BNC Purpose Canadian Financial Income Fund

BELLEVILLE, ON, Sept. 14 /CNW/ -- - Animal Health product sales revenues stable - - overall revenues decrease due to fewer Human Health milestone revenues compared to Fiscal 2010 - (all figures are in Canadian dollars unless otherwise noted) BELLEVILLE, ON, Sept. 14 /CNW/ - Bioniche Life Sciences Inc. (TSX: BNC) (ASX: BNC), a research-based, technology-driven Canadian biopharmaceutical company, today announced financial results for its fiscal year ended June 30, 2011. "The Company has worked diligently over the past few years to de-risk its business and, thus, create a more attractive investment opportunity," said Graeme McRae, Chairman, President & CEO. "This has been achieved through the signing of partnership deals, the presence of a solid base business generating revenue and positive earnings before research and development, the investment in intellectual property protection of core technologies, and the successful raising of capital resources." The Company expects to be launching a series of new research and technology-driven products from its pipeline over the next 18 months. Announcements will be made as these products are launched in various global jurisdictions. Fiscal 2011 Financial Results Highlights Consolidated revenues related to Bioniche Animal Health product sales for the fiscal year were $27.4 million, as compared to $27 million in Fiscal 2010. This represents a stabilization of product revenues which had previously been reduced with the economic recession in some markets. In addition to revenues from animal health product sales, the Company recorded licensing revenue of $5.5 million in Fiscal 2011, as compared to $16.2 million in Fiscal 2010, reflecting non-recurring milestone revenue earned under the Urocidin(TM) license, development and supply agreement with Endo Pharmaceuticals Inc. (Endo) and the amortization of the up-front payment by Endo upon the signing of this agreement. The total up-front payment received, C$22.3 million, will be recognized over 15 years, which is the term over which the Company maintains substantive contractual obligations (per Canadian Generally Accepted Accounting Principles - GAAP). The Company generated Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) - before research and development expenses - of $6.0 million, as compared to $20.5 million in Fiscal 2010. The decrease can be attributed primarily to the lower milestone revenues in Fiscal 2011. Fiscal year-end cash, cash equivalents and short-term investments amounted to $16.8 million, as compared to $11.1 million at June 30, 2010. At June 30, 2011, the Company's net working capital totaled $23.0 million, excluding the current portion of non-refundable deferred licensing revenue, as compared to net working capital of $16.5 million at June 30, 2010. The value of the Company's Property, Plant and Equipment has increased to $27.8 million at June 30, 2011, compared to $16.6 million at June 30, 2010. This reflects the significant investment in the Animal Health and Food Safety Vaccine Manufacturing Centre at the Company's corporate headquarters in Belleville, Ontario. This facility was officially opened in April, 2011 and is undergoing commissioning and validation, a process which is expected to be completed in early calendar 2012, to be followed by production scale-up. Administrative expenses grew in Fiscal 2011 to $10.5 million from $6.8 million at June 30, 2010. Administrative expenses reflect the accrual of approximately $2.0 million for a pension plan for the Company's President & CEO in recognition of his many years of service and longstanding leadership in the Company. The plan provides two months of salary continuance for every year of service, but has not required any cash outlay as the obligation is unfunded. Administrative expenses also include an increase in salaries and related benefits of $0.9 million, comprised of average salary increases of 3% and the creation of four new positions. Research and development expenditures increased by $1.5 million in Fiscal 2011 to $19.8 million, as compared to $18.3 million in Fiscal 2010. R&D resources are focused on the advancement of certain development programs in Animal Health and Food Safety. There is continued investment in the staffing and infrastructure associated with the GMP production of the Company's Urocidin(TM) bladder cancer treatment that is in Phase III clinical testing. Endo has assumed financial responsibility for the external costs of clinical activities as they relate to Urocidin(TM), and the Company is refocusing its human clinical development activities for the underlying technology - Mycobacterial Cell Wall-DNA Complex (MCC) - on other indications. The basic and fully-diluted net loss per share for Fiscal 2011 is ($0.17), as compared to a net loss per share of ($0.02) in Fiscal 2010. The decrease in revenues associated with reduced milestone payments from Endo contributed to the greater loss in Fiscal 2011. Total common shares outstanding at June 30, 2011 were 102,108,692, as compared to 72,890,247 at June 30, 2010. More information on the Company's year-end financial results is provided in the Company's Fiscal 2011 Management's Discussion and Analysis dated September 14, 2011. Fiscal 2011 Year-End Results Conference Call The Company will discuss its year-end results during a: Conference Call & Audio Web Cast Wednesday, September 21, 2011 6:00 p.m. (Eastern) To participate in the conference call from North America, call (888) 231-8191. To participate in the conference call from Australia, call 1-800-287-011. A listen-only audio web cast will be available at: http://event.on24.com/r.htm?e=357400&s=1&k=196F8E1949C7EF06BF11AE4846538BA0 A replay of the conference call will be available until September 28, 2011 at midnight by calling 1-855-859-2056 (passcode: 10564534 followed by the number sign). The web cast will be available for replay using the above link until September 20, 2012. Timing of Q1, Fiscal 2012 Financial Reporting Beginning in Q1, Fiscal 2012, the Company will be reporting its financial results according to International Financial Reporting Standards (IFRS). The conversion to IFRS accounting is a major project and the financial report will occur on or about December 8, 2011 as per Ontario Securities Commission regulations. About Bioniche Life Sciences Inc. Bioniche Life Sciences Inc. is a research-based, technology-driven Canadian biopharmaceutical company focused on the discovery, development, manufacturing, and marketing of proprietary products for human and animal health markets worldwide. The fully-integrated company employs more than 200 skilled personnel and has three operating divisions: Human Health, Animal Health, and Food Safety. The Company's primary goal is to develop proprietary cancer therapies supported by revenues from marketed products in human and animal health. The Company was named one of the Top 50 Small and Medium-Sized Employers in Canada for 2010, based on employee opinion. For more information, please visit www.Bioniche.com. Except for historical information, this news release may contain forward-looking statements that reflect the Company's current expectation regarding future events. These forward-looking statements involve risk and uncertainties, which may cause, but are not limited to, changing market conditions, the successful and timely completion of clinical studies, the establishment of corporate alliances, the impact of competitive products and pricing, new product development, uncertainties related to the regulatory approval process, and other risks detailed from time to time in the Company's ongoing quarterly and annual reporting. Bioniche Life Sciences Inc. Amalgamated under the laws of Ontario CONSOLIDATED BALANCE SHEETS As at June 30 (thousands of Canadian dollars) 2011 2010 $ $ ------------------------------------------------------------------------- ASSETS Current Cash and cash equivalents 15,353 11,070 Short-term investment 1,493 - Accounts receivable 6,460 8,601 Income taxes receivable 254 63 Future income tax assets 85 197 Inventories 8,604 6,668 Prepaid expenses and deposits 1,068 793 ------------------------------------------------------------------------- 33,317 27,392 ------------------------------------------------------------------------- Long-term Property, plant and equipment 27,759 16,584 Intangible assets 6,306 6,500 Goodwill 456 456 Long-term accounts receivable 1,756 1,156 Future income tax assets 43 51 ------------------------------------------------------------------------- 69,637 52,139 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable and accrued liabilities 8,520 9,716 Current portion of long-term debt and obligations under capital leases 700 256 Current portion of repayable government assistance 1,049 960 Current portion of non-refundable deferred licensing revenue 1,486 1,486 ------------------------------------------------------------------------- 11,755 12,418 ------------------------------------------------------------------------- Long-term Long-term debt 2,171 1,341 Obligations under capital leases 546 1,184 Repayable government assistance 13,395 6,965 Employee future benefit 2,012 - Deferred government incentives - 2,382 Non-refundable deferred licensing revenue 17,867 19,353 ------------------------------------------------------------------------- 47,746 43,643 ------------------------------------------------------------------------- Shareholders' equity Share capital 125,630 96,677 Other paid-in capital 8,515 8,700 Deficit (112,254) (96,881) ------------------------------------------------------------------------- 21,891 8,496 ------------------------------------------------------------------------- 69,637 52,139 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Commitments and contingencies Bioniche Life Sciences Inc. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (thousands of Canadian dollars, except share amounts) Preferred shares - Common shares Series 1 No. $ No. $ ------------------------------------------------------------ Balance, June 30, 2009 71,681,147 86,895 167 161 Net loss for the year - - - - Issued under employee share ownership plan 639,176 464 - - Fair value of stock options vested - - - - Directors' remun- eration 278,495 103 - - Warrants exercised 211,429 165 - - Options exercised 80,000 90 - - ------------------------------------------------------------ Balance, June 30, 2010 72,890,247 87,717 167 161 ------------------------------------------------------------ Net loss for the year - - - - Issued under employee share ownership plan 663,021 829 - - Fair value of stock options vested - - - - Shares issued 20,121,380 28,928 - - Share issuance costs - (2,969) - - Share redemption (130,000) (156) - - Conversion of Series II preferred shares 6,521,677 8,799 - - Warrants exercised 710,992 836 - - Options exercised 1,331,375 1,485 - - Related party transaction - - - - ------------------------------------------------------------ Balance, June 30, 2011 102,108,692 125,469 167 161 ------------------------------------------------------------ ------------------------------------------------------------ Other Preferred shares - paid-in Series ll capital Deficit Total No. $ $ $ $ ------------------------------------------------------------------------- Balance, June 30, 2009 9,000,000 8,799 8,539 (95,291) 9,103 Net loss for the year - - - (1,590) (1,590) Issued under employee share ownership plan - - - - 464 Fair value of stock options vested - - 240 - 240 Directors' remun- eration - - - - 103 Warrants exercised - - (61) - 104 Options exercised - - (18) - 72 ------------------------------------------------------------------------- Balance, June 30, 2010 9,000,000 8,799 8,700 (96,881) 8,496 ------------------------------------------------------------------------- Net loss for the year - - - (15,336) (15,336) Issued under employee share ownership plan - - - - 829 Fair value of stock options vested - - 477 - 477 Shares issued - - - - 28,928 Share issuance costs - - - - (2,969) Share redemption - - - (17) (173) Conversion of Series II preferred shares (9,000,000) (8,799) - - - Warrants exercised - - (313) - 523 Options exercised - - (349) - 1,136 Related party transaction - - - (20) (20) ------------------------------------------------------------------------- Balance, June 30, 2011 - - 8,515 (112,254) 21,891 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Bioniche Life Sciences Inc. CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS Years ended June 30 (thousands of Canadian dollars, except share and per share amounts) 2011 2010 $ $ ------------------------------------------------------------------------- REVENUES Sales 27,366 26,993 Licensing 5,532 16,203 Research collaborations 3,146 1,820 Gain on disposal of intangible assets - 883 ------------------------------------------------------------------------- 36,044 45,899 ------------------------------------------------------------------------- EXPENSES Cost of sales (excluding amortization) 13,029 12,387 Administration 10,525 6,841 Marketing and selling 6,643 6,264 Financial expenses 1,015 726 Amortization of property, plant and equipment 1,058 1,080 Amortization and write-down of intangible assets 881 813 Foreign exchange loss 516 505 ------------------------------------------------------------------------- 33,667 28,616 ------------------------------------------------------------------------- Income before research and development expenses and other items 2,377 17,283 Research and development expenses, gross 19,782 18,264 Repayable government assistance - 3,884 Less: government assistance, net (1,954) (3,181) ------------------------------------------------------------------------- Loss before income taxes (15,451) (1,684) Provision for income tax recovery (115) (94) ------------------------------------------------------------------------- Net loss and comprehensive loss for the year (15,336) (1,590) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic and fully diluted net loss per share (0.17) (0.02) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted-average number of common shares outstanding 88,896,923 72,239,959 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Bioniche Life Sciences Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended June 30 (thousands of Canadian dollars) 2011 2010 $ $ ------------------------------------------------------------------------- OPERATING ACTIVITIES Net loss for the year (15,336) (1,590) Add (deduct) non cash items: Amortization 1,939 1,841 Accreted interest on discounted receivables and interest-free loans and amortization of financial expenses 775 471 Write-down of intangible assets - 52 Unrealized foreign exchange loss (gain) 65 (47) Deemed government assistance (61) (81) Stock-based compensation expense 477 240 Accrued pension expense 2,012 - Repayable government assistance - 3,884 Licensing revenue (1,486) (1,447) Amortization of deferred government incentives (1,005) (1,689) Future income taxes 97 (248) Employee share ownership plan 836 528 Gain on sale of intangible assets - (883) ------------------------------------------------------------------------- (11,687) 1,031 Decrease in restricted cash - 1,227 Net change in non-cash working capital balances (1,361) (7,960) Net change in non-refundable deferred licensing revenue - 22,286 ------------------------------------------------------------------------- Cash (used in) provided by operating activities (13,048) 16,584 ------------------------------------------------------------------------- INVESTING ACTIVITIES Government incentives received on account of property, plant and equipment 1,496 1,098 Proceeds on settlement of long-term accounts receivable 100 - Proceeds on sale of intangible assets - 606 Purchase of short-term investments (1,493) - Proceeds on disposal of property, plant and equipment 70 21 Purchases of intangible assets (687) (521) Purchases of property, plant and equipment (18,718) (7,789) ------------------------------------------------------------------------- Cash used in investing activities (19,232) (6,585) ------------------------------------------------------------------------- FINANCING ACTIVITIES Proceeds from government assistance 9,342 1,706 Proceeds from long-term debt 500 - Payment of financing fees - debt - (2,117) Proceeds from shares issued 30,587 176 Payment of share issuance costs (2,969) - Redemption of common shares (173) - Proceeds from deferred government incentives 691 407 Repayment of government assistance (960) - Repayment of revolving credit facility - (4,416) Repayment of capital lease obligations (431) (292) Repayment of long-term debt (24) (343) ------------------------------------------------------------------------- Cash provided by (used in) financing activities 36,563 (4,879) ------------------------------------------------------------------------- Net increase in cash and cash equivalents during the year 4,283 5,120 Cash and cash equivalents, beginning of year 11,070 5,950 ------------------------------------------------------------------------- Cash and cash equivalents, end of year 15,353 11,070 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Jennifer Shea, Vice-President, Communications, Investor & Government Relations, Bioniche Life Sciences Inc., Telephone: (613) 966-8058; from Australia: 0011 1 613-966-8058, Cell: (613) 391-2097; from Australia: 0011 1 613-391-2097, Jennifer.Shea@Bioniche.com

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