Helix BioMedix second-quarter revenue increases 139% to $330,000

Aug 7 2010

Helix BioMedix, Inc. (OTCBB: HXBM), a developer of bioactive peptides, today announced financial results for the company's second quarter 2010 ended June 30, 2010.

“I am pleased to report the achievement of our record quarterly revenue as a result of strong growth across our licensing and peptide sales and continued strength in sales of Helix BioMedix-branded products”

Second Quarter 2010 and Recent Highlights:

• Recorded record revenue of approximately $330,000 in the second quarter of 2010, compared to approximately $138,000 in the same period a year ago, an increase of 139%
• Net loss was approximately $942,000, compared to a net loss of approximately $1.0 million in the second quarter of 2009
• Net operating loss of approximately $725,000, compared to a net operating loss of approximately $874,000 in the second quarter of 2009
• Expanded sales of Helix BioMedix-branded products in North America and Asia
• Acquired a 30% membership interest in and signed a three-year supply agreement with NuGlow Cosmaceuticals, LLC on July 1, 2010

Second Quarter 2010 Results

Revenue for the second quarter of 2010 was approximately $330,000, compared to approximately $70,000 in the first quarter of 2010 and approximately $138,000 in the second quarter of the prior year. The increase in revenue is due to the continued growth in license fees from key customers and partners as well as further growth in peptide and consumer product sales.

Gross margin for the second quarter of 2010 was 62.2%, compared to 64.9% in the first quarter of 2010 and 32.8% in the second quarter a year ago. The year-over-year improvement in gross margin reflects the greater percentage of total revenue from license fees, which generate higher margin compared to peptide and consumer product sales.

"I am pleased to report the achievement of our record quarterly revenue as a result of strong growth across our licensing and peptide sales and continued strength in sales of Helix BioMedix-branded products," stated R. Stephen Beatty, President and Chief Executive Officer of Helix BioMedix. "Growth in revenue from our licensed peptides reflects increased product marketing and improved consumer purchasing in the broader economy. In addition, we benefitted from ongoing efforts to advance sales of Helix BioMedix-branded Striking^® products in the U.S. as well as in certain Asian markets through our recently announced Cerakine^™ distribution agreement with RubyDerm Bio, Inc. This reflects continued progress in our international strategy with South Korea, China and Japan being key markets for future growth. We also continued to make progress on our Rx candidate molecules during the quarter, positioning these technologies for further clinical studies. As a result of our progress, Helix BioMedix is well positioned for continued success across all of our primary businesses, including licensing, branded sales and Rx products."

Net loss for the second quarter of 2010 was approximately $942,000, or $0.04 per share, compared to a net loss of approximately $927,000, or $0.04 per share, for the first quarter of 2010 and approximately $1.0 million, or $0.04 per share, for the second quarter of 2009. The sequential increase in net loss in the second quarter of 2010 was primarily due to higher operating expenses related to product testing and marketing activities, as well as interest expense related to our outstanding notes payable, partially offset by a higher gross profit.

As of June 30, 2010, the Company's cash and cash equivalents balance was approximately $3.0 million as compared to approximately $3.6 million at March 31, 2010.

Beatty continued, "Subsequent to the end of the second quarter, we announced the purchase of a 30% membership interest in and a three-year supply agreement with NuGlow Cosmaceuticals that we believe will increase the value proposition for the commercialization of Helix BioMedix technologies. The NuGlow^® products complement our Striking^® Skin Care line by targeting a younger demographic, expanding our total market opportunity and product spectrum. We intend to leverage NuGlow Cosmaceuticals' proven direct sales model for continued product growth and expect the initial campaign to begin in the Fall. We look forward to these and other initiatives expanding our opportunities for Helix BioMedix products."

"In conclusion, we are very pleased with our progress through the first half of the year and expect to achieve record annual revenue in 2010," said Beatty. "Although we anticipate that third quarter revenue will be lower than the second quarter due to the bi-annual royalty payment schedule of a key customer, we expect our fourth quarter will once again reflect the continued growth of our business. We look forward to reporting our future achievements as we reach additional financial and product milestones in the coming quarters and year."