ViRexx Medical Corp.
TSX : VIR
AMEX : REX

ViRexx Medical Corp.

March 23, 2007 07:00 ET

ViRexx Announces 2006 Fiscal Year Results

EDMONTON, ALBERTA--(CCNMatthews - March 23, 2007) - ViRexx Medical Corp. (TSX:VIR)(AMEX:REX), a company focused on the development of immunotherapies for certain cancers, chronic hepatitis B & C and embolotherapy for tumors, announced its financial and operational results for the fiscal year ended December 31, 2006.

"The next twelve months will be a pivotal period for ViRexx as we expect to receive final data analysis from the two identical Phase III trials of OvaRex® MAb and advance our Occlusin™ 500 Device into clinical trials in preparation for a 510(k) submission. With the countdown to the OvaRex® MAb data in its final stages, ViRexx is among a select group of life sciences companies in North America expecting Phase III data within twelve months," said Dr. Lorne Tyrrell, Chief Executive Officer and Chief Scientific Officer of ViRexx. "During the fourth quarter of 2006, ViRexx completed licensing, supply and manufacturing agreements for OvaRex® MAb in the unlicensed European territories. ViRexx has established partnerships with Sigma-Tau, and its subsidiaries, and Dompe Farmaceutici, both successful marketers of specialty pharmaceutical products in Europe. These agreements represent access to 43% of the currently targeted ovarian cancer markets in North America and the European Union."

Product Development Highlights

- Enrollment was completed in the second of two identical OvaRex® MAb Phase III trials for the treatment of late-stage ovarian cancer. The trials are being conducted by ViRexx's licensee, Unither Pharmaceuticals, Inc. (Unither), a subsidiary of United Therapeutics Corporation. The primary endpoint for each trial is time-to-relapse comparing OvaRex® MAb to placebo. The primary data analysis is scheduled and will occur after each trial has reported at least 118 relapse events. The first trial IMPACT I has achieved the 118th event. It is projected that the second trial, IMPACT II, will reach the 118th event in the second half of 2007.

- ViRexx's licensee, Unither, completed enrollment in a 40 patient OvaRex® MAb Phase II trial, designed to study its use as an adjunct to platinum-based front line chemotherapy in the treatment of advanced ovarian cancer. Unither will present the results at the American Society of Clinical Oncology (ASCO) in June of 2007.

- ViRexx International Corp. and Defiante Farmaceutica, Lda. and Tecnogen S.C.p.A., both subsidiaries of Sigma-Tau Pharmaceuticals, Inc. of Rome, Italy, completed manufacturing, licensing and distribution agreements for OvaRex® MAb for the remaining unlicensed European territories which include the UK, Ireland, France, Sweden, Finland and other countries. The agreements provide for ViRexx to receive a net effective royalty of approximately 25% on net sales of OvaRex® MAb in the European and Middle Eastern countries and milestone payments of up to Cdn$6.5 million in equity.

The milestone payments included an advanced equity investment of Cdn$2.0 million from Sigma-Tau and its subsidiaries for 1,818,182 units of ViRexx at a price of Cdn$1.10.

- A Phase I safety trial of HepaVaxx B Vaccine was completed. The trial enrolled and treated its target of 15 healthy volunteers with a single dose subcutaneous injection of the vaccine; no significant adverse events associated with the treatment have been reported. ViRexx is continuing to monitor the volunteers and expects to complete this safety assessment by the second quarter of 2007.

- The Company entered into a research collaboration with Defense Research and Development Canada - Suffield to evaluate the use of the Chimigen™ vaccine platform for biodefense applications.

- Enrollment and treatment for the Phase I trial of Occlusin™ 50 Injection in liver cancer patients at the Foothills Hospital in Calgary and the Toronto General Hospital was completed during the year.

Financial Highlights

(All amounts reported are in Canadian dollars unless otherwise stated)

The Company recorded a net loss for the twelve-month period ended December 31, 2006 of $17,493,375 or $0.25 per share, as compared with a net loss of $7,459,714 or $0.13 per share for the twelve-month period ended December 31, 2005.

Approximately 75% of the change in the Company's net loss for the year ended December 31, 2006 is due to a non-cash change in the net future tax expense associated with the transfer of intellectual property to ViRexx International Corp.

Research and development expenses for the twelve-month period ended December 31, 2006 were $5,937,122, compared with $4,750,190 for the twelve-month period ended December 31, 2005. The difference is primarily due to additional toxicology testing for the HepaVaxx B Vaccine clinical studies and product development and manufacturing costs associated with the Occlusin™ 500 Device.

Corporate Administration expenses for the twelve-month period ended December 31, 2006 were $4,976,837, compared with $3,650,282 for the twelve-month period ended December 31, 2005. The difference is primarily due to expenses related to business development and commercialization activities for OvaRex® MAb in Europe and business development for the TACT™ and Chimigen™ technologies. Corporate Administration also includes consulting and other fees associated with the new 52-109 and SOX compliance requirements, as well as restructuring costs relating to ViRexx's announcement on November 26, 2006 to prioritize its research activities to focus on the completion of its existing pipeline products that provide near-term potential revenue streams.

At December 31, 2006, the Company's cash and short term investments totalled $10,742,191 as compared to $5,571,850 at December 31, 2005. During the twelve-month period ended December 31, 2006, the Company raised $15,000,000 from the completion of three separate private placements.

At December 31, 2006, the Company had 72,760,717 common shares outstanding. The number of stock options and warrants outstanding at December 31, 2006 is 6,396,241 and 17,077,471, respectively, and could generate proceeds of $29,931,775 if exercised.

About ViRexx Medical Corp.
ViRexx is an Edmonton, Alberta based biotechnology company focused on the development of novel therapeutic products for the treatment of certain cancers and specified chronic viral infections. ViRexx's most advanced programs include drug candidates for the treatment of ovarian cancer, chronic hepatitis B and C and solid tumors.

ViRexx's lead product candidate, OvaRex® MAb, a therapy for the treatment of late-stage ovarian cancer, is currently the subject of two Phase III clinical trials being funded by ViRexx's licensing partner Unither Pharmaceuticals, Inc., a subsidiary of United Therapeutics Corporation. For additional information about ViRexx, please see www.virexx.com.

This news release contains certain forward-looking statements that reflect the current views and/or expectations of the Company with respect to its performance, business and future events. Such statements are subject to a number of risks, uncertainties and assumptions. Actual results and events may vary significantly.

Financial statements attached:



ViRexx Medical Corp.
(a development stage company)
Consolidated Balance Sheets
As at December 31, 2006 and 2005
---------------------------------------------------------------------------
(expressed in Canadian dollars)
December December
31, 31,
2006 2005
$ $
Assets

Current assets
Cash 405,354 237,462
Short-term investments 10,336,837 5,334,388
Prepaid expenses and deposits 168,502 166,658
Other current assets 194,476 39,606
---------------------------

11,105,169 5,778,114
Property and equipment 475,079 518,134
Acquired intellectual property 27,369,445 29,990,097
---------------------------
38,949,693 36,286,345
---------------------------
---------------------------

Liabilities
Current liabilities
Accounts payable 412,441 227,625
Accrued liabilities 1,185,762 442,541
---------------------------

1,598,203 670,166
Obligations under capital lease 5,351 -
Future income taxes 5,346,990 1,168,377
---------------------------

6,950,544 1,838,543
---------------------------

Commitments and contingencies

Shareholders' Equity

Common shares - no par value; unlimited shares
authorized; 72,760,717 shares and 58,443,445
shares issued and outstanding, respectively 54,064,680 45,989,189
Contributed surplus 11,748,640 4,779,409
Deficit accumulated during development stage (33,814,171) (16,320,796)
---------------------------

31,999,149 34,447,802
---------------------------

38,949,693 36,286,345
---------------------------
---------------------------


ViRexx Medical Corp.
(a development stage company)
Consolidated Statements of Shareholders' Equity
---------------------------------------------------------------------------

(expressed in Canadian dollars)


Common
shares
----------------------
Equity
compo- Deficit
nent accumulated Total
of Contri- during share-
deben- buted development holders,
Number Amount ture surplus stage equity
# $ $ $ $ $
Balance-
October
30, 2000 - - - - - -
Shares
issued
on incorp-
oration 200 259 - - - 259
Net loss - - - - (177,397) (177,397)
--------------------------------------------------------------------
Balance-
December
31, 2000 200 259 - - (177,397) (177,138)
Issuance
of
common
shar-
es 16,617,283 1,153,081 - - - 1,153,081
Exer-
cise
of
war-
rants 260,039 207,094 - - - 207,094
Share
issue
costs - (69,067) - - - (69,067)
Net loss - - - - (1,011,957) (1,011,957)
--------------------------------------------------------------------

Balance-
December
31,
2001 16,877,522 1,291,367 - - (1,189,354) 102,013
Shares
issued
on
settle-
ment
of debt 682,686 218,460 - - - 218,460
Issuance
of
common
shares 184,000 800,024 - - - 800,024
Exercise
of
warrants 1,869 1,428 - - - 1,428
Share
issue
costs - (7,749) - - - (7,749)
Issuance
of
convert-
ible
debent-
ure - - 90,000 - - 90,000
Amalgam-
ation (1,000,000) - - - - -
Net
loss - - - - (1,260,472) (1,260,472)
--------------------------------------------------------------------

Balance-
December
31,
2002 16,746,077 2,303,530 90,000 - (2,449,826) (56,296)
Issued
under
private
place-
ment 48,000 31,200 - - - 31,200
Exercise
of
stock
options 300,000 126,600 - - - 126,600
Conversi
on of
debent-
ures 684,648 261,277 (30,882) - - 230,395
Amalgam-
ation (7,378,725) - - - (24,498) (24,498)
Issue
of
special
warr-
ants 5,200,000 2,881,060 - 205,150 - 3,086,210
Stock
options
issued
to non-
emplo-
yees - - - 85,000 - 85,000
Net loss
restated - - - - (1,383,562) (1,383,562)
--------------------------------------------------------------------

Balance-
December
31,
2003 15,600,000 5,603,667 59,118 290,150 (3,857,886) 2,095,049
Retro-
active
adjust-
ment
for
stock-
based
compen-
sation - - - 734,773 (734,773) -
--------------------------------------------------------------------

Balance-
December
31,
2003
(resta-
ted) 15,600,000 5,603,667 59,118 1,024,923 (4,592,659) 2,095,049
Issued
through
public
offer-
ing 11,000,000 8,388,820 - 411,180 - 8,800,000
Issued
as
corpor-
ate
finance
fee 400,000 - - - - -
Exercise
of
war-
rants 5,500 5,500 - - - 5,500
Acquisit-
ion of
Alta-
Rex
Medi-
cal
Corp. 26,257,759 28,620,957 - - - 28,620,957
Exercise
of
stock
options 13,218 15,727 - (5,153) - 10,574
Share
issue
costs - (879,688) - - - (879,688)
Fair
value
of
stock
options
issued
on the
acquis-
ition of
AltaRex - - - 1,815,378 - 1,815,378
Stock-
based
compen-
sation - - - 380,577 - 380,577
Net loss - - - - (3,657,760) (3,657,760)
--------------------------------------------------------------------

Balance-
Decem-
ber
31,
2004 53,276,477 41,754,983 59,118 3,626,905 (8,250,419) 37,190,587
--------------------------------------------------------------------

Balance-
Decem-
ber
31,
2004 53,276,477 41,754,983 59,118 3,626,905 (8,250,419) 37,190,587
Repur-
chase
of
shar-
es (2,056,900) (1,645,113) - - (610,663) (2,255,776)
Exercise
of
stock
options 225,218 267,413 - (75,699) - 191,714
Private
place-
ment 4,035,665 2,970,316 - 1,065,349 - 4,035,665
Exercise
of
war-
rants 2,302,875 2,277,370 - (294,495) - 1,982,875
Conversi
on of
debent-
ures 561,100 591,281 - - - 591,281
Conversi
on and
redempt-
ion of
debent-
ures - - (59,118) - - (59,118)
Share
issue
costs 99,010 (227,061) - - - (227,061)
Stock-
based
compen-
sation - - - 457,349 - 457,349
Net
loss - - - - (7,459,714) (7,459,714)
--------------------------------------------------------------------
Balance-
Decem-
ber
31,
2005 58,443,445 45,989,189 - 4,779,409 (16,320,796) 34,447,802
Exercise
of
stock
options 590,000 439,341 - (143,340) - 296,001
Private
place-
ments 13,527,272 9,032,430 - 5,967,570 - 15,000,000
Common
shares
issued 200,000 148,000 - - - 148,000
Share
issue
costs - (1,544,280) - 539,962 - (1,004,318)
Stock-
based
compen-
sation - - - 605,039 - 605,039
Net loss - - - - (17,493,375) (17,493,375)
--------------------------------------------------------------------

Balance-
Decem-
ber
31,
2006 72,760,717 54,064,680 - 11,748,640 (33,814,171) 31,999,149
--------------------------------------------------------------------


ViRexx Medical Corp.
(a development stage company)
Consolidated Statements of Loss

Cumulative
from
October 30,
Years ended December 31, 2000 to
---------------------------------- December 31,
2006 2005 2004 2006
$ $ $
(Restated)
Revenue - - - -
--------------------------------------------------
Expenses
Research and development 5,937,122 4,750,190 1,796,680 13,892,054
Corporate administration 4,976,837 3,650,282 1,887,711 12,586,301
Amortization 2,771,283 2,499,174 71,348 5,432,626
--------------------------------------------------

13,685,242 10,899,646 3,755,739 31,910,981
--------------------------------------------------

Loss from operations (13,685,242) (10,899,646) (3,755,739) (31,910,981)
--------------------------------------------------

Other income (expenses)
Interest 400,201 218,504 127,728 753,930
Gain (loss) on disposal
of property and
equipment 878 - 1,955 (104,842)
(Loss) gain on foreign
exchange (30,599) (45,528) 14,971 (108,252)
Debenture interest - (95,201) (61,999) (272,960)
Other - 3,731 15,324 19,055
--------------------------------------------------
370,480 81,506 97,979 286,931
--------------------------------------------------

Loss before income
taxes (13,314,762) (10,818,140) (3,657,760) (31,624,050)

Future income taxes
(expense) recovery (4,178,613) 3,358,426 - (820,187)
--------------------------------------------------

Net loss (17,493,375) (7,459,714) (3,657,760) (32,444,237)
--------------------------------------------------
--------------------------------------------------

$ $ $

Basic and diluted loss per
common share (0.25) (0.13) (0.14)
--------------------------------------------------
--------------------------------------------------

# # #

Basic and diluted weighted
average number of
common shares 68,921,409 55,827,119 25,268,388
--------------------------------------------------
--------------------------------------------------


Cumulative
from
October 30,
Years ended December 31, 2000 to
-------------------------------------
December 31,
2006 2005 2004 2006
$ $ $
(Restated)

Cash provided by
(used in)

Operating activities
Net loss (17,493,375) (7,459,714) (3,657,760) (32,444,237)
Items not affecting cash
Debenture interest - 95,201 54,526 265,487
Amortization 2,771,283 2,499,174 71,348 5,432,626
Stock-based
compensation 605,039 457,349 380,577 1,654,265
Investor relations 148,000 - - 148,000
Write off of patent
costs - - 242,626 242,626
(Gain) loss on
disposal of
property and equipment (878) - (1,955) 104,842
Unrealized foreign
exchange gain - (356) (9,471) (9,827)
Future income taxes 4,178,613 (3,358,426) - 820,187
Operating assets and
liabilities 764,215 215,670 (346,104) 1,155,476
--------------------------------------------------

(9,027,103) (7,551,102) (3,266,213) (22,630,555)
--------------------------------------------------

Financing activities
Repayment of capital
lease (1,755) - - (1,755)
Issuance of share
capital
net of share
issue costs 14,291,683 5,983,193 7,405,027 33,066,639
Amounts due to related
parties - - (35,341) -
Advances from
shareholder - - - 769,900
Repayment of advances
from
shareholder - - - (769,900)
Convertible debentures - (600,144) - 84,856
Restricted cash 659,000 (659,000) -
Repurchase of shares - (2,255,776) - (2,255,776)
--------------------------------------------------

14,289,928 3,786,273 6,710,686 30,893,964
--------------------------------------------------

Investing activities
Acquisition of property
and equipment (92,484) (131,991) (403,364) (1,000,906)
Cash acquired on
acquisition - - 3,710,419 3,729,561
Proceeds on sale of
property and
equipment - 5,682 2,861 17,753
Expenditures on patents
and trademarks - - - (267,626)
(Increase) decrease in
short-term investments (5,002,449) 3,483,588 (8,817,976) (10,336,837)
--------------------------------------------------

(5,094,933) 3,357,279 (5,508,060) (7,858,055)
--------------------------------------------------

Increase (decrease) in
cash 167,892 (407,550) (2,063,587) 405,354

Cash - Beginning of
period 237,462 645,012 2,708,599 -
--------------------------------------------------

Cash - End of period 405,354 237,462 645,012 405,354
--------------------------------------------------


The TSX has not approved or disapproved of the information contained herein.

Contact Information