Helix BioMedix 2010 total revenue increases 118% to $852,000

Mar 28 2011

Helix BioMedix, Inc. (OTCQB: HXBM), a developer of bioactive peptides, today announced financial results for the year ended December 31, 2010.

“Revenue for 2010 more than doubled from a year ago, driven by a 221% increase in license and development fees and a 68% increase in product sales, including the NuGlow orders”

2010 Financial and Business Highlights

• Total revenue increased 118% to approximately $852,000 in 2010, compared to approximately $391,000 in 2009.
• License fee revenue increased 221%, reflecting increasing licensing of Helix BioMedix peptides by customers.
• Gross margin increased to 69% from 50% last year due primarily to the increase in higher margin license fee revenue.
• Net loss was approximately $7.7 million for 2010, compared to a net loss of approximately $3.8 million for 2009. Net loss in 2010 included approximately $4.7 million in non-cash charges for the company's debt conversion and interest expense. Net loss in 2009 included approximately $557,000 debt and interest expense. Excluding these items, net loss would have been approximately $3.0 million in 2010 and approximately $3.2 million in 2009.
• In July 2010, the company acquired a 30% membership interest in and signed a three-year supply agreement with NuGlow Cosmaceuticals, LLC (NuGlow). Initial orders were significantly above contractual minimums; delivery began in the fourth quarter of 2010.
• In December 2010, the company retired all of its 8% convertible notes payable and also received approximately $2.9 million through warrant exercises and sales of additional equity, which were collectively executed at a weighted average price of $0.57 per share. As a result the company is now debt free.

Full Year 2010 Results

Helix BioMedix reported record revenue in 2010 of approximately $852,000 compared to approximately $391,000 in 2009. The 118% increase in revenue reflects the significant growth in licensing revenue and product sales. Not included in the 2010 revenue was approximately $115,000 of deferred product sales to NuGlow. This deferred revenue reflects product shipped to NuGlow for which payment has been received, but the revenue will be recognized by Helix BioMedix when NuGlow delivers the product to its third-party customers. Deferred gross profit related to NuGlow, which consisted of deferred revenue net of deferred cost, was approximately $50,000 at December 31, 2010.

Licensing and development fees in 2010 were approximately $479,000 compared to approximately $149,000 in 2009. Peptide and consumer product sales increased to approximately $372,000, which included approximately $63,000 of sales to NuGlow, compared to $222,000 last year. Helix BioMedix also stated that a key licensing customer that had been on a bi-annual license fee payment schedule in 2010 will begin to pay royalties quarterly as of the first quarter of 2011.

Gross margin for 2010 was 69%, compared to 50% a year ago. The increase in gross margin was attributable to a larger contribution to total revenue from license fees, which generated higher margin compared to peptide and consumer product sales revenue.

"Revenue for 2010 more than doubled from a year ago, driven by a 221% increase in license and development fees and a 68% increase in product sales, including the NuGlow orders," stated R. Stephen Beatty, President and Chief Executive Officer of Helix BioMedix. "These results reflect the increasing use of Helix BioMedix peptides in an expanding range of consumer products, many of which are marketed by leading global brands. We also continue to see solid growth in our Helix BioMedix-branded products, including our Striking™ product line in North America as well as the Cerakine™ products being sold in Asia."

Net loss for 2010 was approximately $7.7 million, or $0.28 per share, compared to a net loss of approximately $3.8 million, or $0.15 per share, in 2009. Net loss in 2010 included approximately $888,000 of interest expense and accretion of debt discount associated with the company's convertible notes payable and $3.8 million of inducement expense related to the conversion of these notes payable into shares of common stock. As a result of the debt conversion, the company is now debt free. In addition, the company received an aggregate of approximately $2.3 million from warrant exercises and raised approximately $600,000 from the sale and issuance of additional shares of common stock. The company's 2010 net loss per share also reflects an increase of approximately 1.5 million in shares outstanding compared to 2009. The increase, based on average daily shares outstanding throughout 2010, is due to the shares issued for the conversion of the convertible notes payable and warrant exercises in December 2010.

As of December 31, 2010, cash and cash equivalents were approximately $4.0 million compared to approximately $1.3 million at December 31, 2009.

Beatty concluded, "In 2010, we made notable progress establishing sustainable revenue streams, which we believe sets the stage for continued growth momentum in 2011. Our peptides are being increasingly used by our partners around the world, and we continue to foster new relationships to further expand the use of our molecules. Growth in international sales was driven by direct product sales and through the increase in license fees from international partners. We also continue to develop sales in North America, including broadening our product lines through our equity stake and supply agreement with NuGlow. We were pleased to deliver record results in 2010 and expect to achieve continued improvement in 2011."