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SemBioSys Reports 1Q08 Results

[For archival purposes—no new info other than the financials.]

http://biz.yahoo.com/prnews/080509/to240.html

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Friday May 9, 7:00 am ET

CALGARY, May 9 /PRNewswire-FirstCall/ - SemBioSys Genetics Inc. (TSX:SBS), a biotechnology company developing a portfolio of therapeutic proteins for metabolic and cardiovascular diseases, today announced its 2008 first quarter operational and financial results.

Highlights

- Prepared pilot scale quantities of insulin from its facilities and initiated the final animal toxicology study for safflower-produced insulin

- Initiated animal studies of the Company's safflower-produced Apo AI(Milano) that will provide important cholesterol mobilization data, subsequent to the end of the quarter

- Announced Burt's Bees launched three products containing Hydresia(TM) in the U.S. personal care market, representing Botaneco's (a wholly- owned subsidiary of SemBioSys) first national brand name customer

- Received a $350,000 milestone payment from AVAC Ltd. in recognition of critical advances in the Company's safflower-produced insulin program and a $500,000 milestone payment from AVAC to support the commercial activities of Botaneco

- Launched the second generation oleosome product, Hydresia(TM) G2, subsequent to the end of the quarter

Outlook

SemBioSys is currently conducting all the necessary preclinical work for safflower-produced insulin to enable it to file an IND application with the FDA in the second half of 2008 which would then, pending feedback from the FDA, allow it to proceed into human clinical trials in the second half of 2008. The upcoming insulin milestone events include:

- Submission of an IND to the FDA in the second half of 2008 upon completion of the toxicology studies of safflower-produced insulin

- Completion of the production of clinical grade insulin supply for use in Phase I/II human clinical trials

- Upon FDA approval, initiation of a 30 patient Phase I/II clinical trial of safflower-produced insulin in the second half of 2008

- Continuation of business development activities toward an insulin partnership

In 2007, SemBioSys successfully achieved commercial levels of both Apo AI and Apo AI(Milano) accumulation in safflower. The Company is currently conducting laboratory testing in an animal model to establish equivalent functionality in animals of safflower-produced Apo AI(Milano) to the published values for Apo AI(Milano) that has been successfully used in human clinical trials. The upcoming milestone events include:

- Completion of in vivo efficacy studies of cholesterol mobilization with safflower-produced Apo AI(Milano)

- Completion of in vivo efficacy studies of plaque remodeling with safflower-produced Apo AI(Milano) followed by studies of plaque regression

- Initiation of a formal partnering process for Apo AI and Apo AI(Milano) upon receiving the initial in vivo efficacy results

In addition to its pharmaceutical milestones, the Company is also advancing the development of its non-pharmaceutical products. The upcoming milestone events expected from these programs include:

- Expansion of the commercial distribution of the Company's personal care topical oilbody products, specifically Hydresia(TM) and Hydresia(TM) G2, through Botaneco, including Europe

- Collection of milestone payments from Arcadia Biosciences, Inc., upon their successful commercial scale-up of High GLA Safflower Oil

- Initiation of pond trials for the Company's shrimp feed additive, ImmunoSphere(TM)

"During the quarter, we took an important step that should allow us to begin the clinical trials for our safflower-produced insulin, with the initiation of the animal toxicology study required before the submission of an IND. We intend to submit that IND in the coming months and, if granted approval by the FDA, initiate a Phase I/II trial during the second half of 2008," said Andrew Baum, President and CEO of SemBioSys Genetics Inc. "Equally as important as insulin, we have initiated preclinical studies to establish functionality of safflower-produced Apo AI(Milano) in animals, the results of which will be critical in confirming our transformative HDL (high density lipoprotein) program. We also continue to execute our growth strategy for our non-pharmaceutical products. In particular, we have launched our second generation oleosome product, Hydresia(TM) G2, and signed Burt's Bees as our first brand name customer. We continue to develop business opportunities to further increase the sales revenues of Botaneco and are currently in discussions with a number of potential customers in this area."

Financials

Please note that prior to the third quarter of 2007, SemBioSys operated under one segment. During the third quarter of 2007, Botaneco completed the construction of its manufacturing facility and SemBioSys began operating in two reportable segments: (i) the Biopharmaceutical, Animal Health, and Nutritional Oils segment focused on the Company's lead pharmaceutical candidates, recombinant human insulin and Apo AI, in addition to its animal health product, ImmunoSphere(TM) and nutritional oils, DHA and GLA and (ii) the Specialty Ingredients segment which will manufacture and market branded lines of naturally derived base emulsions and delivery systems used in the development of cosmetic, personal care and prescription topical/dermatology products through the Botaneco subsidiaries.

Total revenue for the three-month period ended March 31, 2008 was $210,027 compared with $542,788 for the corresponding period in 2007. The difference is due mainly to a license fee payment earned from the Company's collaboration agreement with Martek BioSciences Corporation in the first quarter of 2007 which is partially offset by 2008 product sales revenue from Hydresia(TM) and the option payment received from INDEAR.

Total expenditures for the three-month period ended March 31, 2008 were $5,257,611 compared with $3,943,408 for the three-month period ended March 31, 2007.

Research and development expenses for the three-month period ended March 31, 2008 were $2,794,103, compared with $1,743,973 for the same period last year. The change in research and development costs is primarily from increased preclinical costs including outsourcing costs, laboratory supplies, personnel and the related support costs in all areas of research and development. As the Company prepares to enter clinical trials for its safflower-produced insulin, all related activities continue to substantially increase, resulting in a higher overall cost.

General and administrative expenses for the three-month period ended March 31, 2008 were $1,395,275 compared with $1,023,711 for the corresponding period last year. The difference is due to Botaneco now being operational which includes costs for newly added staff and the additional related support costs.

Intellectual property costs for the three-month period ended March 31, 2008 were $342,330 compared with $528,249 for the three-month period ended March 31, 2007. The change is due mainly to timing of costs throughout the year.

Business development costs for the three-month period ended March 31, 2008 were $159,630, compared with $309,474 for the corresponding period last year. The difference is primarily related to the shift in Botaneco's activities from business development to that of a fully operational manufacturing and sales business. However, SemBioSys expects business development costs to increase over the remainder of 2008 as its products progress further along the commercialization path, the Company initiates partnership activities and augments its product candidate pipeline.

Net loss for the three-month period ended March 31, 2008 was $5,017,055 or $0.19 per share, compared to a net loss of $3,228,411 or $0.17 per share for the three-month period ended March 31, 2007.

As of March 31, 2008 the Company had cash and cash equivalents totaling $16,284,778 and a net positive working capital balance of $15,260,129 compared to $20,444,013 and $19,518,408, respectively, at December 31, 2007. Total long-term debt at March 31, 2008 was $1,930,962 compared with $1,389,047 at December 31, 2007.

As at March 31, 2008 the Company had 25,937,476 common shares outstanding, 4,322,000 warrants, and 1,282,429 options.

About SemBioSys Genetics Inc. (www.sembiosys.com)

Calgary, Alberta-based SemBioSys Genetics Inc. is a biotechnology company developing protein-based pharmaceuticals for metabolic and cardiovascular diseases. The Company's lead pharmaceutical candidates, produced in the plant host safflower, are recombinant human insulin to serve the rapidly expanding global diabetes market and Apo AI, a next generation cardiovascular drug. In addition to its pharmaceutical products, SemBioSys is developing a series of non-pharmaceutical products addressing human topical, nutritional oils and agricultural biotechnology markets. More information is available and can be accessed at www.sembiosys.com.
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