ViRexx Medical Corp.
TSX : VIR
AMEX : REX

ViRexx Medical Corp.

November 09, 2006 08:55 ET

ViRexx Announces Third Quarter Results

EDMONTON, ALBERTA--(CCNMatthews - Nov. 9, 2006) - ViRexx Medical Corp. (TSX:VIR)(AMEX:REX), a company focused on immunotherapy treatments for certain cancers, chronic hepatitis B & C and embolotherapy treatments for solid tumors, today announced its financial and operational results for the third quarter and nine-month period ended September 30, 2006.

"With enrollment complete in each of the two identical Phase III trials for OvaRex® MAb we continue to work to advance the clinical development of our Chimigen™ vaccines and Occlusin™ technologies. In anticipation of the pivotal OvaRex® MAb results expected in the second half of 2007 we recently announced the completion of manufacturing, licensing and distribution agreements with Defiante Farmaceutica and Tecnogen for OvaRex® MAb in the unlicensed territories in Europe," said Dr. Lorne Tyrrell, M.D., Ph.D., Chief Executive Officer and Chief Scientific Officer of ViRexx. "These new agreements, together with the earlier agreements in Europe and the Middle East, cover nearly 40% of the global ovarian cancer market."

Operational Highlights

- Enrollment has been completed in each of the two identical OvaRex® MAb Phase III trials for treatment of late-stage ovarian cancer. The trials are being conducted by ViRexx's licensee, Unither Pharmaceuticals, Inc. a subsidiary of United Therapeutics Corporation. The primary endpoint for each trial is time-to-relapse comparing OvaRex® MAb and placebo with the primary data analysis scheduled after each trial has reported at least 118 relapse events.

- Completion of manufacturing, licensing and distribution agreements for OvaRex® MAb between the Company's wholly owned Irish subsidiary, ViRexx International Corp., with Defiante Farmaceutica, Lda. and Tecnogen S.C.p.A., both subsidiaries of Sigma-Tau Pharmaceuticals, Inc. of Rome, Italy, for the remaining unlicensed European territories which include the U.K., Ireland, France, Sweden, Finland and other countries. The agreements, announced subsequent to the end of the quarter, 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 $6.5 million CDN. The milestones payments include an upfront equity investment of $2.0 million CDN from Defiante for 1,818,182 units of ViRexx at a price of $1.10 CDN.

- Treatment has been completed in the Phase I safety trial of HepaVaxx B Vaccine. 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 the safety assessment for this study in the fourth quarter of 2006.

- Enrollment in the Phase I trial of Occlusin™ 50 Injection in liver cancer patients continued at the Foothills Hospital in Calgary and the Toronto General Hospital. ViRexx expects to complete enrollment in the trial later this year.

Financial Highlights

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

The Company recorded a net loss for the three-month period ended September 30, 2006 of $3,364,719 or ($0.05) per share, as compared with a net loss of $2,005,191 or ($0.04) per share for the three-month period ended September 30, 2005. The Company reported a net loss for the nine-month period ended September 30, 2006 of $8,999,368 or ($0.13) per share, as compared with $5,716,701 or ($0.10) per share, for the same period last year.

Research and development expenses for the three-month and nine-month periods ended September 30, 2006, totalled $1,505,654 and $4,524,977 respectively, compared with $1,290,690 and $3,279,150 for the corresponding periods ended September 30, 2005. This difference is primarily due to additional preclinical and clinical trial costs, including toxicology testing for HepaVaxx B clinical studies and development of the Occlusin™ 500 Artificial Embolization Device. Corporate administrative expenses for the three-month and nine-month periods ended September 30, 2006 totaled $1,298,642 and $3,537,771 respectively, compared with $716,737 and $2,325,743 for the corresponding periods last year. The difference is primarily due to an increase in business development activities relating to negotiations of the OvaRex® MAb agreements in Europe and discussions with Asia-Pacific companies regarding the licensing rights to HepaVaxx B and Occlusin™ 50 Injection.

At September 30, 2006, the Company's cash and cash equivalents totalled $10,922,341, as compared with $5,571,850 at December 31, 2005. The cash increase resulted from two separate private placements completed earlier this year. On February 16, 2006, the Company issued 10,909,090 units in a private placement financing for gross proceeds of $12,000,000. Each unit consists of one common share and one common share purchase warrant. Each common share warrant entitles the holder to purchase one common share of the Company at a price of $1.50 CDN for a period of two years. On April 7, 2006, the Company issued 800,000 units in a private placement for gross proceeds of $1,000,000. Each unit consists of one common share and one common share purchase warrant. Each common share warrant entitles the holder to purchase one common share of the Company at a price of $1.75 CDN for a period of two years.

Subsequent to the end of the quarter, the Company issued 1,811,182 units at a price of $1.10 CDN to Defiante Farmaceutica, Lda. as part of the OvaRex® MAb agreement for gross proceeds to ViRexx of $2,000,000. Each unit consists of one common share and one non-transferable common share purchase warrant. Each warrant entitles Defiante to purchase one common share of ViRexx at a price of $1.25 CDN for a period of 24 months.

At September 30, 2006, the Company had 70,342,535 shares outstanding. The number of stock options and warrants outstanding at September 30, 2006 is 7,130,063 and 15,619,289 respectively and could generate proceeds of $28,600,454 if exercised.

Outlook

The upcoming milestone events from ViRexx's broad product pipeline include the completion of the Company's Phase I Occlusin™ 50 Injection trial and the selection of a Chimigen™ HCV vaccine candidate for further development and completion of a Phase II study of immune response to OvaRex® MAb while on primary chemotherapy.

About ViRexx Medical Corp.

ViRexx is a Canadian development-stage biotechnology company focused on innovative targeted therapeutic products that offer quality of life and a renewed hope for living. ViRexx's most advanced programs include product 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 licensee Unither Pharmaceuticals, Inc., a subsidiary of United Therapeutics Corporation. Both Phase III trials completed enrollment in the first half of 2006, and an analysis of the data in second half of 2007. 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 Sheet
--------------------------------------------------------------------------
(expressed in Canadian dollars)
September December
30, 31,
2006 2005
$ $
(Unaudited)
Assets

Current assets
Cash and cash equivalents 10,922,341 5,571,850
Other receivables 35,954 39,606
Prepaid expenses and deposits 249,295 166,658
-------------------------

11,207,590 5,778,114
Property and equipment 513,051 518,134
Acquired intellectual property rights 27,991,707 29,990,097
-------------------------

39,712,348 36,286,345
-------------------------
-------------------------
Liabilities

Current liabilities
Accounts payable and accrued liabilities 1,286,345 670,166
Current portion of obligation under capital
lease 7,108 -
-------------------------

1,293,453 670,166
Future income taxes - 1,168,377
Obligation under capital lease 6,515 -
-------------------------

1,299,968 1,838,543
-------------------------
Commitments

Shareholders' Equity

Share capital
Common shares -- no par value; unlimited shares
authorized;
70,342,535
shares and 58,433,445 shares issued and
outstanding,
respectively 52,278,280 45,989,189
Contributed surplus 11,454,264 4,779,409
Deficit accumulated during development stage (25,320,164) (16,320,796)
-------------------------

38,412,380 34,447,802
-------------------------

39,712,348 36,286,345
-------------------------
-------------------------


ViRexx Medical Corp.
(a development stage company)
Interim Consolidated Statement of Loss and Accumulated Deficit
---------------------------------------------------------------------------
(expressed
in Canadian
dollars)
Three-month period ended Nine-month period ended
--------------------------------------------------------------------------
September 30, September 30, September 30, September 30,
2006 2005 2006 2005
$ $ $ $
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue - - - -
------------------------------------------------------------

Expenses
Research and
development 1,505,654 1,290,690 4,524,977 3,279,150
Corporate
administratio
n 1,298,642 716,737 3,537,771 2,325,743
Depreciation
and
amortization 661,397 700,597 2,105,989 2,088,113
Loss on
foreign
exchange 7,641 5,729 20,513 43,644
Interest
income (108,615) (63,443) (303,435) (169,729)
Debenture
interest - 18,732 - 95,201
Other income - (3,731) - (3,731)
-------------------------------------------------------------

3,364,719 2,665,311 9,885,815 7,658,391
-------------------------------------------------------------
Loss before
income
taxes (3,364,719) (2,665,311) (9,885,815) (7,658,391)

Recovery of
future
income
taxes - (660,120) (886,447) (1,941,690)
-------------------------------------------------------------
Net loss for
the
period (3,364,719) (2,005,191) (8,999,368) (5,716,701)

Accumulated
Deficit -
Beginning of
period (21,955,445) (12,069,568) (16,320,796) (8,250,419)

Premium on
repurchase
of
shares - (351,023) - (458,662)
------------------------------------------------------------
Accumulated
deficit
- End
of period (25,320,164) (14,425,782) (25,320,164) (14,425,782)
------------------------------------------------------------
------------------------------------------------------------

$ $ $ $
Basic and
diluted
loss per
share (0.05) (0.04) (0.13) (0.10)
------------------------------------------------------------
------------------------------------------------------------

# # # #
Weighted
average
number
of common
shares
outstanding 70,342,535 55,557,264 68,179,205 54,877,238
------------------------------------------------------------
------------------------------------------------------------


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 30, September 30, September 30, September 30,
2006 2005 2006 2005
$ $ $ $
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash provided
by (used in)

Operating
activities
Net loss for
the period (3,364,719) (2,005,191) (8,999,368) (5,716,701)
Items not
affecting cash
Debenture
interest - 24,137 - 95,201
Depreciation
and
amortization 661,397 700,597 2,105,989 2,088,113
Stock-based
compensation 193,510 18,385 522,617 324,044
Gain on
disposal of
property and
equipment - (356) - (356)
Unrealized
foreign
exchange loss - (50,877) - -
Future income
taxes - (660,120) (886,447) (1,941,690)
----------------------------------------------------------

(2,509,812) (1,973,425) (7,257,209) (5,151,389)
Net change in
non-cash
working capital
items
Decrease in
other
receivables 54,788 10,225 3,652 68,444
Decrease
(increase) in
prepaid
expenses and
deposits 94,500 48,252 (82,637) 185,794
Increase
(decrease) in
accounts
payable and
accrued
liabilities 86,231 198,401 616,179 (144,987)
----------------------------------------------------------

(2,274,293) (1,716,547) (6,720,015) (5,042,138)
----------------------------------------------------------
Financing
activities
Repayment of
capital lease (592) - (592) -
Repayment of
convertible
debenture and
accrued
interest - (223,448) - (324,625)
Issuance of
share capital - 3,861,581 13,104,002 5,660,764
Redemption of
shares - (1,415,847) - (1,718,222)
Restricted cash - (257,120) - 401,880
Share issuance
costs - 35,102 (944,603) -
----------------------------------------------------------

( 592) 2,000,268 12,158,807 4,019,797
----------------------------------------------------------
Investment
activities
Proceeds on
sale of
property and
equipment - - - 10,077
Acquisition of
property and
equipment (13,355) (44,272) (88,301) (131,458)
----------------------------------------------------------

(13,355) (44,272) (88,301) (121,381)
----------------------------------------------------------
(Decrease)
increase in
cash and cash
equivalents (2,288,240) 239,449 5,350,491 (1,143,722)
Cash and cash
equivalents -
Beginning of
period 13,210,581 8,079,817 5,571,850 9,462,988
----------------------------------------------------------
Cash and cash
equivalents -
End of period 10,922,341 8,319,266 10,922,341 8,319,266
----------------------------------------------------------
----------------------------------------------------------
Cash and cash
equivalents
comprised of
Cash on deposit 229,480 357,932 229,480 357,932
Short-term
investments and
deposits 10,692,861 7,961,334 10,692,861 7,961,334
----------------------------------------------------------
10,922,341 8,319,266 10,922,341 8,319,266
----------------------------------------------------------
----------------------------------------------------------




Contact Information

  • ViRexx Medical Corp.
    Marc Canton
    President & Chief Operating Officer
    (780) 433-4411
    (780) 436-0068 (FAX)
    Email: mcanton@virexx.com
    or
    ViRexx Medical Corp.
    Scott Langille
    Chief Financial Officer
    (780) 989-6708
    (780) 436-0068 (FAX)
    Email: slangille@virexx.com