Mistral Pharma Inc.

Mistral Pharma Inc.

August 19, 2005 16:35 ET

Mistral Pharma Announces its Results for its First Quarter 2005 and for its MIST-G01 Pilot Clinical Study

MONTREAL, QUEBEC--(CCNMatthews - Aug. 19, 2005) - Mistral Pharma Inc. (TSX VENTURE:MIP) announced today its financial results and review of operating highlights for the first fiscal quarter ended June 30, 2005. The Company also announced the results from the MIST-G01 pilot bioequivalence study that was initiated in July 2005.

Mistral Pharma received the results of its pilot bioequivalence trial for its first generic product, MIST-G01. The formulation developed for this trial did not meet the bioequivalence criteria. "While we were disappointed with the results, we remain confident in our technologies and our ability to develop both generic and branded controlled-delivery products" said Bertrand Bolduc, President & CEO.

This three-month period was Mistral Pharma's first quarter as a publicly traded company. On April 29, 2005, Black Point Capital Inc. a Capital Pool Company completed its public offering of 10,000,000 units at a price of $0.20 per unit. This transaction was immediately followed by the completion of the qualifying transaction with Mistral Pharma.

The loss for the quarter was $705,725 ($0.01 per share) compared to $543,714 for the same period in 2004 ($0.02 per share). Research and development costs, before tax credits for the first quarter of 2005, amounted to $398,657, compared to $297,757 for 2004, an increase of 34% related to our expected level of research investment. The research and development tax credits were $61,101 in the first quarter of 2005 as compared to $106,491 in 2004; the decrease being due to the loss of refundable federal tax credits following our listing on the TSX Venture Exchange.

Administration and Business Development expenses totaled $283,035 as compared to $210,025 for the same quarter in 2004, resulting from higher payroll expense and higher legal and professional fees. The 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 June 30, 2005, Mistral had cash, and cash equivalents of $1,703,179 compared with $522,406 as at March 31, 2005. The merger with Black Point brought in approximately $2,579,684 in new financing. During the first three months ended June 30, 2005, cash flows used in operating activities were $957,432, as compared to $215,174 in the same quarter of 2004. Increased development activities and increases in refundable expense receivables from partners explain this increase. Investing activities in the amount of $1,462,443 primarily included the acquisition of the tablet press machine and R&D equipment valued at $997,525 and the addition of a deposit of US $300,000 held in escrow in relation to the long-term debt contracted with Oxford Finance. The Company was also able to negotiate long debt financing of $1,170,312 for the purchase of equipment.

Our committed cash obligations and expected level of expenses for the upcoming twelve months exceed the committed sources of funds. It is management's intention to secure further capital to support future development costs in the form of equity, advances from related parties and/or issuance of debentures. The Company's ability to continue as a going concern is subject to securing additional capital.

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
For the three-month period ended June 30
(Unaudited) 2005 2004
$ $

Research and development
costs 337,557 191,267
Administration 260,823 178,199
Business development 22,212 31,475
Employee and consultant
stock options 51,195 112,215
Interest 27,835 5,493
Exchange gain (28,957) -
Amortization 35,060 25,064
Net loss 705,725 543,713

Deficit, beginning of period 6,642,193 4,067,809
Share issue costs 777,544 -
Deficit, end of period 8,125,462 4,611,522
Net loss per share basic
and diluted 0.01 0.02
Weigthed average number
of common shares
outstanding 48,557,839 26,391,849

2005-06-30 2005-03-31
(Unaudited) (Audited)
$ $

Cash and Cash equivalent 1,703,179 522,406
Receivables and other
current assets 1,088,779 790,625
2,791,958 1,313,031
Equipment 1,146,664 159,049
Deposit 367,680 -
Intangible and other assets 811,128 949,672
5,117,430 2,421,752

Bank financing 307,555 307,555
Accounts payables and
accrued liabilities 810,435 933,908
Other current liabilities 448,409 618,750
Liability component of secured
convertible debenture 600,001 590,407
Current portion of long
term debt 242,961 -
2,409,361 2,450,620
Long term debt 848,739 -
Shareholders' Equity (Deficiency)
Equity component of secured
convertible debenture 48,622 48,622
Share capital 8,922,457 5,700,593
Contributed surplus 1,013,713 864,110
Deficit (8,125,462) (6,642,193)
1,859,330 (28,868)
5,117,430 2,421,752

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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