Nexia narrows Q1 2004 loss to $1.86-million
2004-01-28 09:00 ET - News Release
Mr. Jeffrey Turner reports
FIRST QUARTER 2004 FINANCIAL RESULTS REPORTED BY NEXIA
Nexia Biotechnologies has released its financial results for the first quarter of fiscal 2004, ending Nov. 30, 2003. The company has also received ratification of its 2004 slate of directors during its annual general meeting and made changes to management.
The company thanked outgoing members Marcel Thibault, Livio D. DeSimone and James McDonald for their many contributions to Nexia, and welcomed Peter Janson and Joseph Rus as new members to the board of directors. Mr. Janson was the former chairman and chief executive officer of AMEC (formerly Agra Inc.) from 1999 to 2002. He previously held the position of president and chief executive officer at ABB Inc. U.S.A. from 1996 to 1999. Mr. Rus is the president and chief executive officer of Shire BioChem and has occupied this position since his appointment in 2001, upon the merger of BioChem Pharma and Shire Pharmaceuticals, where he held the position of president.
At the management level, departures were James McDonald, who held the position of executive vice-president -- corporate development, Bradley Cilley, who was vice-president -- business development, medical devices and Taoufik Mabrouk, who was vice-president -- operations, proteins. Management welcomes Kenneth Johnson as acting chief operating officer. Mr. Johnson previously occupied the position of vice-president -- therapy systems for MDS Nordion from 1999 to 2004 and held the rank chief operating officer of Fisher Scientific Worldwide division for many years prior.
On Nov. 20, 2003, Nexia reported in Stockwatch that the United States Army Medical Research Institute of Chemical Defense (USAMRICD) presented results from its Protexia program at the joint services scientific conference on chemical and biological defence in Towson, Md. These results indicated that Protexia, manufactured in transgenic goats, would bind a broad spectrum of nerve agents and had properties very similar to human butyrylcholinesterase (HuBChE) when compared in vitro under identical conditions. The data also indicated that Protexia was capable of binding stoichiometrically with nerve agents on a one-molecule-to-one-molecule basis.
Furthermore, on Jan. 22, 2004, Nexia announced in Stockwatch positive results from the Protexia in vivo efficacy studies conducted by the USAMRICD. The U.S. Army's demonstration of Protexia's in vivo efficacy was an important independent assessment. Protexia clearly protected all the animals in the study. These positive in vivo efficacy results with recombinant BChE are consistent with the army's research experience with plasma-derived BChE.
Financial overview
For the quarter ending Nov. 30, 2003, Nexia reported, in line with expectations, that the net loss deceased $790,000 to $1.86-million, or eight cents per share, when compared with a loss of $2.65-million (12 cents per share) for the quarter ending Nov. 30, 2002. The decrease was due to reductions in almost all spending categories and increases in contract revenue from the U.S. Army of $253,000. A non-recurring closure charge of $120,000 relating its Plattsburgh facility was incurred.
Contract revenues for this quarter increased to $253,000 from nil for the quarter ended Nov. 30, 2002. The revenues relate to the research contract with the U.S. Army to develop Protexia. Interest revenues for the quarter ended Nov. 30, 2003, decreased by $47,000 to $109,000 from $156,000 for the quarter ended Nov. 30, 2002. The decrease in interest revenues was primarily due to lower cash balances.
Gross research and development expenses, including amortization expense of $240,000 ($257,000 in 2002), for the quarter ended Nov. 30, 2003, decreased by $590,000 to $1.51-million from $2.10-million for the quarter ended Nov. 30, 2002.
Investment tax credits and other government assistance (ITC) in this quarter decreased by $32,000 to $188,000 from $220,000 for the quarter ended Nov. 30, 2002. Investment tax credit receivables decreased by $70,000, due to reduction in research and development salary expenses. During the current quarter, the company recorded grants of $38,000 from the Canadian Department of National Defence.
Business development expenses for the quarter ended Nov. 30, 2003, decreased by $105,000 to $361,000 from $466,000 for the quarter ended Nov. 30, 2002, which was primarily due to lower salary expense.
Administrative expenses decreased by $50,000 to $351,000 for this quarter from $401,000 for the quarter ended Nov. 30, 2002, which was due to a reduction in salary expense. The overall decrease in administrative spending during the quarter was offset by a foreign exchange loss of $18,000, which occurred due to a large decrease in the U.S. dollar exchange rate. On Oct. 28, 2003, the company decided to close its facility in Plattsburgh, N.Y., and recorded a non-recurring charge of $120,000 for closure costs.
Nexia had cash and cash equivalents of $15.4-million at the first quarter. The major uses of funds during the three-month period ended Nov. 30, 2003, included $1.5-million used for operations, and $56,000 invested in property, plant, equipment and intellectual property, compared with $2.7-million and $361,000, respectively for the three-month period ended Nov. 30, 2002. As at Dec. 31, 2003, the company had 23,133,014 common shares outstanding.
Under Nexia's current operating plan, management believes that the company's current cash, cash equivalents, short-term investments and other current assets should be sufficient to finance its operations and capital needs through early into fiscal 2006.
Conference call and Webcast
Nexia will be holding a conference call on Jan. 28, 2004, at 4:10 p.m., and this call will be broadcast live on the Web at www.nexiabiotech.com.
WARNING: The company relies upon litigation protection for "forward-looking" statements.
CONSOLIDATED STATEMENT OF OPERATIONS
AND DEFICITS
Three months ended Nov. 30
2003 2002
Revenues
Contract
revenues $ 252,700 $ -
----------- -----------
Interest income 108,554 156,208
----------- -----------
Total revenues 361,254 156,208
----------- -----------
Expenses
Research and
development 1,274,303 1,843,113
Amortization 240,414 257,359
----------- -----------
Total research
and development 1,514,717 2,100,472
Investment tax
credits and
other government
assistance (187,587) (220,340)
----------- -----------
Net research
and development 1,327,130 1,880,132
Business
development 360,713 466,225
Administrative 350,769 401,021
Amortization 36,987 44,017
Loss (gain) on
exchange rate 18,522 (1,801)
Interest on
long-term debt 9,235 15,943
Restructuring
costs 120,457 -
----------- -----------
Total expenses 2,223,813 2,805,537
----------- -----------
Net loss $ 1,862,559 $ 2,649,329
----------- -----------
Deficit,
beginning of
period 40,251,289 29,267,289
----------- -----------
Deficit,
end of period $42,113,848 $31,916,618
=========== ===========
Basic and
diluted (loss)
per share $ 0.08 $ 0.12
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