After signing up, you'll start to receive regular news updates from us.
SemBioSys Announces Third Quarter Highlights and Financial Results
Complete the form below to unlock access to ALL audio articles.
SemBioSys Genetics Inc. has announced its financial and operational results for the third quarter, ended September 30, 2011.
Subsequent to quarter end, the Company announced a broad development commercialization partnership with Tasly Pharmaceutical Co., Ltd, of Tianjin, China, and its U.S. Subsidiary, Tasly Pharmaceuticals, Inc.
"We had a successful third quarter, achieving a major corporate objective. We will begin to build a new company with one of China's most respected and fastest growing brand names in the health, wellness and pharmaceutical markets. Our new corporate joint venture anticipates commercializing products in the short, medium and long term, for both the Chinese and global markets by combining Tasly and SemBioSys' respective core competencies. Our technology and innovation are now joined with Tasly's well established global development and commercialization organizations," said James Szarko, President and CEO of SemBioSys.
Tasly Corporate Highlights:
• China's second largest producer of plant made Traditional Chinese Medicines ("TCMs");
• The fifth largest publically listed pharmaceutical company in China with a market capitalization currently of approximately 22 billion RMB (approximately CAD$3.5 billion);
• Recorded revenues of 4.65 billion RMB (approximately CAD$750 million) with a ten-year compounded annual growth rate of approximately 21% in 2010;
• Their leading product (Cardiotonic Pill) has been the number one selling TCM in China for the last seven years;
• Its scope of business includes the manufacture and sale of modern TCMs, chemical and biological drugs, generic drugs, vaccines, personal care products, healthcare products, and functional foods; and
• Operations exist within China, South East Asia, the United States, Africa, and the UK with its partner Coop Group Ltd.
Joint Venture Highlights:
• Upon receiving government approval, a new company called Tasly-SemBioSys (Tianjin) Bio-Pharmaceuticals Co., Ltd., will be incorporated and based in Tianjin, China. The pre-approval process and preregistration process has been under way since October 10, 2011;
• Tasly will pay 100 percent of all development and commercialization expenses of the new company; and
• SemBioSys will contribute certain intellectual property and know how to the incorporated joint venture (the "Joint Venture") for a 30% equity and profit sharing interest.
Other events for Q3 2011
• Continued partnership discussions for other plant derived products for territories and product candidates excluded from our recently announced Joint Venture,
• Received $761,583 of non-dilutive Canadian Government funding, including a $750,000 promissory note from Agriculture Finance Service Corporation ("AFSC")
Financial Highlights
Operating burn for the nine months ended September 30, 2011, was $3,834,687 compared to $4,446,029 for the same period in 2010, meeting the Company's goal of keeping cash expenditures low while focusing primarily on strategic partnering and development of its therapeutic product candidates.
The operating burn for the three months ended September 30, 2011 of $1,385,238 is higher than the comparable 2010 period burn of $966,791 primarily due to SemBioSys receiving a $318,994 scientific research & experimental development ("SR&ED") tax credit refund in the third quarter of 2010 whereas the estimated refund of $223,902 for 2011 remains outstanding.
In addition, business development activities were significantly higher in the current period to enable the successful completetion of the Tasly partnership noted above.
Net loss for the three months ended September 30, 2011, was $2,238,276 (net of a $257,799 non-cash loss related to the $4.0 million financing closed in the first quarter of 2011) or $0.04 per share compared to $1,834,230 or $0.04 per share for the same period last year.
Net loss for the nine months ended September 30, 2011 was $7,050,696 (net of a $2,563,353 non-cash expense and a $1,207,361 non-cash gain related to the $4.0 million financing closed in the first quarter of 2011) or $0.14 per share and $6,978,781 or $0.14 per share for the same period last year.
Revenue for the three and nine months ended September 30, 2011, were $5,761 and $75,287 compared to $5,974 and $473,478 for the same period last year.
The Company recorded no licensing fees in the nine months ended September 30, 2011 while there was $315,789 in licensing fees in the first nine months of 2010.
Expenditures for the three and nine months ended September 30, 2011 compared to the same period last year:
• $762,505 and $2,526,509 research & development costs compared to $852,017 and $4,155,601 (net of $318,994 SR&ED tax credit);
• $642,521 and $1,448,578 operating costs compared to $413,762 and $1,542,706; and
• $331,258 and $964,012 amortization expense compared to $341,443 and $1,040,004.
The overall decrease in expenditures for the nine month period is primarily due to the general cost-cutting implemented in the third quarter of 2010.
The increase in operating costs for the current quarter compared to the prior year period is due to the intensive business development effort we made to achieve the strategic partnership with Tasly as mentioned above.
Total finance income (expense) for the three and nine month periods ended September 30, 2011 was $(508,763) and $373,296 respectively, and related primarily to the $4.0 million financing closed in the first quarter. A one-time non-cash expenditure of $2,563,353 unidentified consideration in bond and warrants issuance also related to the $4.0 million financing was recorded in the first quarter of 2011.
At September 30, 2011, the Company had cash and cash equivalents of $1,348,441 as compared to $267,436 at December 31, 2010. The increase in cash during the period resulted primarily from the successful closing of a $4,000,000 financing and the receipt of $250,000 non-dilutive financing from AVAC Ltd. and $750,000 from AFSC during the period, offset by net cash burn over the course of the nine-month period.
Total short-term debt, long-term debt, long-term bonds and convertible debentures were $6,721,928 at September 30, 2011, compared to $2,665,176 at December 31, 2010. The increase in debt relates mainly to the $4.0 million financing and $750,000 AFSC debt noted above.
At September 30, 2011, the Company had a net negative working capital balance of $1,339,088 as compared to a net negative working capital of $2,168,782 at December 31, 2010. The improvement in working capital is primarily due to the increase of cash resulting from the financing activities noted above, offset by the operating cash burn.
As at November 13, 2011, the Company had 51,829,818 common shares outstanding, 81,853,286 warrants, 4,654,900 options, 905,927 deferred share units and debentures which are convertible into 8,924,922 common shares.
