WEX Pharmaceuticals Inc.
TSX : WXI

WEX Pharmaceuticals Inc.

November 15, 2006 09:06 ET

WEX Reports Second Quarter Results

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 15, 2006) - WEX Pharmaceuticals Inc. ("WEX" or the "Company")(TSX:WXI) reported events and financial results for the three and six month periods ended September 30, 2006. All amounts, unless specified otherwise, are in Canadian dollars.

Second Quarter Events

- The Company received the approval from BGTD of Health Canada to resume the clinical trials for Tectin™. This authorization was granted after BGTD of Health Canada reviewed the results of the re-analysis of the double blind, placebo controlled (WEX-014) and the open label continuation (WEX-014OL) trials presented by the Company at a pre-clinical trial application (Pre-CTA) meeting held on September 5, 2006.

- The Company held its Annual and Special Meeting of Shareholders on September 29, 2006. During the meeting all seven board nominees were elected to serve as directors of WEX for a one-year term. Shareholders also ratified the appointment of Manning Elloit, Chartered Accountants, as the auditor of the Company. The balance of the Resolutions proposed in the Management Information Circular were duly passed.

- The Company signed the term sheet of the license agreement with Children's Hospital Boston, for the development and commercialization of pharmaceutical(s) containing Tetrodotoxin (TTX) for prolonged local anesthesia based on the patented technology by Children's Hospital.

- The Company announced that it intends to raise approximately $2 million of equity by way of a rights offering to all shareholders. The rights offering is expected to be made pursuant to a rights offering circular.

- The Company received official grant to the Company patent ZL 01 1 18098.6 by the State Intellectual Property Office of the People's Republic of China (SIPO) under the title of "Application of A Synergistic Combination of A Sodium Ion Channel Blocker and An Opioid Analgesic in Treatment of Pain in Mammals" and patent UA 2003032528 by the State Department of Intellectual Property of Ukraine under the title "Method of Analgesia".

Financial Results - Unaudited

For the three months ended September 30, 2006, the Company recorded a loss of $806,942 ($0.02 per common share) compared to a loss of $4.1 million ($0.12 per common share) in the three months ended September 30, 2005. The decrease in loss for the three months ended September 30, 2006, when compared to the same period in the preceding year, is attributable to expense reductions relating to discontinuing all clinical trials in March 2006, significant staff reductions, reduced amortization, the reduction of other overhead expenses, negotiated settlement of a liability and an increase in the estimated investment tax credit receivable. With minor revenue income, Management expects losses to continue during the coming quarters as it continues to focus its resources in an effort to further the commercialization of Tectin™.

The Company recorded a loss for the six months ended September 30, 2006 of $2.2 million ($0.06 per common share) compared to a loss of $7.6 million ($0.22 per common share) in the six months ended September 30, 2005. The decrease in loss for the six months ended September 30, 2006, when compared to the same period in the preceding year, is attributable to expense reductions relating to discontinuing all clinical trials in March 2006, significant staff reductions, reduced amortization and the reduction of other overhead expenses, negotiated settlement of a liability and an increase in the estimated investment tax credit receivable. With minor revenue income, Management expects losses to continue during the coming quarters as it continues to focus its resources in an effort to further the commercialization of Tectin™.

The Company had cash, cash equivalents and short term investments of $3.6 million as at September 30, 2006 as compared to $7.9 million as at March 31, 2006. At September 30, 2006 the Company had negative working capital of approximately $618,000.

The Company's subsidiaries in China, Nanning Maple Leaf Pharmaceuticals Co. Ltd. ("NMLP"), and Wex Medical Limited in Hong Kong, recorded product revenues of $106,646 for the three months ended September 30, 2006, as compared to $122,321 in the same period in the previous year, or a decrease of $15,675.

Product revenues were $182,245 for the six months ended September 30, 2006, as compared to $253,307 for the same period in the previous year, or a decrease of $71,062.

All results of operations were in line with management expectations.

About WEX Pharmaceuticals Inc.

WEX Pharmaceuticals Inc. is dedicated to the discovery, development, manufacture and commercialization of innovative drug products to treat pain. The Company's principal business strategy is to derive drugs from naturally occurring toxins and develop proprietary products for the global market. The Company's Chinese subsidiary sells generic products manufactured at its facility in China.

Forward Looking Statements and Information

Certain statements herein may contain forward-looking statements and forward-looking information within the meaning of applicable securities laws. Forward-looking statements or information appear in a number of places and can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate" or "believes" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements and information are subject to such risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or information. See our annual information form and our quarterly and annual management's discussion and analysis for additional information on risks and uncertainties relating to the forward-looking statement and information. There can be no assurance that forward-looking statements or information referenced herein will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements or information. Also, many of the factors are beyond the control of the Company. Accordingly, readers should not place undue reliance on forward-looking statements or information. All forward-looking statements and information made herein, are qualified by this cautionary statement.



WEX PHARMACEUTICALS INC.
Incorporated under the laws of Canada
CONSOLIDATED BALANCE SHEETS
(See Note 1 - Basis of Presentation)
(Unaudited, Prepared by Management)


(Expressed in Canadian Dollars)
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As at September 30, March 31,
2006 2006
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ASSETS

Current
Cash and cash equivalents (notes 3 (a)
and (c)) $ 3,616,307 $ 7,797,673
Restricted cash 23,000 23,000
Short-term investments (notes 3 (b)
and (c)) - 100,000
Accounts and other receivables 472,235 598,088
Investment tax credit receivable 950,285 777,873
Inventories 72,970 69,091
Prepaid expenses, deposits and other 139,391 274,949
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Total current assets 5,274,188 9,640,674

Deposits 80,952 80,952
Property and equipment (note 4) 2,031,551 2,169,309
Intangible assets (note 5) - -

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TOTAL ASSETS $ 7,386,691 $ 11,890,935
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LIABILITIES AND SHAREHOLDERS' EQUITY

Current
Accounts payable and accrued
liabilities (note 10) $ 2,494,161 $ 4,417,849
Deferred revenue 187,778 187,778
Deferred tenant inducements 8,056 8,056
Capital lease obligations (note 6) - -
Convertible debentures (note 7) 3,202,042 2,317,611
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Total current liabilities 5,892,037 6,931,294

Deferred tenant inducements 18,127 22,155
Deferred revenue 406,855 500,743
Convertible debentures (notes 7) 609,150 1,850,952

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Total liabilities 6,926,169 9,305,144

Commitments and contingencies (note 11)

Shareholders' equity
Share capital (notes 8 and 13(a)
and (b)) 62,766,019 62,766,019
Equity component of convertible
debentures (note 7) 449,263 725,018
Contributed surplus (note 8 (e)) 4,834,194 4,755,188
Deficit (67,588,954) (65,660,434)
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Total shareholders' equity 460,522 2,585,791

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TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 7,386,691 $ 11,890,935
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See accompanying notes to the consolidated financial statements


On behalf of the Board:

"Edge Wang" "Simon Anderson"
Director Director

See accompanying notes on sedar



WEX PHARMACEUTICALS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(Unaudited, Prepared by Management)

(Expressed in Canadian Dollars)
Three Months Ended Six Months Ended
September 30 September 30
2006 2005 2006 2005
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Revenue
Product sales
(note 12 (b)) $ 106,646 $ 122,321 $ 182,245 $ 253,307
License fees
(note 12 (b)) 46,944 46,943 93,888 93,888
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153,590 169,264 276,133 347,195
Cost of goods
sold product sales 67,940 102,221 124,912 197,820
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85,650 67,043 151,221 149,375

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Expenses
Research and
development
(notes 8(e), 9
and 10 (a)) 138,051 2,069,766 900,904 4,302,345

General and
administrative
(notes 8(e), 9
and 10 (b)) 684,491 1,216,701 1,177,059 2,187,158

Amortization 64,709 204,843 130,593 438,179
Severance and
restructuring 6,167 327,472 6,167 457,472
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893,418 3,818,782 2,214,723 7,385,154
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Operating Loss (807,768) (3,751,739) (2,063,502) (7,235,779)
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Other
Interest and
sundry income 17,373 78,696 83,986 194,343
Convertible
debentures
interest expense
(note 7) (188,536) (161,051) (390,509) (328,888)
Convertible
debentures
settlement (note 7) - - 18,273 -
Foreign exchange
(loss) (404) (227,953) (24,916) (262,146)
Clinical trial -
settlement of
accounts payable 172,393 - 172,393 -
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826 (310,308) (140,773) (396,691)
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Loss for the period (806,942) (4,062,047) (2,204,275) (7,632,470)

Deficit,
beginning
of period (66,782,012) (49,215,873) (65,660,434) (45,645,450)
Equity component
of convertible
debentures
settlement (note 7) - - 275,755 -
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Deficit, end of
period $(67,588,954) $(53,277,920) $(67,588,954) $(53,277,920)
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Basic and
diluted
loss per share $ (0.02) $ (0.12) $ (0.06) $ (0.22)
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Weighted average
number of
common shares
outstanding 35,059,451 35,059,451 35,059,451 35,054,675
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See accompanying notes on sedar


WEX PHARMACEUTICALS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, Prepared by Management)

(Expressed in Canadian Dollars)
Three Months Ended Six Months Ended
September 30 September 30
2006 2005 2006 2005
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OPERATING
ACTIVITIES
Loss for the
period $ (806,942) $ (4,062,047) $ (2,204,275) $ (7,632,470)

Adjustment for
items not
involving cash
Amortization 64,709 204,843 130,593 438,179
Amortization of
deferred tenant
inducement allowance (2,014) (7,601) (4,028) (15,202)
Loss on disposal
of property
and equipment 797 97,244 3,757 97,244
Stock-based
compensation 38,806 108,507 79,007 134,070
Amortization of
deferred revenue (46,944) (46,944) (93,888) (93,889)
Imputed interest
expense on
convertible
debentures 185,655 158,623 384,447 326,460
Convertible
debentures
settlement - - (18,273) -
Foreign exchange
expense (gain) on
convertible
debentures 4,942 (231,181) (176,859) (175,073)
Amortization of
deferred
financing costs 2,882 1,214 6,062 2,428
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(558,109) (3,777,342) (1,893,457) (6,918,253)

Changes in
non-cash working
capital items:
Accounts and other
receivables (67,275) (25,637) 125,853 3,196,577
Inventories (4,684) (33,937) (3,879) (26,812)
Investment tax
credit receivable (172,412) (163,604) (172,412) (263,604)
Prepaid expenses
and deposits 14,129 (30,432) 64,496 (60,477)
Accounts payable
and accrued
liabilities (115,606) 542,192 (1,923,688) 141,659
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Cash used in
operating
activities (903,957) (3,488,760) (3,803,087) (3,930,910)
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INVESTING
ACTIVITIES
(Purchase) of
short term
investments - - - (5,193,681)
Proceeds from
short term
investments - 3,410,144 100,000 8,243,576
Deposit - - 65,000 125,000
Tenant inducement
allowance - 9,483 - 64,094
Restricted cash - 11,500 - 11,500
Purchase of
property and
equipment (5,468) (24,125) (5,876) (40,477)
Proceeds from
disposal of
property and
equipment 942 164,569 9,283 164,569
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Cash provided by
(used in)
investing
activities (4,526) 3,571,571 168,407 3,374,581
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FINANCING
ACTIVITIES
Proceeds from
issuance of
share capital, net
of issuance costs - - - 183,000
Repayment of
capital lease
obligations - (34,009) - (39,753)
Repayment of
convertible
debentures and
interest (57,292) (163,069) (546,686) (163,069)
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Cash (used in)
provided by
financing
activities (57,292) (197,078) (546,686) (19,822)
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(Decrease)
increase
in cash
and cash
equivalents (965,775) (114,267) (4,181,366) (576,151)
Cash and cash
equivalents,
beginning of
period 4,582,082 9,771,404 7,797,673 10,233,288
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Cash and cash
equivalents, end
of period $ 3,616,307 $ 9,657,137 $ 3,616,307 $ 9,657,137
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See accompanying notes on sedar



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