ViRexx Medical Corp.
TSX : VIR

ViRexx Medical Corp.

November 14, 2005 07:00 ET

ViRexx Announces Third Quarter Results

EDMONTON, ALBERTA--(CCNMatthews - Nov. 14, 2005) - ViRexx Medical Corp. (TSX:VIR) a company focused on immunotherapy treatments for certain cancers, chronic hepatitis B & C and embolotherapy treatments for tumors, today announced its 2005 third quarter financial and operational results.

"ViRexx's product pipeline continued to demonstrate clinical progress during the third quarter. Enrollment in the two Phase III trials for OvaRex® MAb continues to grow and the trials are on schedule to complete enrollment in the first quarter of next year. Furthermore, we anticipate the Phase II OvaRex® MAb trial will complete enrollment in the fourth quarter," said Marc Canton, President and Chief Operating Officer of ViRexx. "With the enrollment in each of these three trials progressing smoothly, the clinical plan for OvaRex® MAb remains on track."

Product Development Highlights

During the third quarter of 2005, the operational highlights included:

- Enrollment continued in the two Phase III trials for OvaRex® MAb, a therapy for the treatment of late-stage ovarian cancer. To date 312 of a targeted 354 patients have been enrolled in the combined trials. The two trials are on pace to complete enrollment by the first quarter of 2006.

- Enrollment in the OvaRex® MAb Phase II trial to study its use as an adjuvant to platinum-based front line chemotherapy in the treatment of advanced ovarian cancer patients reached 34 of a targeted 40 patients.

- Enrollment continued in the Occlusin™ 50 Injection Phase I liver cancer trial and patient recruitment is expected to be completed in the fourth quarter of 2005.

- Protein Sciences, the Company's contract manufacturer, is expected to complete the manufacturing of the clinical material for the HepaVaxx B Phase I trial in the fourth quarter. Once the manufactured product is available the Company intends to file a Clinical Trial Application ("CTA") with Health Canada to initiate the clinical trial.

Financial Highlights

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

The Company reported a net loss of $2,005,191 or ($0.04) per share for the three-month period ended September 30, 2005, as compared with $962,987 or ($0.04) per share, for the corresponding period last year. The Company reported a net loss for the nine-month period ended September 30, 2005 of $5,716,701 or ($0.10) per share, as compared with $2,306,190 or ($0.09) per share, for the same period last year. The expenditure increase is primarily attributable to an increase in preclinical, product development and clinical trial activity.

Research and development expenses for the third quarter were $1,290,690, an increase of $692,173 compared with $389,672 for the corresponding period last year. Research and development expenses for the nine-month period ended September 30, 2005, totaled $3,279,150, an increase of $2,100,887 compared with $1,178,263 for the same period last year. The increase in research and development expenses was due to:

- Manufacturing of clinical material for the HepaVaxx B Phase I trial

- Increase in number of staff members and salary increases awarded to staff

- Elevated use of third party consultants to accelerate HepaVaxx B preclinical activities

- Completion of Occlusin™ 50 Injection preclinical activities (including manufacturing) and ongoing Phase I clinical trial

- Decrease in government assistance received

General and administrative expenses for the third quarter were $716,737, an increase of $327,065 compared with $389,672 for the corresponding period last year. General and administrative expenses for the nine-month period ended September 30, 2005, totaled $2,325,743 an increase of $1,190,767 compared with $1,134,976 for the same period last year. The increase in general and administrative expenses was due to:

- Consulting and professional fees associated with investor relations and corporate communication activities

- Increase in number of staff members and salary increases awarded to staff

- Costs related to the acquisition of AltaRex Medical Corp.

- Elevated insurance premiums and expanded insurance coverage (director & officer insurance)

- Stock-based compensation expense recorded for options granted

On September 7, 2005 the Company completed a brokered private placement of 4,035,665 units for gross proceeds of $4,035,665. Each unit consists of one common share and one-half of one share purchase warrant. Each whole share purchase warrant entitles the holder to purchase one common share of ViRexx at a price of $1.20 for a period of 2 years. The broker for the private placement received cash of 7% of the gross proceeds and 403,567 broker warrants as a commission. Each broker warrant entitles the broker to acquire one common share of the Company for $1.20 per share until September 9, 2007.

At September 30, 2005, the Company's cash and cash equivalents totaled $8,319,266 as compared with $9,462,988 as at December 31, 2004. As such, the Company believes it has adequate financial resources to fund planned operations into the third quarter of 2006. During the three and nine-month periods ended September 30, 2005 the Company raised $1,963,136 and $3,179,195 from the completion of the private placement, exercise of warrants and stock options net of share issuance and normal course issuer bid costs.

At September 30, 2005, the Company had 58,608,545 shares outstanding. The number of stock options outstanding at September 30, 2005 was 6,120,200 and could generate proceeds of $3,906,450 if exercised. As at September 30, 2005, 12,935,519 warrants were outstanding. Subsequent to the end of the quarter, 9,886,720 warrants expired on October 14, 2005. The remaining warrants if exercised could generate proceeds of $4,391,158.

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 & C and solid tumors.

ViRexx's lead product, 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.

Summary financial statements attached:



ViRexx Medical Corp.
(a development stage company)
Interim Consolidated Balance Sheet
---------------------------------------------------------------------

(expressed in Canadian dollars)

September 30, December 31,
2005 2004
$ $
(Unaudited) (Restated)
Assets

Current assets
Cash and cash equivalents 8,319,266 9,462,988
Restricted cash 257,120 659,000
Accounts receivable - 18,527
Goods and services tax recoverable 44,986 94,903
Prepaid expenses and deposits 197,349 383,143
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8,818,721 10,618,561

Property and equipment 561,869 533,202

Acquired intellectual property rights 32,575,639 34,570,682
---------------------------------------------------------------------
41,956,229 45,722,445
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---------------------------------------------------------------------

Liabilities

Current liabilities
Accounts payable and accrued liabilities 599,818 744,805
Convertible debenture 234,130 1,037,106
---------------------------------------------------------------------
833,948 1,781,911

Future income taxes 4,808,257 6,749,947
---------------------------------------------------------------------
5,642,205 8,531,858
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Shareholders' Equity

Share capital 47,418,380 42,371,313

Contributed surplus 3,298,436 3,010,575

Equity component of convertible
debenture 22,990 59,118

Deficit accumulated during development
stage (14,425,782) (8,250,419)
---------------------------------------------------------------------
36,314,024 37,190,587
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41,956,229 45,722,445
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ViRexx Medical Corp.
(a development stage company)
Interim Consolidated Statement of Deficit
---------------------------------------------------------------------

(expressed in Canadian dollars)

Three-month period ended Nine-month period ended
---------------------------------------------------------------------
September September September September
30, 2005 30, 2004 30, 2005 30, 2004
$ $ $ $
(Restated) (Restated)
(Unaudited)(Unaudited) (Unaudited)(Unaudited)

Balance - Beginning of
period

As previously reported (12,069,568)(5,863,310) (8,233,762)(3,857,886)
Accounting changes - (72,552) (16,657) (734,773)
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As restated (12,069,568)(5,935,862) (8,250,419)(4,592,659)
Premium on repurchase
of shares (351,023) - (458,662) -
Net loss for the period (2,005,191) (962,987) (5,716,701)(2,306,190)
---------------------------------------------------------------------

Balance - End of
period (14,425,782)(6,898,849)(14,425,782)(6,898,849)
---------------------------------------------------------------------
---------------------------------------------------------------------



ViRexx Medical Corp.
(a development stage company)
Interim Consolidated Statement of Loss
---------------------------------------------------------------------

(expressed in Canadian dollars)

Three-month period ended Nine-month period ended
---------------------------------------------------------------------
September September September September
30, 2005 30, 2004 30, 2005 30, 2004
$ $ $ $
(Restated) (Restated)
(Unaudited) (Unaudited) (Unaudited)(Unaudited)

Revenue - - - -
---------------------------------------------------------------------

Operating expenses
Research and
development 1,290,690 598,517 3,279,150 1,178,263
Corporate
administration 716,737 389,672 2,325,743 1,134,976
Depreciation and
amortization 700,597 12,717 2,088,113 34,296
Debenture interest 18,732 16,235 95,201 47,359
Interest income (63,443) (41,911) (169,729) (76,382)
Loss (gain) on foreign
exchange 5,729 (4,361) 43,644 (1,870)
Other income (3,731) (7,882) (3,731) (10,452)
---------------------------------------------------------------------

2,665,311 962,987 7,658,391 2,306,190
---------------------------------------------------------------------

Loss before income
taxes (2,665,311) (962,987) (7,658,391)(2,306,190)

Income taxes recovery 660,120 - 1,941,690 -

---------------------------------------------------------------------
Net loss for the
period (2,005,191) (962,987) (5,716,701)(2,306,190)
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $

Basic and diluted loss
per share (0.04) (0.04) (0.10) (0.09)
---------------------------------------------------------------------
---------------------------------------------------------------------

# # # #

Weighted average number
of common shares
outstanding 55,557,264 27,005,500 54,877,238 26,420,165
---------------------------------------------------------------------
---------------------------------------------------------------------

ViRexx Medical Corp.
(a development stage company)
Interim Consolidated Statement of Cash Flows
---------------------------------------------------------------------

(expressed in Canadian dollars)

Three-month period ended Nine-month period ended
---------------------------------------------------------------------
September September September September
30, 2005 30, 2004 30, 2005 30, 2004
$ $ $ $
(Restated) (Restated)
(Unaudited) (Unaudited) (Unaudited)(Unaudited)

Cash provided
by (used in)

Cash flows from
operating activities
Cash receipts from
grants and other 6,494 88,969 164,924 544,430
Cash paid to suppliers
and employees (1,742,797) (1,053,086) (5,152,498)(3,746,211)
Interest received 63,443 41,911 169,729 76,382
---------------------------------------------------------------------

(1,672,860) (922,206) (4,817,845)(3,125,399)
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Financing activities
Amounts due to related
parties - - - (35,341)
Repayment of convertible
debenture and accrued
interest (218,044) - (324,625) (3,667)
Restricted cash (257,120) - (257,120) -
Issuance of share
capital 4,142,790 - 5,805,754 8,805,500
Repurchase of shares (1,413,000) - (1,718,222) -
Share issuance costs (291,490) (2,701) (326,592) (890,291)
---------------------------------------------------------------------

1,963,136 (2,701) 3,179,195 7,876,201
---------------------------------------------------------------------

Investment activities
Acquisition of property
and equipment (38,259) (3,708) (130,505) (55,119)
Proceeds on sale of
property and equipment - - 10,077 -
---------------------------------------------------------------------

(38,259) (3,708) (120,428) (55,119)
---------------------------------------------------------------------

Foreign exchange loss
on cash held in
foreign currency (12,568) 4,360 (43,644) 1,870
---------------------------------------------------------------------

(Decrease) increase
in cash and cash
equivalents 239,449 (924,255) (1,802,722) 4,697,553

Cash and cash
equivalents -
Beginning of period 8,079,817 8,330,407 10,121,988 2,708,599
---------------------------------------------------------------------

Cash and cash
equivalents -
End of period 8,319,266 7,406,152 8,319,266 7,406,152
---------------------------------------------------------------------
---------------------------------------------------------------------

Cash and cash
equivalents
comprised
Cash on deposit 357,932 2,786 357,932 2,786
Short-term
investments
and deposits 7,961,334 7,403,366 7,961,334 7,403,366
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8,319,266 7,406,152 8,319,266 7,406,152
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Contact Information

  • ViRexx Medical Corp.
    Marc Canton
    Chief Operating Officer
    (780) 989-6717
    (780) 436-0068 (FAX)
    mcanton@virexx.com
    or
    The Equicom Group Inc.
    Ross Marshall
    Investor Relations
    (800) 385 5451 ext. 238
    (416) 815-0080 (FAX)
    rmarshall@equicomgroup.com
    or
    Lippert/Heilshorn & Associates Inc.
    Kim Golodetz
    Investor Relations
    (212) 838 -3777
    (212) 838 -4568 (FAX)
    kgolodetz@lhai.com