SemBioSys Genetics Inc. (TSX:SBS), a biotechnology company developing a broad pipeline of protein-based pharmaceutical and non-pharmaceutical products, today announced its 2005 second quarter operational and financial results.

"Our team continues to make progress, with the support of our partners, on the execution of the development and commercialization plans for our oilbody-oleosin technology based products," said Andrew Baum, President and CEO of SemBioSys Genetics Inc. "Our strong partnerships with industry leaders, like Lonza Inc., support our business strategy for the generation of near and intermediate term revenues and provide additional confirmation of the value of the oilbody-oleosin technology. These partnerships enable development within multiple product categories and strengthen the diversity of our pipeline."

SemBioSys has executed five major funded license and development agreements over the past 18 months with Lonza Inc., Syngenta Participations AG, Martek Biosciences Corporation, Dow AgroSciences LLC and Arcadia BioSciences, Inc.

During the second quarter SemBioSys announced receipt of the second and final scheduled license payment from its royalty-bearing license and sales agreement with Lonza Inc. for the DermaSphere(TM) Oleosome Technology used by Lonza in its Natrulon(R) line of natural ingredients in the personal care market.

Financial Highlights

Total revenues for the second quarter were $561,697 compared with $330,947 for the same period last year. Revenues were generated from licensing fees, which were $248,126 for the second quarter compared with $63,224 for the same period last year, and contract research, which was $313,571 for the second quarter compared with $267,723 for the same period last year. Total revenues for the six-month period ended June 30, 2005 were $1,048,414 compared with $496,532 for the corresponding period last year. The increase in total revenue over the six-month period related primarily to recognition of a prorate amount of upfront license fees from three agreements in accordance with the revenue recognition policy of the Company and contract research revenue from research performed for three collaborations. In both cases there was no comparable revenue during the earlier portion of the previous six-month period in 2004.

Total expenditures for the three-month and six-month periods ended June 30, 2005 were $2,233,213 and $4,225,619 respectively, compared with $1,781,725 and $3,460,534 for the corresponding periods last year.

Research and development expenses for the three-month and six-month periods ended June 30, 2005 were $1,202,242 and $2,079,568 respectively, compared with $970,572 and $1,827,126 for the corresponding periods last year. This increase is primarily due to increased salary expenses from added staff and normal salary increases, an enhanced quality control and assurance program and additional field studies related to product development programs.

General and administrative expenses for the three-month and six-month periods ended June 30, 2005 were $857,973 and $1,698,388 respectively, compared with $841,676 and $1,467,991 for the corresponding periods last year.

Intellectual property costs for the three-month and six-month periods ended June 30, 2005 were $240,160 and $448,760 respectively, compared with $314,428 and $506,206 for the corresponding periods last year. This decrease is mainly attributable to the timing of the costs associated with executing new patents and incurring legal opinions.

Net loss for the 2005 second quarter was $1,558,076 or ($0.12) per share, compared to a net loss of $1,448,463 or ($0.27) per share for the same period last year. Net loss for the six-month period ended June 30, 2005 was $2,953,934 compared with $2,988,824 for the same six-month period last year.

As at June 30, 2005 the Company had cash and cash equivalents totaling $17,062,426, compared with $18,836,396 cash and cash equivalents at December 31, 2004.

These unaudited financial statements are prepared in accordance with Canadian generally accepted accounting principles.     

Outlook

SemBioSys' current pharmaceutical product priorities are to achieve commercial levels of expression of insulin and Apo AI, in safflower. Its non-pharmaceutical product priorities include the continued development of its ImmunoSphere(TM) Feed Additive and DHA rich safflower oil programs. The upcoming milestone events include:

• First royalties from sales of DermaSphere(TM)

• Milestone payment for delivery of Arabidopsis produced material for proof-of-concept vaccine testing in animals to Dow AgroSciences

• Apo AI animal data results

• Milestone payment for delivery of GLA pre-commercial safflower lines to Arcadia Biosciences

• Achievement of commercial levels of insulin expression in safflower

• Achievement of commercial levels of Apo AI expression in safflower 

Calgary, Alberta-based SemBioSys Genetics Inc. is a biotechnology company focused on the development, commercialization and production of protein-based pharmaceuticals and non-pharmaceutical products based on its plant genetic engineering skills and proprietary oilbody-oleosin technology platform - the Stratosome(TM) Biologics System. Its two lead pharmaceutical products are insulin and a developmental cardiovascular drug called Apo AI. It also has a series of non-pharmaceutical products addressing animal health, industrial and human topical markets. SemBioSys currently has five major funded partnership agreements with Syngenta Participations AG, Martek Biosciences Corporation, Lonza Inc., Dow AgroSciences LLC and Arcadia Biosciences, Inc.