ViRexx Medical Corp.
TSX : VIR
AMEX : REX

ViRexx Medical Corp.

August 14, 2008 13:22 ET

ViRexx Announces 2008 Second Quarter Results

EDMONTON, ALBERTA--(Marketwire - Aug. 14, 2008) - ViRexx Medical Corp. (TSX:VIR) (AMEX:REX), company focused on developing innovative-targeted therapeutic products that offer better quality of life and a renewed hope for living. Its platform technologies include product candidates for the treatment of Hepatitis B, Hepatitis C, avian influenza viral infections, biodefence and nanoparticle applications, select solid tumors and late-stage ovarian cancer, today announced its financial and operational results for the three-month period ended June 30, 2008.

"Despite the very challenging times in the capital markets, the Company was able, in the second quarter, to secure the needed Standby Guarantor for its Rights Offering, which is now proceeding", said Darrell Elliott, Chairman and interim Chief Executive Officer of Virexx. "This provides the needed foundation for the company's continued reorganization. The planned reduction in operating expenses will continue during the third quarter, whilst added emphasis is given to the Chimigen™ Platform technologies. We have also continued our planning for re-entry into clinical trials of candidates from the Occlusin™ Platform technologies."

Operational Update

As announced on June 5, 2008, ViRexx entered into a Standby Purchase Agreement dated May 22, 2008, effective June 4, 2008, with LM Funds Corp., with respect to the rights offering to shareholders announced on March 31, 2008.

On July 18, 2008 the Company filed a final short form prospectus for a rights offering. The subscription is $0.045 per common share and was equal to the weighted average of the closing price of the Company's common shares on the Toronto Stock Exchange ("TSX") for each of the trading days on which there was a closing price during the three trading days immediately preceding July 14, 2008, less a discount of 25%. The Company has applied to list on the TSX the rights distributed under the short form prospectus and the shares issuable upon the exercise of the rights. Approval of such listing will be subject to the Company fulfilling all of the listing requirements of the TSX. The Company has applied to list the shares issuable upon the exercise of the rights (but not the rights themselves) on the American Stock Exchange ("AMEX"). Approval of such listings will be subject to the Company fulfilling all of the listing requirements of the AMEX. The offering is only available to existing shareholders on the record date, July 25, 2008. The Company anticipates raising net proceeds of approximately $2,997,778 which will provide approximately eight months of operating capital.

Financial Highlights

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

For the three months ended June 30, 2008, the net loss was $1,524,143 or ($0.02) per common share, as compared to $3,187,594 or ($0.04) per common share for the three months ended June 30, 2007. On a year-to-date basis, the Company recorded a net loss of $3,247,600 or ($0.04) per share, compared to $6,111,621 or ($.08) per share for the first half of 2007.

Research and development expenses for the three months ended June 30, 2008, totaled $739,650, a decrease of 45% from $1,354,544 for the three months ended June 30, 2007. On a year-to-date basis, research and development expenses totaled $1,369,927 compared to $2,479,796 for the first half of 2007. The difference in research and development was due to lower staffing levels compared to the same period in 2007, receipt of funding from Alberta Heritage Foundation for Medical Research - Industrial Research Fellowship which began in April 2007, an increase in National Research Council of Canada Industrial Research Assistance Programme funding and reduced clinical activity.

Corporate administration expenses for the three months ended June 30, 2008, totaled $747,525, a decrease of 50% from $1,506,871 for the three months ended June 30, 2007. On a year-to-date basis, corporate administration expenses totaled $1,805,363 compared to $2,971,781 for the first half of 2007. During the period, efforts continued on business development including the pursuit of potential partnerships and finance arrangements for product candidates and technology platforms. The significant decrease from 2007 in business development is a direct result of a reduction of management personnel in this department. Overall employee related costs have decreased due to the management changes undertaken in May 2007 which have been partially offset by higher consulting and travel costs incurred by senior management consultants. Other administration costs are lower as significant costs were incurred in 2007 related to the Schedule 13D filed February 14, 2007 with the Securities and Exchange Commission.

As at June 30, 2008, the Company's cash and cash equivalents and short-term investments totaled $756,812 as compared with $2,575,248 at December 31, 2007. The Company's net cash used from operating activities amounted to $1,111,528 and $2,596,806 for the three and six-months ended June 30, 2008, respectively, reflecting the Company's research and development expenses and corporate administration expenses, including costs incurred for the public offering. As at July 31, 2008 the Company's cash and cash equivalents and short-term investments totaled approximately $0.3 million.

At June 30, 2008, the Company had 72,760,617 shares outstanding. The number of stock options and warrants outstanding at June 30, 2008 is 4,555,725 and 1,818,182 respectively and could generate proceeds of approximately $ 5.9 million if exercised.

About ViRexx Medical Corp.

ViRexx is a Canadian-based development-stage biotech company focused on developing innovative-targeted therapeutic products that offer better quality of life and a renewed hope for living. Our platform technologies include product candidates for the treatment of Hepatitis B, Hepatitis C, avian influenza viral infections, biodefence and nanoparticle applications, select solid tumors and late-stage ovarian cancer. 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.



ViRexx Medical Corp.
(a development stage company)
Interim Consolidated Balance Sheets
(Unaudited)
----------------------------------------------------------------------------
(expressed in Canadian dollars)
June 30, December 31,
2008 2007
$ $

Assets

Current assets
Cash and cash equivalents 713,969 2,533,105
Short-term investments 42,843 42,143
Prepaid expenses and deposits 86,933 139,641
Deferred corporate transaction costs 218,972 -
Other current assets 41,552 75,572
-----------------------------

1,104,269 2,790,461
Property and equipment 440,086 500,371
-----------------------------

1,544,355 3,290,832
-----------------------------
-----------------------------

Liabilities

Current liabilities
Accounts payable and accrued liabilities 2,557,330 2,103,372
Current portion of obligations under capital
lease 2,573 5,931
-----------------------------
2,559,903 2,109,303

Secured convertible debenture 978,305 -
-----------------------------

3,538,208 2,109,303
-----------------------------

Capital deficiency

Common shares - no par value, unlimited shares
authorized; 72,760,717 shares issued and
outstanding 54,064,680 54,064,680
Equity component of secured convertible
debenture 31,315 -
Contributed surplus 12,539,613 12,498,710
Deficit accumulated during development stage (68,629,461) (65,381,861)
-----------------------------

(1,993,853) 1,181,529
-----------------------------

1,544,355 3,290,832
-----------------------------
-----------------------------


ViRexx Medical Corp.
(a development stage company)
Interim Consolidated Statements of Loss, Comprehensive Loss and Accumulated
Deficit
(Unaudited)
----------------------------------------------------------------------------

(expressed in Canadian dollars)

Cumulative
from
Three-month period ended Six-month period ended October 30,
--------------------------- ------------------------- 2000 to
June 30, June 30, June 30, June 30, June 30,
2008 2007 2008 2007 2008
$ $ $ $ $

Revenue - - - - -
----------------------------------------------------------------
Expenses
Corporate
administration 747,525 1,506,871 1,805,363 2,971,781 19,339,151
Research and
development 739,650 1,354,544 1,369,927 2,479,796 20,022,541
Amortization 28,976 650,878 58,126 1,301,757 7,993,051
----------------------------------------------------------------

1,516,151 3,512,293 3,233,416 6,753,334 47,354,743
----------------------------------------------------------------
Loss from
operations (1,516,151) (3,512,293) (3,233,416) (6,753,334) (47,354,743)
----------------------------------------------------------------

Other income
(expenses)
Interest 5,060 61,515 16,746 146,125 982,680
Loss on
disposal of
property and
equipment (2,159) - (2,159) - (107,001)
Impairment of
acquired
intellectual
property - - - - (24,991,344)
(Loss) gain on
foreign
exchange (1,273) 2,622 (19,151) 6,833 (52,397)
Debenture
interest (4,274) - (4,274) - (277,234)
Debenture
accretion
expense (5,346) - (5,346) - (5,346)
----------------------------------------------------------------
Other - - - - 19,055

(7,992) 64,137 (14,184) 152,958 (24,431,587)
----------------------------------------------------------------

Loss before
income
taxes (1,524,143) (3,448,156) (3,247,600) (6,600,376) (71,786,330)

Future income
tax recovery - 260,562 - 488,755 4,526,803
----------------------------------------------------------------
Net loss and
comprehensive
loss (1,524,143) (3,187,594) (3,247,600) (6,111,621) (67,259,527)
-------------
-------------

Accumulated
deficit -
Beginning of
period (67,105,318) (36,738,198) (65,381,861) (33,814,171)
----------------------------------------------------------------

Accumulated
deficit - End
of period (68,629,461) (39,925,792) (68,629,461) (39,925,792)
----------------------------------------------------------------
----------------------------------------------------------------

Basic and
diluted loss
per common
share $(0.02) $(0.04) $(0.04) $(0.08)
----------------------------------------------------------------
----------------------------------------------------------------

Basic and
diluted
weighted
average
number of
common shares
outstanding 72,760,717 72,760,717 72,760,717 72,760,717
----------------------------------------------------------------
----------------------------------------------------------------


ViRexx Medical Corp.
(a development stage company)
Interim Consolidated Statements of Cash Flows
(Unaudited)
(expressed in Canadian dollars)

Cumulative
from
October 30,
Three-month period ended Six-month period ended 2000
June 30, June 30, June 30, June 30, to June 30,
2008 2007 2008 2007 2008
$ $ $ $ $
Cash provided
by (used in)

Operating
activities
Net loss for
the period (1,524,143) (3,187,594) (3,247,600) (6,111,621) (67,259,527)
Items not
affecting
cash
Debenture
interest 4,274 - 4,274 - 269,761
Debenture
accretion
expense 5,346 - 5,346 - 5,346
Amortization 28,976 650,878 58,126 1,301,757 7,993,051
Stock-based
compensation 23,207 325,228 40,903 427,358 2,445,238
Common share
issued to
consultants
for services
rendered - - - - 148,000
Impairment of
acquired
intellectual
property - - - - 25,233,970
Loss on
disposal of
property
and equipment 2,159 - 2,159 - 107,001
Unrealized
foreign
exchange
gain - - - - (9,827)
Future income
taxes - (260,562) - (488,755) (4,526,803)
Change in
non-cash
working
capital items 348,997 (35,232) 540,686 (151,932) 2,356,204
Purchase of
short-term
investments (42,487) (60,907) (42,843) (320,231) (2,428,000)
Redemption of
short-term
investments 42,143 3,647,085 42,143 6,309,410 12,721,994
--------------------------------------------------------------
(1,111,528) 1,078,896 (2,596,806) 965,986 (22,943,592)
--------------------------------------------------------------
Financing
activities
Repayment of
obligations
under capital
lease (1,698) (1,417) (3,358) (2,785) (11,641)
Issuance of
share
capital - net
of share issue
costs (218,972) - (218,972) - 32,847,667
Issuance of
secured
convertible
debentures 1,000,000 - 1,000,000 - 1,084,856
Repurchase of
common shares - - - - (2,255,776)
--------------------------------------------------------------
779,330 (1,417) 777,670 (2,785) 31,665,106
--------------------------------------------------------------
Investment
activities
Acquisition of
property and
equipment - - - - (1,150,396)
Cash acquired
on business
acquisitions - - - - 3,729,561
Proceeds on
sale of
property
and equipment - - - - 17,753
Expenditures
on patents and
trademarks - - - - (267,626)
Purchase of
short-term
investments - - - - (31,426,872)
Redemption of
short-term
investments - - - - 21,090,035
--------------------------------------------------------------
- - - - (8,007,545)
--------------------------------------------------------------
(Decrease)
increase in
cash and cash
equivalents (332,198) 1,077,479 (1,819,136) 963,201 713,969
Cash and cash
equivalents -
Beginning of
period 1,046,167 291,076 2,533,105 405,354 -
--------------------------------------------------------------
Cash and cash
equivalents -
End of period 713,969 1,368,555 713,969 1,368,555 713,969
--------------------------------------------------------------
--------------------------------------------------------------


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

Contact Information

  • ViRexx Medical Corp.
    Darrell Elliott
    Chairman and Chief Executive Officer
    (780) 433-4411
    (780) 436-0068 (FAX)
    Email: investor@virexx.com
    or
    ViRexx Medical Corp.
    Brent Johnston
    Chief Financial Officer
    (780) 433-4411
    (780) 436-0068 (FAX)
    Email: investor@virexx.com
    Website: www.virexx.com