 years as portfolio Manager. Mr. Pharand is presently Chief Strategic Officer at Cato Research, a contract clinical research company having its headquarters in Durham, N.C. Mr. Pharand also acted as a director and has served on various board committees for more than 30 publicly traded or life sciences corporations including Corautus Genetics Inc. (NASDAQ:VEGF), Bio 1 Inc. (now TSX-VENTURE:ARU) and LAB International Inc. (TSX:LAB)

Highlights of the fourth quarter

During the fourth quarter, Mistral continued its development work on its existing branded and generic products and initiated the development of two new branded products MIST-B02 and MIST-B03. In addition, Mistral reimbursed the Glaxosmithkline ("GSK") secured convertible debenture, it renewed the contractual agreement with ("GSK") regarding the PROCISETM technology and finally, closed the first tranche of a private placement, which, combined with the completion of the private placement in May 2006, brought in a total of $5.5 million (or $4.95 million, net of issue costs). These accomplishments have all contributed to strengthen Mistral's financial and strategic position.

Increased focus on branded products

The improved financial position of the Corporation combined with the promising prospects of MIST-B01 and the two new branded products currently at the formulation stage are key factors that should help Mistral move faster towards its goal of becoming an integrated specialty pharma developing selected high potential products. In addition, in light of the recent pilot pharmacokinetic trial results for the generic product MIST-G02, which, while encouraging with regards to the performance of the technology, did not meet the desired objectives, these results have reinforced Mistral's strategy of focusing on the development of innovative and high potential branded products.

Results for the year and for the three-month period ended March 31, 2006

The loss for the year was $1,926,188 ($0.03 per share) compared to $2,574,384 for the same period in the previous year ($0.07 per share). Revenues of $378,249 were recognized during the year following the termination of the contract with ratiopharm Inc. There were no revenues in 2005. Stock-based compensation expense was $332,550 for the year compared to $730,214 for the same period a year earlier. The exercise of options in the year ended March 31, 2005 and the timing of recognition of stock-based compensation expense explain this important reduction. Research and development costs, net of tax credits, were $870,197 for the year compared to $747,327 in 2005. The savings in sub-contracting expenses following the termination of the GSK contract during the quarter were offset by increased staffing and pilot clinical trials costs for MIST-B01. Tax credits for the year were only $235,088 compared to $564,131 for the same period in 2005 because of the non-eligibility for the Corporation to receive refundable federal tax credits following the Corporation's listing on the TSX Venture Exchange.

For the year ended March 31, 2006, Administration and Business Development expenses totaled $864,342 compared to $856,608 in 2005. Increases in payroll expenses were offset by lower professional fees. Financial expenses, interest on the debenture and on the long-term debt totaled $132,311 while the Corporation incurred $98,694 the previous year. The gain on exchange of $63,393 for the year ended March 31, 2006 resulted from the appreciation of the Canadian dollar compared to the US dollars on the US denominated long term debt.

As at March 31, 2006, the Corporation had cash and cash equivalents of $966,552 compared to $522,406 as at March 31, 2005. This increase in liquidity is a result of the merger with Black Point Capital Inc. in April 2005 which brought in approximately $2.8 million. Mistral also closed the first tranche of a private placement in the last quarter for a total proceed, net of issue costs, of $930,000. The private placement was completed in May 2006 resulting in the addition $4 million in new share capital shortly after Mistral's financial year end. During the year ended March 31, 2006, the funds were used for operating activities, for the reimbursement of the convertible debenture to GSK and for the purchase of equipment including the purchase of a tri-layer press machine. As mentioned, the Corporation was successful in completing a private placement of approximately $4 million, net of issue costs, in May 2006.

The loss for the quarter was $393,803 ($0.01 per share) compared to $438,241 for the same period in 2005 ($0.01 per share). The reduced loss for the quarter compared to the previous year is a result, for a second consecutive quarter, of the positive impact of the GSK contract termination which helped bring the R&D expenses net of tax credits to $32,349, compared to $152,750 for 2005, a decrease of 79%. The Stock-based compensation expense of $90,078 for the quarter compared to $4,395 for the same period a year earlier, a non-cash item, reduced the positive impact of the reduction in R&D expenses mentioned above. The research and development tax credits were $128,474 in the fourth quarter as compared to $200,014 for the quarter ended March 31, 2005; as it was the case in previous quarters, the decrease is due to the non-eligibility of the Corporation to receive refundable federal tax credits.

Administration and Business Development expenses totaled $208,513 compared to $182,208 for the same quarter in 2005. The higher expenses in the current quarter reflect the higher salaries and benefits expenses as well as the regulatory costs that the Corporation must assume now that it is a public company. Interests were $12,150 for the quarter compared to $63,030 for the same period in 2005 reflecting the higher interest revenues and the lower interest on the GSK debenture that was reimbursed in January 2006.

Selected Financial Information

Three months ended Year ended
March 31th March 31th
2006 2005 2006 2005
(Unaudited)(Unaudited) (Audited) (Audited)
$ $ $ $
Revenues - - 378,249 -
Research and
development costs 32,349 152,750 870,197 747,327
Administration 186,341 154,006 782,555 722,036
Business development 22,172 28,202 81,787 134,572
Licence fees - - - 25,000
compensation 90,078 4,395 332,550 730,214
Interest 15,026 63,030 132,311 98,694
Exchange loss (gain) 1,057 956 (63,393) 849
Amortization & other 46,780 34,902 168,430 115,692
Net loss 393,803 438,241 1,926,188 2,574,384

Deficit, beginning 8,952,123 6,203,952 6,642,193 4,067,809
Share issue costs 113,093 - 890,638 -
Deficit, end 9,459,019 6,642,193 9,459,019 6,642,193
Net loss per share
basic and diluted 0.01 0.01 0.03 0.07
Weigthed average
number of common
shares outstanding 56,633,514 35,858,655 55,144,860 35,858,655

2006-03-31 2005-03-31
(Audited) (Audited)
$ $
Cash and Cash equivalent 966,552 522,406
Receivable and other current assets 162,451 790,625
1,129,003 1,313,031
Equipment 1,383,307 159,049
Deposit 233,420 -
Intangible and other assets 850,397 949,672
3,596,127 2,421,752
Bank financing - 307,555
Accounts payable and accrued liabilities 291,115 933,908
Other current liabilities 135,000 618,750
Liability component of
secured convertible debenture - 590,407
Current portion of long term debt 434,783 -
860,898 2,450,620
Long term debt 813,101 -
Shareholders' Equity (Deficiency)
Equity component of
secured convertible debenture - 48,622
Share capital 9,949,863 5,700,593
Contributed surplus 1,431,284 864,110
Deficit (9,459,019) (6,642,193)
1,922,128 (28,868)
3,596,127 2,421,752

About Mistral Pharma Inc.

Mistral Pharma is a pharmaceutical product development and drug delivery company and its first branded product MIST-B01 showed positive results at its first pilot clinical trial. Mistral is also working on two control-delivery branded products. Mistral positions itself as a development partner for specialty pharmaceutical companies. Additional information about Mistral Pharma can be obtained on Mistral Pharma'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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