Bioniche Life Sciences announces financial results for first quarter of Fiscal 2014

Nov 6 2013

Bioniche Life Sciences Inc. (TSX: BNC) (ASX: BNC), a research-based, technology-driven Canadian biopharmaceutical company, today announced financial results for the first quarter of Fiscal 2014 (ended September 30, 2013).

"I'm pleased to report that revenues from product sales in our Animal Health business unit increased by 17% in the first quarter of Fiscal 2014 as compared to the same period last year," said Mr. Andrew Grant,President of Bioniche Animal Health (global). "The divestment of this business is being pursued by the Company and this revenue growth will be very encouraging to the potential purchasers."

As a result of the Company's decision to divest the Animal Health business, the Fiscal 2014 first quarter financial statements have been segmented into continuing operations (Human Health and One Health business units) and discontinued operations (Animal Health business unit).

Fiscal 2014 First Quarter Financial Results Highlights

The Company's continuing operations recorded no income in the quarter, as compared to $0.07 million in the same period in Fiscal 2013. In Fiscal 2013, the Company received reimbursement from its former development partner for Urocidin™-related development costs. Such reimbursement was discontinued when the Company regained global rights to Urocidin™ in December, 2012.

Cash and cash equivalents from continuing operations amounted to $15.9 million at September 30, 2013, as compared to $4.2 million at June 30, 2013.

The Company's total liabilities and shareholders' equity at September 30, 2013 is $74.6 million, as compared to $61.5 million at June 30, 2013.

The Company's consolidated cash flow used in operations for the quarter ended September 30, 2013 (both continuing and discontinued operations) was ($4.7) million, as compared to cash used in operations of ($5.0) million in Q1, Fiscal 2013. The average monthly burn rate (before changes in working capital) was $1.3 million for Q1, Fiscal 2014, as compared to $1.8 million for the same quarter in Fiscal 2013. Financial expenses are a substantial contributor to the Company's average monthly burn rate. These amounted to $1.3 million for the first three months of Fiscal 2014 compared to $0.8 million recorded in Q1, Fiscal 2013.

"The Company reduced expenditures by $1.2 million in the first quarter as compared to the same period last year," said Mr. Brian Ford, Chief Financial Officer of Bioniche Life Sciences Inc. "However, this reduction was offset by one-time legal and other expenditures related to the concerned shareholder activity of $0.8 million."

Administration expenses for continuing operations were $1.3 million in the first quarter of Fiscal 2014, as compared to $1.7 million in the first quarter of Fiscal 2013. The decrease reflects the Company's continued efforts to reduce the burn rate. The Company also incurred expenses related to the aforementioned settlement expenditures. Marketing and selling expenses were steady at $0.2 million in both comparative quarters.

Net research and development (R&D) expenditures for continuing operations were $3.1 million in the first quarter of Fiscal 2014, as compared to $3.2 million in Q1, Fiscal 2013. This includes the continued investment in the staffing and infrastructure associated with the GMP production of the Company's Urocidin™ bladder cancer treatment that is in Phase III clinical development. As the validation process on the fermentor area of the Company's Vaccine Manufacturing Centre in Belleville has been completed, the Company has begun to depreciate the facility. Until such time as the facility is fully validated and making commercial product, the carrying costs associated with this facility are being accounted for under R&D.

Additional R&D resources are focused on the advancement of a second generation E. coli O157 cattle vaccine.

The basic and fully diluted net loss per share for the Company's continuing operations for Q1, Fiscal 2014 is ($0.07), as compared to a basic and fully diluted net loss per share of ($0.06) in Q1, Fiscal 2013.

Fiscal 2014 First Quarter Financial Results Highlights - Discontinued Operations (Animal Health)

In May, 2013, the Company formally commenced the process to divest its Animal Health business and concentrate on becoming a Human Health company. The divestment is proceeding well, with binding offers expected to be tendered before the end of the calendar year.

Revenues for this business unit in Q1, Fiscal 2014 were $7.7 million, as compared to $6.6 million in the same period in Fiscal 2013, a 17% increase. Net income in Q1, Fiscal 2014 was $1.9 million, as compared to net income of $0.08 million in Q1, Fiscal 2013.

The basic and fully diluted earnings per share for this business unit in Q1, Fiscal 2014 is $0.02, as compared to basic and fully diluted earnings per share of $0.00 in the same quarter of Fiscal 2013.

Q1, Fiscal 2014 Summary

The Company has total Common Shares outstanding at November 4, 2013 of 140,427,498. In addition, the Company has 22,270,912 outstanding Warrants and 9,468,648  outstanding Options, exchangeable for one Common Share upon exercise.

More information on the Company's year-end financial results is provided in the Company's Q1, Fiscal 2014 Management's Discussion and Analysis.

Annual and Special Meeting of Shareholders

The Company held its Annual and Special Meeting of Shareholders in Belleville, Ontario today. At the meeting, shareholders voted in favour of electing the following individuals as members of the Board of Directors:

• Mr. Yvon Bastien
• Dr. Michael Berendt
• Mr. Rod Budd
• Ms. Lyne Fortin
• Mr. Greg Gubitz
• Mr. James Rae

Dr. Armen Aprikian remains an Observer on the Board. Mr. Graeme McRae is also an Observer on the Board, with the title of Founder and Chairman Emeritus.

The shareholders also voted in favour of the appointment Ernst & Young, LLP, Chartered Accountants, as auditors of the Corporation.

Further, the shareholders voted in favour of an increase in the maximum number of Common Shares available to be issued under the Group Registered Retirement Savings and Employee Savings Plan ("Savings Plans") to 10,000,000.

The shareholders voted against the Advance Notice By-Law.

Other Meeting Highlights

During the meeting, additional information was presented to shareholders, including the following highlights:

1. The divestment of the Animal Health business being managed by Evercore is progressing, with final offers expected by the end of November. These offers will be subject to negotiation, with the preferred offer brought to shareholders for approval at a special meeting within 30-60 days of signing a definitive agreement.
2. Discussions are underway with Ontario officials about a potential provincial program for Econiche®.
3. A meeting with the U.S. Food and Drug Administration to discuss the potential for accelerated approval of Urocidin™ has been scheduled for December 18, 2013.
4. The confirmatory trial design for Urocidin™ is proposed to be a seamless Phase II/III single-arm design. This must be approved by regulators prior to being initiated, and the Company will seek to offset costs through development partnerships.

The Company's new CEO, Dr. Michael Berendt, talked about his goals and objectives for the Company, which include "laying the groundwork for a new way of doing business". He described his first priority as a full analysis of the business and the use of resources. "We are going to work to eliminate debt with the sale of the Animal Health business. We will then focus on assets that generate near-term value, while dramatically increasing efforts to monetize the Company's Vaccine Manufacturing Centre and working to achieve accelerated approvals for Urocidin™ in Canada and the U.S." Dr. Berendt committed to open communications with shareholders and the setting of realistic timelines.