Benz Mining Corp. press release
Biomira Inc. announces 2nd quarter results
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EDMONTON, July 27 /CNW/ - Biomira Inc. (Nasdaq:BIOM) (TSX:BRA) today reported financial results for the six months ended June 30, 2005.
Financial Update
Financial results for the six months ended June 30, 2005 reflect a consolidated net loss from operations of $9.2 million or $0.12 per share compared to $3.8 million or $0.05 per share for the same period in 2004. The increased net loss of $5.4 million in 2005 arises from lower revenues of $5.5 million and higher research and development expenditures of $0.7 million, offset by higher investment and other income of $0.2 million and reductions in general and administrative expenses of $0.4 million, marketing and business development expenses of $0.1 million and other expenses of $0.1 million. The higher revenues in 2004 resulted from the recognition into income of the remaining deferred licensing revenues related to Theratope(R) vaccine, totalling $5.9 million, due to the return of the Theratope development and commercialization rights from Merck KGaA of Darmstadt, Germany announced in June 2004. Biomira's financial reserves total $30.1 million in cash and short-term investments as at June 30, 2005, a decrease of $8.5 million from the year end position due to funding of operations. For a further discussion of the Company's financial results for the six months ended June 30, 2005, please refer to the Company's unaudited consolidated financial statements and the Company's full Management Discussion & Analysis of Financial Condition and Results of Operations included in this news release.
Highlights From the Second Quarter
L-BLP25 phase 2b protocol-specified survival update and data in non-small cell lung cancer (NSCLC) presented at 41st annual meeting of the American Society of Clinical Oncology (ASCO) Meeting held in Orlando, FL - May 2005; Merck KGaA and Biomira remain encouraged by two-year survival data.
Enrolment into L-BLP25 phase 2 safety study continues in preparation for pivotal phase 3 study, expected to begin late 2005 - Trial to assess safety of the vaccine formulation planned to be used in phase 3 study. Both studies are for the NSCLC indication.
Biomira to seek a partner for its third-generation vaccine, L-BGLP40.
Synthetic Biologics Unit formed to take advantage of strong potential in chemically synthesized biologicals for use in protective and therapeutic vaccines.
Biomira Inc. Biomira is a biotechnology company specializing in the development of innovative therapeutic approaches to cancer management. Biomira's commitment to the treatment of cancer currently focuses on the development of synthetic vaccines and novel strategies for cancer immunotherapy. We are The Cancer Vaccine People(TM).
Management's Discussion and Analysis of Financial Condition and Results of Operations
Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A), prepared as at July 15, 2005, should be read in conjunction with the unaudited consolidated financial statements and accompanying notes for the six months ended June 30, 2005, included hereafter, as well as the audited consolidated financial statements and MD&A for the fiscal year ended December 31, 2004. Except as discussed below, all other factors referred to and discussed in the MD&A for the fiscal year end December 31, 2004 remain substantially unchanged.
Overview of the Business Biomira Inc. is an international biotechnology company operating primarily in a single business segment, the research and development of innovative therapeutic approaches to cancer management. We are focused on developing synthetic vaccines and novel strategies for cancer immunotherapy. Immunotherapy is a treatment approach designed to induce protective immune responses that will control the growth of cancers, prevent or delay metastasis or spreading, and increase the survival of cancer patients. Our strategic mission is to become a forward integrated, global products-oriented biotechnology company.
BLP25 Liposome Vaccine (L-BLP25)
Data from the phase 2b study of L-BLP25 in NSCLC, originally announced in December 2004 were presented at the 41st annual meeting of the American Society of Clinical Oncology (ASCO) held in Orlando, FL in May 2005. Biomira and Merck KGaA of Darmstadt, Germany remain encouraged by the survival data, particularly after two years. The poster presented at ASCO centered on the 65-patient subset of patients with Stage IIIB locoregional disease. In this subset, those who received L-BLP25 in addition to best supportive care survived considerably longer than those with the same stage disease who received best supportive care alone. The median survival for the vaccine arm is encouraging. At the time of the November 2004 formal analysis, the median survival in the vaccine arm had not been reached, but will not be less than 23 months compared with median survival of 13.3 months for patients who did not receive the vaccine. Additionally, the hazard ratio, a statistical test used to describe relative risk, is 0.5652. In this clinical trial, a hazard ratio of less than one indicates a decrease in the risk of death for patients who received L-BLP25. However, the difference in survival between patients who received vaccine and those who did not receive the vaccine remained statistically non-significant (p(equal sign)0.0924), in line with expectations given the relatively small numbers of patients in each group. The differences in the number of patients who remain alive, one year, two years and three years after entering this trial suggest a positive survival impact for those who received the vaccine. The two-year survival data show 33.3 per cent of patients on the best supportive care arm remained alive, while 57.1 per cent of patients on the vaccine arm were still alive two years after their enrolment in the trial. The three-year survival data are also promising, but are less mature and will be re-calculated using additional data following the next survival analysis. The protocol will be amended to allow further survival documentation to be collected, and a further analysis is expected to be completed by the end of 2005. A second poster at ASCO described the patients' quality of life outcomes by stage of disease. Statistically significant differences in quality of life were identified at two separate time-points on the trial for patients with Stage IIIB locoregional disease, favouring patients who received vaccine. No differences were found between the patients with the more advanced Stage IIIB with pleural effusion and Stage IV disease. The quality of life data for vaccinated patients with Stage IIIB locoregional disease is encouraging. We see an important trend worth exploring in a phase 3 study. Additionally, we believe that L-BLP25 may be beneficial to patients with Stage IIIA disease, in addition to those with Stage IIIB locoregional disease, and patients with either disease stage will be potentially eligible for our phase 3 trial. By adding patients with Stage IIIA unresectable disease to our trial, we will also increase the potential market, should the trial outcome be successful. We are currently enrolling patients in a L-BLP25 phase 2 safety study in preparation for the large multinational pivotal phase 3 study. The phase 2 safety study incorporates manufacturing changes to the vaccine intended to secure the future commercial supply of the vaccine. The phase 2 study is expected to enroll approximately 20 patients in eight sites across Canada and should complete enrolment in the third quarter of 2005. Shortly thereafter, towards the end of 2005, the phase 3 trial is expected to commence.
Business Development
"With our collaboration with Merck KGaA for L-BLP25 in place, we will now focus our efforts and resources on finding a collaborator for our follow-on vaccine, L-BGLP40, which we believe offers the best elements of both L-BLP25 and Theratope," said Alex McPherson, MD, PhD, President and CEO. L-BGLP40 is a third generation vaccine. L-BGLP40 is a completely synthetic MUC1 based liposomal, multiple target cancer vaccine, which we believe may provide benefit in several cancer indications. L-BGLP40 is a vaccine designed to evoke both a cellular and humoral immune response against major cancer-associated target epitopes expressed on adenocarcinomas.
Synthetic Biologics Unit
In April 2005, we created a Synthetic Biologics Unit headed by Vice President and General Manager, R. Rao Koganty, PhD. This business unit was created to take advantage of the strong potential in chemically synthesized biologicals for use in protective and therapeutic vaccines. We have developed technologies that can be used by other companies developing non-competing vaccine technology. Our expertise in this area will complement our current programs and provide new upside business potential. Synthetic organic chemistry has been the foundation of our vaccine development program. Our scientists design and synthesize both antigens and immune stimulants, essential components of every vaccine, to achieve safety, specificity, purity and dependability in performance. Synthetic structures carry an impeccable structural definition that eludes natural macromolecules. With structural definition, you are assured of consistency in production and performance and we are able to provide a variety of synthetic immune stimulants (adjuvants) that will assist companies in vaccine development and clinical testing. We are actively seeking licensing opportunities for synthetic adjuvants.
Results of Operations Financial results for the six months ended June 30, 2005 reflect a consolidated net loss from operations of $9.2 million or $0.12 per share compared to $3.8 million or $0.05 per share for the same period in 2004. The increased net loss of $5.4 million in 2005 arises from lower revenues of $5.5 million and higher research and development expenditures of $0.7 million, offset by higher investment and other income of $0.2 million and reductions in general and administrative expenses of $0.4 million, marketing and business development expenses of $0.1 million and other expenses of $0.1 million. The higher revenues in 2004 resulted from the recognition into income of the remaining deferred licensing revenues related to Theratope, totalling $5.9 million, due to the return of the Theratope development and commercialization rights from Merck KGaA announced in June 2004.
Revenues Contract research and development revenue for the six months ended June 30, 2005, totalling $1.7 million compared to $0.8 million for the same period in 2004, represents contract research and development funding received from Merck KGaA associated with L-BLP25. The increase in contract research and development revenue is attributable to increased clinical expenditures incurred by Biomira in relation to the L-BLP25 phase 2 safety study commenced in the second quarter of this year and in preparation of the planned phase 3 clinical trial expected to commence towards the end of 2005. Licensing revenue from collaborative arrangements for the six months ended June 30, 2005, totalling $0.1 million compared to $6.4 million for the same period in 2004, represents the amortization of upfront payments received from Merck KGaA and upfront sub-licensing fee from CancerVac upon commencement of the respective collaborations. The decreased revenue results from return of the Theratope vaccine development and commercialization rights by Merck KGaA in June 2004 and the immediate recognition into income of the remaining related deferred revenues totalling $5.9 million. Licensing, royalties and other revenue for the six months ended June 30, 2005, totalling $0.2 million, was similar to the same period in 2004. Licensing, royalties and other revenue relates to contract manufacturing activities utilizing various Biomira patented technologies and compounds for external customers.
Research and Development Research and development expenditures for the six months ended June 30, 2005 totalled $7.8 million compared to $7.1 million for the same period in 2004. The increase in research and development expenditures is attributable to increased spending associated with the L-BLP25 phase 2 safety study commenced in the second quarter of this year and the planned L-BLP25 phase 3 clinical trial that is expected to commence towards the end of 2005. Expenditures include development of clinical protocols and procurement and manufacturing of clinical materials along with ongoing costs associated with clinical site wrap up expenses of existing clinical trials.
General and Administrative General and administrative expenses for the six months ended June 30, 2005 totalled $3.3 million compared to $3.7 million for the same period in 2004. The decrease of $0.4 million is mainly due to incremental costs incurred in the first half of 2004 relating to the settlement of an outstanding litigation.
Marketing and Business Development Marketing and business development expenditures for the six months ended June 30, 2005, totalled $0.7 million compared to $0.8 million for the same period in 2004. Marketing and business development expenditures include corporate administrative expenses associated with these functions, as well as costs associated with licensing activities related to pre-clinical and early stage technologies.
Amortization Amortization expense for the six months ended June 30, 2005, totalling $0.2 million, was similar to the same period in 2004. Amortization expense relates to facility leaseholds and equipment, certain licensing rights, and other assets.
Investment and Other Income Investment and other income for the six months ended June 30, 2005, totalling $0.9 million compared to $0.7 million for the same period in 2004, comprises income from cash and investments and foreign exchange gains and losses. The increased income is due to a higher net foreign exchange gain of $0.1 million and higher income from cash and investments of $0.1 million.
Liquidity and Capital Resources Liquidity Biomira's financial reserves total $30.1 million in cash and short-term investments as at June 30, 2005, a decrease of $8.5 million from the year end position due to funding of operations. Current and projected cash burn is expected to remain at this level until we have finalized our clinical strategy and received clearance from the regulatory agencies to undertake the pivotal phase 3 registration trial for L-BLP25 in NSCLC. Working capital, defined as current assets less current liabilities, decreased by $7.7 million from the year end position, to $29.4 million from $37.1 million and is attributable to the $8.5 million decrease in cash reserves offset by a $0.4 million increase in accounts receivable, a $0.2 million increase in prepaid expenses and a $0.2 million decrease in the current portion of deferred revenue. The increase in accounts receivable relates to the higher contract research and development revenues in the second quarter of 2005 compared to same period in 2004.
Capital Resources Under the U.S. $100 million Base Shelf Prospectus registered with the applicable regulatory authorities in Canada and the U.S. on July 13, 2004, and expected to remain in place into the third quarter of 2006, just over U.S. $87 million is still available for future financings. In addition, there are 3.2 million warrants outstanding from previous financings, at a weighted-average exercise price of U.S. $2.69. Based on our NASDAQ closing share price of U.S. $1.72 on June 30, 2005, none of the warrants outstanding are currently in the money. Assuming continuing investor support for our equity offerings, the Base Shelf Prospectus should allow us to pursue financing opportunities sufficient to fund our expected programs in the foreseeable future.
Contractual Obligations and Contingencies In our continuing operations, we have entered into long-term contractual arrangements from time to time for our facilities, debt financing, the provision of goods and services, and acquisition of technology access rights, among others. The contractual obligations arising from these arrangements, currently in force over the next ten years, are disclosed in the MD&A section of our 2004 Annual Report. During the six months ended June 30, 2005, we did not enter into any new material long-term contractual obligations.
Off-Balance Sheet Arrangements During the six months ended June 30, 2005, we have not entered into any off-balance sheet arrangements.
Transactions with Related Parties During the six months ended June 30, 2005, we have not entered into any material transactions with related parties.
Outlook Until one of our products receives regulatory approval and is successfully commercialized, we will continue to incur operating losses. The magnitude of these operating losses will be largely affected by the timing and scope of future clinical trials and pre-launch activities related to our lead products, as well as any new initiatives. Finally, the duration of the pre-operating losses will depend on the scientific results of such clinical trials. We believe that our cash and short-term investments, together with expected cash inflows from collaborative funding arrangements, investment income, and technology licensing efforts will be sufficient to meet operating and capital requirements into 2006. However, we will be required to obtain additional financing in order to fund the expected L-BLP25 phase 3 registration trial and operations in the second half of 2006 and beyond.
Risks and Uncertainties As described in the Outlook, the immediate risks and uncertainties facing Biomira may include: changing market and industry conditions; the impact of competitive products and their pricing; timely and favourable regulatory clearance for an expected phase 3 registration trial for L-BLP25 in NSCLC; outcomes associated with the exploration of potential early registration opportunities for L-BLP25 in regions other than the U.S. and Europe based on the results of the phase 2b trial in NSCLC; the ability to attract a new collaborator to further develop L-BGLP40 and Theratope; the ability to patent and defend our intellectual property; recruitment and retention of key personnel; and our success in generating sufficient new capital on acceptable terms and on a timely basis. In the near and long term, the ability to secure financing will depend on several factors, such as: regulatory support for a phase 3 pivotal L-BLP25 registration trial; the costs and timelines required to obtain regulatory approval for our products; timely progression and favourable outcomes of current and future clinical studies; the availability of new financing through private and/or public offerings on acceptable terms; and our ability to in-license complementary products and technology and secure collaborative arrangements to build up our pipeline. Other business risks and uncertainties have not changed significantly from those disclosed in the MD&A in our 2004 annual report and in other regulatory filings.
Critical Accounting Policies and Estimates All of our accounting policies are in accordance with Canadian GAAP including some which require management to make assumptions and estimates that could significantly affect the results of operations and financial position. The significant accounting policies that we believe are the most critical in fully understanding and evaluating the reported financial results are disclosed in the MD&A section of our 2004 Annual Report. As well, our significant accounting policies are disclosed in Note 2, Significant Accounting Policies, of the notes to our audited consolidated financial statements for the fiscal year ended December 31, 2004.
Changes in Accounting Policies Variable Interest Entities Effective January 1, 2005, we adopted the recommendations of CICA Handbook Accounting Guideline 15 (AcG-15), Consolidation of Variable Interest Entities, effective for annual or interim periods beginning on or after November 1, 2004. Variable interest entities (VIEs) refer to those entities that are subject to control on a basis other than ownership of voting interests. AcG-15 provides guidance for identifying VIEs and criteria for determining which entity, if any, should consolidate them. We have determined that adoption of AcG-15 does not have an effect on our financial position, results of operations or cash flows in the current period or the prior period presented.