Bioniche Life Sciences announces year-end results for fiscal 2014, provides corporate update

Sep 27 2014

Bioniche Life Sciences Inc. (TSX: BNC) today announced financial results for its fiscal year ended June 30, 2014.

Major accomplishments for the fiscal year include:

• Positioning Bioniche as a focused, human therapeutics company with a late-stage asset for bladder cancer for which the Company is now preparing for the filing of a Biologics License Application (BLA), projected to be submitted prior to March 31, 2015;
• The sale of the Animal Health business unit for proceeds of $61 million, representing 16.7 times the unit's Fiscal 2013 profit before income taxes;
• Initiation of a sales process of the Company's vaccine business, including the Econiche® technology and a state-of-the-art Vaccine Manufacturing Centre (VMC);
• Repayment of $50.3 million of high-cost secured and unsecured debt, and renegotiation of interest and principal payments due on the remaining debt associated with the VMC;
• Execution of additional cost reduction and revenue generation initiatives, including ASX delisting, employee position reduction, elimination of non-essential patent and trademark costs, and sale of non-core assets; and
• Extension of the Company's cash runway to a minimum of 15 months, including the proceeds of the recently completed equity financing.

"Fiscal 2014 was a year of major transition for Bioniche Life Sciences Inc.," said Dr. Michael Berendt, Chief Executive Officer and Chief Scientist. "The Company is now focused to fully capitalize on our late stage bladder cancer therapeutic. We have clarified the regulatory approval path forward with the U.S. Food and Drug Administration (FDA) and are targeting the filing of a BLA with the FDA in the first quarter of calendar 2015. I am looking forward to addressing our shareholders at our upcoming Annual General Meeting in November, to provide a comprehensive review of the past year, as well as to discuss our vision for the Company going forward."

Fiscal 2014 Financial Results Highlights

The Company's continuing operations recorded revenue of $185 in Fiscal 2014, compared to $82 in Fiscal 2013. This revenue was derived from rental income related to the lease of production and office space at the Company's Belleville campus. In Fiscal 2013, revenue was entirely derived from research collaboration activity related to a license, development and supply agreement with Endo Pharmaceuticals Inc. (Endo). The Endo agreement was terminated in Fiscal 2013.

Fiscal year-end cash amounted to $10.5 million at June 30, 2014, as compared to $4.2 million at June 30, 2013.

The Company's total assets at June 30, 2014 were $33.5 million, as compared to $61.5 million at June 30, 2013.

The Company's consolidated cash flow used in operations after changes in non-cash working capital for the year ended June 30, 2014 was $17.7 million, as compared to cash used in operations of $13.3 million in Fiscal 2013. The average monthly burn rate was $1.5 million for Fiscal 2014, as compared to $1.1 million for Fiscal 2013. The monthly burn increased by $0.4 million primarily due to increased financial charges and severances related to restructuring activities.

Administrative expenses for continuing operations were $6.2 million in Fiscal 2014, in line with the $6.0 million incurred in Fiscal 2013. Marketing and selling expenses were $0.5 million in Fiscal 2014, as compared to $0.9 million in Fiscal 2013.

Interest and financial expenses include both non-cash and cash interest components. For the year ended June 30, 2014, financial expenses dropped to $3.1 million from $8.6 million in Fiscal 2013. This substantial reduction relates to the extinguishment of a significant amount of corporate debt upon the sale of the Animal Health business and to a change in the estimate of debt related to One Health's Econiche® product.

Net research and development (R&D) expenditures for continuing operations in Fiscal 2014 were $9.4 million, as compared to $12.4 million in Fiscal 2013. This includes the continued investment in the staffing and infrastructure associated with the GMP pilot plant for the production of the Company's MCNA bladder cancer therapeutic.

The Company incurred a non-cash impairment charge of $19.8 million in Fiscal 2014 (compared to $3.7 million in Fiscal 2013), related to the Company's VMC in Belleville, an asset that is being offered for sale.

The basic and fully diluted net income per Share for the Company's continuing operations for Fiscal 2014 was ($0.32) compared to a loss per Share of ($0.32) in Fiscal 2013.

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

In the fourth quarter of the year ended June 30, 2013, the Company completed the divestiture of its Animal Health business unit on April 15, 2014. Animal Health was a reportable segment for business and reporting purposes. At June 30, 2013, the Animal Health business was classified as held for sale and as a discontinued operation.

Revenues for this business unit in Fiscal 2014, which includes sales until April 15, 2014, were $23.9 million, as compared to $31.5 million in Fiscal 2013, with a profit in Fiscal 2014 of $48.1 million, which includes a gain on the sale of the business of $44.5 million, as compared to a profit of $3.3 million in Fiscal 2013.

The basic and fully diluted earnings per Share for this business unit in Fiscal 2014 was $0.36, as compared to basic and fully diluted earnings per Share of $0.03 in Fiscal 2013.

Fiscal 2014 Summary

The Company has total Common Shares outstanding at September 26, 2013 of 167,630,221. In addition, the Company has 36,541,812 outstanding Warrants and 8,734,213 outstanding Options, exchangeable for one Common Share upon exercise.

More information on the Company's year-end financial results is available in the Company's Fiscal 2014 Management's Discussion and Analysis which will be available on www.SEDAR.com.

Corporate Updates

MCNA Regulatory Activities

The Company, working with a top-tier global regulatory consulting firm, is currently actively preparing for the filing of a Biologics License Application (BLA) with the FDA, projected to be submitted prior to March 31, 2015. In addition, an Orphan Drug Designation request has been submitted in the U.S., which, if granted, will provide the Company with a 7-year period of market exclusivity in the U.S., as well as a waiver of certain filing fees associated with a BLA, which could be in excess of $2.5 million. The opportunity to obtain marketing authorization of MCNA from regulatory agencies in geographic regions beyond the U.S. and Canada is also being explored.

MCNA Partnering Activities

The Company's near-term ability to file a BLA in the U.S., which represents the most important global market for MCNA, has had a significant and positive impact on the Company's ability to generate partnering interest and engage potential partners with strong commercial capabilities and experience. A number of potential partners have executed confidentiality agreements and are actively reviewing and evaluating the MCNA program via access to the Company's confidential electronic data room. The Company is conducting a thorough and structured partnering process and is seeking to explore multiple strategic options over the upcoming months. The Company has formally mandated a consulting firm to conduct a full U.S. commercial assessment of MCNA, including market research and a pricing/market access assessment, to validate its internal estimates, and to provide a robust U.S. sales forecast and product valuation. This external commercial assessment will be key in supporting the Company's strategic decisions related to the potential future partnering of MCNA. .

VMC Sale Process

The VMC and related Econiche® vaccine technology have been put up for sale. These assets are being actively brokered by PharmaBioSource, a specialized U.S. merchant bank, engaged by the Company to find a qualified buyer for the VMC and the entire Belleville campus. The Company is currently in discussions, and meeting, with interested parties.