Second-quarter fiscal 2010 results announced by Bioniche Life Sciences

Feb 10 2010

- consolidated revenues in the quarter 62% higher than the previous year due to receipt of licensing milestone revenue -

Bioniche Life Sciences Inc. (TSX: BNC), a research-based, technology-driven Canadian biopharmaceutical company, today announced financial results for its Fiscal 2010 second quarter, ended December 31, 2009.

"This was a very positive quarter for the Company, the first one in its history to show a profit," stated Graeme McRae, Chairman, President & CEO of Bioniche Life Sciences Inc. "The milestone revenue associated with the July, 2009 licensing agreement with Endo Pharmaceuticals Inc. ("Endo") for exclusive rights to develop and market Urocidin(TM) in North America has enabled this situation. We continue to work diligently with Endo to complete the development of Urocidin(TM) and anticipate future positive financial results at such time as the product is successfully commercialized."

Urocidin(TM) is a patented intravesical formulation of Mycobacterial Cell Wall-DNA Complex (MCC) developed by Bioniche for the treatment of non-muscle-invasive bladder cancer. A U.S. Food and Drug Administration (FDA) fast tracked Phase III registration study of the product for the treatment-refractory indication is currently underway and is expected to report results later this year.

Fiscal 2010 Q2 Financial Results Highlights

Consolidated revenues for the quarter totaled $13.8 million, an increase of $5.3 million, or 62%, over the same period in Fiscal 2009. This positive result is attributed to the receipt of the first milestone payment to the Company from Endo related to an achievement under the above-mentioned licensing agreement. The incoming $6.4 million milestone payment was somewhat offset by decreased sales of Animal Health products in the quarter as compared to last year. The sales decrease relates to sales promotions in the last quarter of Fiscal 2009, recessionary conditions in all markets and the effect of foreign exchange.

Gross profit on product sales totaled $3.7 million in the quarter, as compared to $5.1 million in the same quarter last year. Gross profit as a percentage of product sales totaled 53% this quarter, compared to 59.5% in the second quarter of Fiscal 2009.

For the quarter ended December 31, 2009, expenses before research and development totaled $6.4 million, as compared to $6.8 million in the same quarter last year. This decrease can be attributed to lower sales levels translating to lower cost of sales, and to reductions in sales and marketing expenses due to personnel changes. Management expects sales and marketing costs to increase over the remainder of Fiscal 2010 to sustain and grow the business.

Gross research and development (R&D) expenses in this quarter totaled $4.8 million, compared to $3.2 million for the same period in Fiscal 2009. This increase of $1.6 million, or 49%, relates to the ongoing Phase III clinical program for the Company's Urocidin(TM) bladder cancer therapy, as well as an increased focus on the development of Animal Health reproductive products and vaccines.

The basic and fully-diluted net gain per share for the second quarter of Fiscal 2010 was $0.04, compared to a loss per share of ($0.04) for the corresponding period in Fiscal 2009. Total common shares outstanding at December 31, 2009 were 72,120,814, as compared to 71,160,544 for the corresponding period in Fiscal 2009.

Earnings before interest, taxes, depreciation, amortization and foreign exchange (before research and development) during the second quarter of Fiscal 2010 were $7.4 million, as compared to $1.8 million for the same period in Fiscal 2009, a 321% increase. This significant increase relates to the intake of licensing milestone revenue in the quarter.

At December 31, 2009, the Company's net working capital totaled $19.4 million including $14.5 million in cash, excluding the current portion of non-refundable deferred licensing revenue, as compared to negative working capital of $0.5 million at June 30, 2009.

Long-term liabilities at December 31, 2009 totaled $10.6 million, excluding non-refundable deferred licensing revenue of $20.1 million, which compares to $8.2 million reported at June 30, 2009. The increase reflects the long-term portion of the required repayment of government assistance to the Industrial Technologies Office (ITO - formerly TPC) of $3.1 million, less repayments of capital leases and long-term debt. The up-front payment related to the licensing agreement with Endo is reflected as non-refundable deferred licensing revenue, the current portion being $1.5 million and long-term portion - $20.1 million. The total revenue received was $22.3 million, which will be brought into income over the next 15 years.