ProMetic Life Sciences Inc.

ProMetic Life Sciences Inc.

March 28, 2006 17:55 ET

ProMetic Announces Year-End 2005 Financial Results

MONTREAL, QUEBEC--(CCNMatthews - March 28, 2006) - ProMetic Life Sciences Inc. ("ProMetic" or the "Company") (TSX:PLI.SV) today announced its financial results for the year ended December 31, 2005. All amounts are in Canadian dollars unless otherwise indicated.

Highlights of the year 2005

The investments made in research and development have borne fruit and the Company is now proceeding rapidly towards commercialization of some of its flagship products in collaboration with partners. With the development risk behind us for several value drivers, our mission is to execute and turn our scientific achievements into product sales.

ProMetic BioSciences Ltd, the Company's unit based on the Isle of Man is approaching positive cash flow and is anticipated to increase its product sales, launch new products and utilize the new plant capacity added during 2005. The launch of the Pathogen Removal and Diagnostic Technologies Inc. (PRDT) prion reduction filter with partner MacoPharma is expected in 2006. Discussions are underway to develop a prion reduction technology at industrial scale with players in the plasma fractionation industry.

Using PRDT technology, the Company entered into a memorandum of understanding in 2005 to form a joint-venture with Top Meadows Life Sciences Inc. to develop and launch a Bovine Spongiform Encephalopathy (BSE) prion testing system. Our competitive advantage resides in PRDT's proven ability to concentrate extremely small quantities of infectious prions in animal body fluids. The Company's immediate goal is to adapt this technology to the full range of current post-mortem diagnostic systems to improve on their sensitivity. In the longer term a full BSE diagnostic test for live cattle could be developed by the Company alone or in partnership.

The Company suffered a setback in 2005 following the financial difficulties and insolvency of Hemosol LP, its North American licensee for the Plasma Protein Purification System (PPPS), depriving the Company of significant cash flow. Nevertheless, technological progress with impressive yield improvements over standard fractionation systems was achieved in 2005.

The proprietary PPPS process is increasingly recognized as less expensive, less wasteful and more efficient compared to standard processes. The year ahead will be a turning point for long-term profitability originating from this technology.

With excellent results in Phase I and its mechanism of action unraveled, our potential drug to treat anemia, PBI-1402, is entering Phase Ib/II clinical trial. An attractive feature of this trial which targets chemotherapy and/or cancer induced anemia stems from a mechanism of action which is different from the current anemia treatment, erythropoietin (EPO). The orally active synthetic drug PBI-1402 could be addressing a significant portion of the anemia market which is expected to reach US$15 billion in the US alone by the end of this decade.

The Company will not likely finance and commercialize on its own the scale and diversified opportunities it faces. A Board initiative was undertaken in November 2005 to effect a major structural change of the Company into four pure-play operating units. The goal is to ensure that the increased value and maturity of the Company's proven technologies are reflected in shareholder value.

2005 Financial Results

Year ended December 31, 2005

The following information should be read in conjunction with the audited financial statements for the year ended December 31, 2005, as well as the annual Management Discussion and Analysis for the year ended December 31, 2005, including results of the fourth quarter.

Revenues for the year were to $8.1 million compared with $8.2 million in 2004. The anticipated growth in licensing fees did not materialize partly due to the insolvency of the PPPS licensee in North America. Product sales and contracts originating from ProMetic BioSciences Ltd increased from $3.8 million to $4 million and are expected to continue to grow as clients advance their clinical development programs and require more purified consumables from the Company. For example, Halozyme recently obtained FDA approval from a new recombinant biopharmaceutical drug which was manufactured using our Mimetic Ligand™ purification technology. The Research and development program with Serono was successfully completed in 2005 and programs with GSK and Octapharma are ongoing.

Research and development expenses decreased slightly to $13.3 million in 2005 compared with $14.3 million in 2004 and tax credits of $1.7 million, available under provincial programs, were recorded in 2005. General and administrative expenses increased to $6.7 million in 2005, compared with $5.3 million in 2004. This increase was the result of additional expenses related to hiring management expertise, expensing stock option costs and incurring external legal and accounting fees related to financing activities.

Depreciation for the year ended December 31, 2005 was slightly higher at $2.9 million.

The Company incurred a net loss of $22.9 million, or $0.20 per share in 2005, compared with $17.2 million, or $0.17 per share, in 2004. Before write-downs, the net loss is $0.13 per share in 2005 compared with $0.14 per share in 2004. A net loss of $0.07 per share in 2005 is related to the write-off of Hemosol Corp shares following its insolvency and the write-off of an investment in Arriva Pharmaceuticals, Inc., following US federal jury awards against that company.

Fourth Quarter 2005

Revenues for the fourth quarter of 2005 were $1.2 million compared with $0.8 million for the same period in 2004 and were related to higher shipments of product from ProMetic BioSciences Ltd.

Operating expenses were $5.2 million in the fourth quarter of 2005 compared with $4.2 million for the same period in 2004. In 2005, research and development tax credits were recorded every quarter instead of in one recording during the fourth quarter of 2004.

Net loss was $7.8 million or $0.07 per share in the fourth quarter of 2005, compared with $6.1 million, or $0.06 per share, in the same 2004 period.

(In thousands of Canadian dollars)

December 31 December 31
2005 2004

Current assets
Cash and cash equivalents $10,525 $6,770
Short-term investment in shares of a public
company - 2,340
Accounts receivable 2,914 2,796
Inventories 1,935 921
Prepaid expenses 518 789
15,892 13,616

Investments 2,876 4,479
Capital assets 5,324 5,190
Licenses and patents 5,098 5,430
Deferred financing expenses 563 -
Deferred development costs 43 990
$29,796 $29,705

Current liabilities
Bank loan $1,029 $1,029
Accounts payable and accrued liabilities 5,319 7,714
Deferred revenues - 243
Current portion of long-term debt 366 440
Current portion of liability component
of the convertible term notes 524 -
7,238 9,426

Liability component of the convertible term
notes 3,490 -
Long-term debt 46 407
Provision related to a lawsuit 2,921 -
Preferred shares, retractable at the holder's
option 2,248 1,586
15,943 11,419

Share capital 150,697 135,682
Contributed surplus 5,929 99
Deficit (142,773) (117,495)
13,853 18,286

$29,796 $29,705

The accompanying notes are an integral part of the consolidated
financial statements.

(In thousands of Canadian dollars except for per share amounts)
Years ended December 31,

2005 2004
Sales and contract $4,028 $3,813
Licensing 4,024 4,370
8,052 8,183

Research and development expenses 13,338 14,271
Administration, marketing and other expenses 6,742 5,274
Amortization 2,892 2,740
22,972 22,285

Provision related to a lawsuit (206) (2,715)
Write-down of short-term investment (5,085) (530)
Write-down of long term investments (2,558) -
Net interest income (expenses) (163) 195
NET LOSS ($22,932) ($17,152)

Net loss per share (basic and diluted) (0.20) (0.17)

Weighted average number of outstanding shares
(in thousands) 115,717 99,429

The accompanying notes are an integral part of the consolidated
financial statements.

About ProMetic Life Sciences

ProMetic Life Sciences Inc. is a biopharmaceutical company specialized in the research, development, manufacture and marketing of a variety of commercial applications derived from its proprietary Mimetic Ligand™ enabling technology. This technology is used in large-scale purification of biologics and the elimination of pathogens. ProMetic is also active in therapeutic drug development with the mission to bring to market effective, innovative, lower cost, less toxic products for the treatment of inflammation and cancer. Its drug discovery platform is focused on replacing complex, expensive proteins with synthetic "drug-like" protein mimetics. Headquartered in Montreal (Canada), ProMetic has R&D and manufacturing facilities in the UK and business development activities in the US, Europe, Asia and Middle East and North African countries.

Additional information is available on the Company's website at

Forward Looking Statements

This press release contains forward-looking statements about ProMetic's objectives, strategies and businesses that involve risks and uncertainties. These statements are "forward-looking" because they are based on our current expectations about the markets we operate in and on various estimates and assumptions. Actual events or results may differ materially from those anticipated in these forward-looking statements if known or unknown risks affect our business, or if our estimates or assumptions turn out to be inaccurate. Such risks and assumptions include, but are not limited to, the Company's ability to develop, manufacture, and successfully commercialize value-added pharmaceutical products, the availability of funds and resources to pursue R&D projects, the successful and timely completion of clinical studies, the ability of the Company to take advantage of business opportunities in the pharmaceutical industry, uncertainties related to the regulatory process and general changes in economic conditions. You will find a more detailed assessment of the risks that could cause actual events or results to materially differ from our current expectations on page 15 of the Company's Annual Information Form for the year ended December 31, 2004, under the heading "Risk Factors". As a result, we cannot guarantee that any forward-looking statement will materialize. We assume no obligation to update any forward-looking statement even if new information becomes available, as a result of future events or for any other reason.

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