Mistral Pharma Inc.
TSX VENTURE : MIP

Mistral Pharma Inc.

November 10, 2005 16:13 ET

Mistral Pharma Announces its Results for its Second Quarter 2005

MONTREAL, QUEBEC--(CCNMatthews - Nov. 10, 2005) - Mistral Pharma Inc. (TSX VENTURE:MIP) announced today its financial results and review of operating highlights for the second fiscal quarter ended September 30, 2005.

"This quarter has brought us much further in the development of our branded product, MIST-B01, thanks to our pilot clinical study's success" said Mr. Bertrand Bolduc, Mistral's President & CEO. "We are actively pursuing the development of our product line as well as having discussions with several potential strategic partners for MIST-B01" he added.

Highlights of the quarter

Successful pilot clinical trials for MIST-B01: Controlled-Delivery Branded Product

Mistral's first branded product is a controlled-delivery formulation of a widely prescribed drug, which is already approved around the world for numerous indications. The MIST-B01 once-daily formulation met the study objectives relative to area under the curve (AUC) and maximum concentration (Cmax) resulting in a successful 24h pharmacokinetic profile compared to the reference product taken twice daily. If approved by regulatory authorities, Mistral's management believes that MIST-B01's preferred dosage schedule and additional potential clinical benefits could lead this product to capture a significant portion of this market. According to Drug Topics, the total generic sales for this drug were above US $ 275 M in 2004.

Mistral is seeking a commercial partner to further the development, proceed with the regulatory approval process and commercialize the product.

Mistral's shares listed as replacement stock for the Quebec SME growth stock plan

Mistral has obtained an advanced income tax ruling from the Ministere du Revenu du Quebec confirming that the common shares of Mistral could be included on the list drawn up by the Autorite des marches financiers and be valid shares for the SME Growth Stock Plan, in accordance with the measures contained in the 2005-2006 Quebec budget tabled on April 21, 2005. As a result, the common shares of Mistral purchased on the secondary market to replace a qualifying share or security disposed of by an individual (other than a trust) will qualify as valid shares for a "covering" operation in accordance with the SME Growth Stock Plan.

The loss for the quarter was $467,250 ($0.01 per share) compared to $559,052 for the same period in 2004 ($0.02 per share). Milestone payments in the amount of $250,000 were recorded as revenues for the period; this payment was received in October 2004 and was recorded as deferred revenues at the time. Research and development costs, before tax credits, for the second quarter of 2005, amounted to $406,236, compared to $315,581 for 2004, an increase of 29% related to our increased efforts invested in the development and clinical trials of our branded product MIST-B01. The research and development tax credits were $21,404 in the second quarter of 2005 as compared to $123,018 in 2004; as it was the case in the first quarter, the decrease is due to the loss of refundable federal tax credits following our listing on the TSX Venture Exchange.

Administration and Business Development expenses totaled $192,271 as compared to $190,704 for the same quarter in 2004, resulting from higher payroll expenses and higher legal and professional fees. The $36,560 gain on exchange resulted from the appreciation of the Canadian dollar compared to the US dollars on the US denominated long term debt.

As at September 30, 2005, Mistral had cash, and cash equivalents of $910,783 compared with $522,406 as at March 31, 2005. This increase in liquidity is a result of the merger with Black Point last April which brought in approximately $2.8 Million in new financing. During the first two quarters of 2005, the funds were used for operating activities and for the purchase of equipment including the purchase of a tri-layer press machine. It is management's intention to secure further capital to support future development costs in the form of equity, advances from related parties or through the issuance of debentures.

The loss for the six-month period was $1,172,973 ($0.02 per share) compared to $1,102,770 for the same period in the previous year ($0.03 per share). Research and development costs, before tax credits, were to $804,893 for the six-month period of 2005 compared to $613,338 in 2004. The increase in staffing and the extended use of sub-contractors in the period, combined with the pilot clinical trials costs for MIST-B01, accounted for the increase in research costs over the same period in 2004.

For the six-month period ended September 30, 2005, administration and Business Development expenses totaled $475,306 as compared to $400,348 for the same period in 2004. As it was the case for the quarter, this increase is the result of higher payroll expenses and higher legal and professional fees. The gain on exchange of $65,517 resulted from the appreciation of the Canadian dollar compared to the US dollars on the US denominated long term debt.

About Mistral Pharma Inc.

Mistral Pharma is an emerging oral drug delivery company which develops generic and branded controlled-delivery products using its PROCISE™, SAVIT™ and CHRONOP™ geometry surface area technologies. These technologies offer many competitive advantages including flexible and fast development, competitive cost of goods and the use of "generally recognized as safe" excipients. Additional information about Mistral Pharma can be obtained on Mistral Pharma's website at www.mistralpharma.com.



Selected Financial Information
(Unaudited)

Three months ended Six months ended
September 30 September 30
2005 2004 2005 2004
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$ $ $ $
Milestone revenues 250,000 250,000
Expenses
Research and
development costs 384,832 192,563 722,389 383,830
Administration 173,980 152,912 434,803 331,111
Business development 18,291 37,762 40,503 69,237
Employee and consultant
stock options 101,199 142,749 152,394 254,964
Interest 32,502 6,410 60,335 11,907
Exchange gain (36,560) (75) (65,517) (75)
Amortization 43,006 26,731 78,066 51,796
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Net loss 467,250 559,052 1,172,973 1,102,770
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Deficit, beginning
of period 8,125,460 4,611,523 6,642,193 4,067,805
Share issue costs - - 777,544 -
Deficit, end
of period 8,592,710 5,170,575 8,592,710 5,170,575
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Net loss per share
basic and diluted 0.01 0.02 0.02 0.03
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Weigthed average
number of common
shares
outstanding 54,595,155 35,858,655 51,609,670 35,858,655


2005-09-30 2005-03-31
(Unaudited) (Audited)
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$ $
Assets
Cash and Cash equivalent 910,783 522,406
Receivables and other current assets 915,526 790,625
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1,826,309 1,313,031
Equipment 1,277,364 159,049
Deposit 348,330 -
Intangible and other assets 792,984 949,672
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4,244,987 2,421,752
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Liabilites
Bank financing 307,555 307,555
Accounts payables and accrued liabilities 856,144 933,908
Other current liabilities - 618,750
Liability component of secured
convertible debenture 609,595 590,407
Current portion of long term debt 238,131 -
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2,011,425 2,450,620
Long term debt 740,281 -
Shareholders' Equity (Deficiency)
Equity component of secured
convertible debenture 48,622 48,622
Share capital 8,874,863 5,700,593
Contributed surplus 1,162,506 864,110
Deficit (8,592,710) (6,642,193)
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1,493,281 (28,868)
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4,244,987 2,421,752
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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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