Calgary, Alberta, Canada
August 5, 2008
Canadian Biotechnology Company
hits key insulin and Apo AI(Milano) milestones
SemBioSys Genetics Inc.
(TSX:SBS), a biotechnology company developing a portfolio of
therapeutic proteins for
metabolic and cardiovascular diseases, today announced its 2008
second quarter financial and operational results.
Highlights
Insulin Program
- Submitted an Investigational New Drug Application (IND)
for safflower-produced insulin to the U.S. Food and Drug
Administration (FDA), subsequent to the end of the quarter.
- Met with the European Medicines Agency (EMEA) to agree
upon a clinical development strategy designed to allow
simultaneous European and U.S. submissions for
safflower-produced insulin.
Apo AI Program
- Demonstrated that safflower-produced Apo AI(Milano) is
functional, by measuring increased cholesterol mobilization,
in a widely accepted animal model.
Botaneco
- Received $4 million in funding from Avrio Ventures Limited
Partnership in the form of a convertible debenture to
accelerate the commercialization of Hydresia(TM) products
from Botaneco Specialty Ingredients Inc., a SemBioSys
subsidiary.
Outlook
SemBioSys intends to follow its recent IND application with the
submission of a Clinical Trial Application (CTA) to the
appropriate European authorities later in the third quarter of
this year. In order to meet both FDA and EMEA requirements, the
Company plans to conduct a Phase I/II clinical trial wherein
safflower-produced insulin is compared to both U.S. and
European-sourced reference insulin. The upcoming insulin
milestone events include:
- Complete production of
clinical grade insulin supply for use in Phase I/II human
clinical trials.
- Upon CTA approval,
initiation of a single-dose Phase I/II clinical trial of
safflower-produced insulin in the United Kingdom in the
fourth quarter of 2008.
- Continuation of business
development activities toward an insulin partnership.
In 2007, SemBioSys successfully
achieved commercial levels of both Apo AI and Apo AI(Milano)
accumulation in safflower. With positive results demonstrating
safflower-produced Apo AI(Milano) increased cholesterol
mobilization in animals earlier this year, SemBioSys is
continuing testing in animals to establish that
safflower-produced Apo AI(Milano) is equivalent to
microbial-produced Apo AI(Milano) with respect to
plaque-remodeling and plaque regression. The upcoming milestone
events include:
- Completion of in vivo
efficacy studies of plaque remodeling with
safflower-produced Apo AI(Milano) followed by studies of
plaque regression using a mouse model.
- Continuation of the
formal partnering process for safflower-produced Apo
AI(Milano). The Company has already initiated
confidential discussions with several potential large
pharmaceutical partners.
In addition to its pharmaceutical
milestones, SemBioSys also expects to collect milestone payments
from Arcadia Biosciences, Inc., upon their successful commercial
scale-up and market launch of High GLA Safflower Oil in late
2008 or early 2009.
Meanwhile, Botaneco is also advancing the development of its
personal care ingredient products with the expansion of the
commercial distribution of Hydresia(TM) and Hydresia(TM) G2.
With the completion of the recent funding transaction with
Avrio, along with the previously committed $2.4 million from
AVAC Ltd.,
SemBioSys expects Botaneco to be self-financing moving forward.
"The progress we have made with our two lead pharmaceutical
programs, insulin and Apo AI(Milano), over the past few months
has transformed SemBioSys. We are now poised to have insulin
enter the clinic later this year
as the first recombinant human protein produced from safflower
to advance into human trials, which addresses a component of the
largest volume drug protein market in the world. The animal
results we received demonstrating safflower-produced Apo
AI(Milano) successfully increased cholesterol mobilization were
a critical milestone for the Company. With these data in hand,
we are now able to intensify our formal partnering process for
Apo AI(Milano) in parallel to the execution of additional animal
studies designed to show plaque remodeling and plaque
regression. We are already engaged in discussions with several
major pharmaceutical companies concerning this program," said
Andrew Baum, president and chief executive officer of SemBioSys.
"As we advanced each of our pharmaceutical programs we also made
important operational progress with our subsidiary, Botaneco.
The funding from AVAC and Avrio provides Botaneco with the
financial independence to pursue commercial opportunities on its
own, while SemBioSys focuses its resources on advancing the
insulin and Apo AI(Milano) programs."
Financials
Prior to the third quarter of 2007, SemBioSys operated under one
segment. During the third quarter of 2007, Botaneco
completed construction of its manufacturing facility and
SemBioSys began to operate in two reportable
segments: (i) the Biopharmaceutical, Animal Health and
Nutritional Oils segment focused on the Company's lead
pharmaceutical candidates, recombinant human insulin and Apo
AI(Milano) and (ii) the Specialty Ingredients segment. As of
October 1, 2007, Botaneco Specialty Ingredients Inc. was
established as a separate legal entity, and SemBioSys'
previously dormant U.S. subsidiary, SemBioSys Inc., was renamed
as Botaneco Inc.
Total revenue for the three and six-month periods ended June 30,
2008 was $62,207 and $272,234 respectively, compared with
$459,407 and $1,002,195 for the corresponding periods in 2007.
The difference is due mainly to a license fee payment earned
from the Company's collaboration agreement with Martek
BioSciences Corporation in the first half of 2007 which is
partially offset by 2008 product sales revenue from Hydresia(TM)
and the option payment received from INDEAR S.A.
Total expenditures for the three and six-month periods ended
June 30, 2008 were $6,542,258 and $11,799,869 respectively,
compared with $4,046,723 and $7,990,131 for the corresponding
periods last year.
Research and development expenses for the three and six-month
periods ended June 30, 2008 were $3,357,683 and $6,151,786,
compared with $1,924,745 and $3,668,717 for the corresponding
periods last year. The difference is primarily related to the
shift in the stage of development of the Company from research
to preclinical development of two major drug candidates, which
requires significant external resources to advance and prepare
for the upcoming clinical trials. These include increased
contract research organization (CRO) costs, independent third
party animal studies, preparation of GMP and cGMP material and
other outsourcing costs, as well as increased personnel and the
associated support costs and laboratory supplies related to
preclinical activity.
General and administrative expenses for the three and six-month
periods ended June 30, 2008 were $1,666,323 and $3,061,598
respectively, compared with $1,086,766 and $2,110,477 for the
corresponding periods last year. The difference is mainly due to
the commercial operations of Botaneco being fully established
during 2008 resulting in additional increases in general and
administrative costs and legal fees incurred for the Botaneco
debenture financing.
Intellectual property costs for the three and six-month periods
ended June 30, 2008 were $504,690 and $847,020 respectively,
compared with $307,414 and $835,663 for the corresponding
periods last year. The difference in costs for the three-month
periods is due mainly to an increase in legal costs for patent
applications for the Company's insulin program during 2008,
which were partially offset by a decrease in royalty payments.
Business development costs for the three and six-month periods
ended June 30, 2008 were $155,522 and $315,152 respectively,
compared with $404,434 and $713,909 for the corresponding
periods last year. The difference is primarily due to the shift
in Botaneco's activities from essentially entirely business
development related prior to the commissioning of its commercial
manufacturing operations which occurred in September 2007, to
now being fully operational.
Net loss for the 2008 second quarter was $6,414,856 or ($0.25)
per share, compared to a net loss of $3,225,371 or ($0.15) per
share for the same period last year. Net loss for the six-month
period ended June 30, 2008 was $11,431,911 or ($0.44) per share
compared with $6,453,782 or ($0.31) per share for the same
six-month period last year. The change in net loss is primarily
due to the increased commercial activities of Botaneco and the
increased preclinical activities related to insulin and Apo AI.
As at June 30, 2008 the Company had cash and cash equivalents
totaling $14,101,923 and a net positive working capital balance
of $13,154,749 compared to $20,444,013 and $19,518,408
respectively, at December 31, 2007. Total long-term debt and
convertible debentures at June 30, 2008 was $4,352,904 compared
with $1,389,047 at December 31, 2007. As at July 31, 2008 the
Company had 25,938,294 common shares outstanding, 2,390,000
warrants and 2,387,269 options.
Calgary, Alberta-based SemBioSys Genetics Inc. is a
biotechnology company developing protein-based pharmaceuticals
for metabolic and cardiovascular diseases. The Company's lead
pharmaceutical candidates, produced in the plant host safflower,
are recombinant human insulin to serve the rapidly expanding
global diabetes market and Apo AI(Milano), a next generation
cardiovascular drug. In addition to its pharmaceutical products,
SemBioSys and its subsidiary, Botaneco Specialty Ingredients
Inc., are developing a series of non-pharmaceutical products
addressing human topical, nutritional oils and agricultural
biotechnology markets. More information is available and can be
accessed at www.sembiosys.com.
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