Hemosol Announces First Quarter Financial Results Quarter
Highlighted by Successful Scale-up of Cascade Technology TORONTO,
May 6 /PRNewswire-FirstCall/ -- Hemosol Corp.
(NASDAQ:HMSLNASDAQ:TSX: HML) today announced financial results and
reviewed operations for the first quarter ended March 31, 2005.
Unless otherwise stated, all dollar amounts presented herein are in
Canadian dollars. Highlights of the quarter included: - Completion
of technology transfer and successful scale-up to the 30- litre
level of the Cascade technology, allowing the Company to move
forward with the development of three valuable therapeutic
proteins; - Completion of installation and validation of vial
filling capability pursuant to agreement with Organon Canada, in
preparation for inspection and licensing by Health Canada -
expected in the second quarter of 2005; - Negotiation of financial
agreements to secure further funding and to extend the Company's
line of credit; - Continued development of product pipeline
including next generation oxygen therapeutic. "In the first quarter
we focused on implementing measures that will help Hemosol in its
development of several important proteins and in establishing
Meadowpine as a world class facility for clinical and commercial
scale production," said Lee Hartwell, President and CEO of Hemosol.
"Through our scale-up of the Cascade technology, the establishment
of a sterile vial filling capability and the advancement of our
product pipeline, we continue to build a stable platform for
growth." The Company's net loss increased modestly to $5.9 million
or ($0.10) per share for the quarter ended March 31, 2005 from $5.0
million or ($0.09) per share for the quarter ended March 31, 2004.
This increase included additional depreciation of $1.0 million as
the Company started to amortize equipment now deemed available for
use. Total operating expenses for the quarter ended March 31, 2005
increased to $5.7 million from $3.5 million for the quarter ended
March 31, 2004, an increase of $2.2 million. The principal cause of
the increase was scientific and process development expenses that
grew to $4.6 million from $2.1 million for the quarter ended March
31, 2004. This increase was mainly due to heightened activity
related to bio-manufacturing as the Company readies its facility
for the Health Canada licensing inspection and the additional
depreciation of $1.0 million. As of March 31, 2005 the Company had
$1.3 million of cash and cash- equivalents. Subsequent to the end
of the quarter Hemosol closed financings generating gross proceeds
of approximately $13.4 million. Cascade Technology Transfer At the
end of the first quarter Hemosol announced that it had successfully
scaled the Cascade technology up to the 30-litre pilot scale. At
this scale, and during earlier development and engineering stages,
Hemosol achieved significantly higher protein yields compared to
current methods. Hemosol will now build towards clinical scale
production by the end of the third quarter of 2005 in an effort to
develop three key therapeutic protein products: - Intravenous
Immunoglobulins (IVIG), Alpha 1 Proteinase Inhibitor (A1PI), and
von Willebrand Factor/Factor VIII (vWF/FVIII). The Company plans to
file the first of three Investigational New Drug applications
related to these initial lead proteins with the U.S. Food and Drug
Administration later this year in order to initiate a clinical
development program. HEMOLINK Update There was a significant effort
by the company in 2004 to modify HEMOLINK(TM) (hemoglobin raffimer)
and to investigate its effects in pre- clinical studies. These
studies were largely conducted and completed in 2004 in preparation
for discussion with the FDA that was subsequently held in March of
2005. This meeting helped to clarify further pre-clinical
development required for HEMOLINK prior to the re-initiation of
clinical trials. Based upon a combination of the outcome of this
meeting, the nature of the product changes required and the
resources and new focus of the Company, Hemosol has elected to
pursue HRC 101 as a more cost effective, late pre-clinical product
for development in this sector, subject to available resources. HRC
101 is targeted at high volume blood loss indications as may occur
during emergency blood loss situations where the life saving
quality of the product may be most effectively demonstrated.
Hemosol's extensive drug development experience in, and
understanding of, the field from the technical, regulatory and
clinical perspective has been fully captured in the design of this
next generation oxygen therapeutic, positioning the company to
compete effectively in this sector. "We believe that the refocusing
of our oxygen therapeutic development program is the best way to
extract value for shareholders in the near term," said Dr. David
Bell, Chief Scientific Officer of Hemosol. "Hemosol is seeking
partnership and business opportunities to advance development of
its' products in an effort to unlock the value that resides within
our product pipeline." Product Pipeline Other developments in the
pipeline include the advancement of the hemoglobin-based drug
delivery technology. Pre-clinical proof-of-concept studies have
demonstrated the benefits of attaching the anti-viral drug,
ribavirin, to hemoglobin for more effective delivery. The results
have been presented at several major scientific conferences, most
recently as an oral presentation by Hemosol's collaborating
investigator in this area, Dr. Gary Levy, at the Tenth Annual
International Liver Transplantation Society Congress in Kyoto,
Japan (2004). Hemosol has also conducted imaging studies through
collaboration with Prof. J. Valliant, a leading expert at McMaster
University using newly obtained, state-of-the-art pre-clinical
SPECT/CT imaging equipment that clearly shows the of the ability of
hemoglobin to serve as a liver targeting drug carrier. The Company
believes there is a major unmet need in the treatment of liver
disease, particularly liver cancer, that can be effectively
addressed through the drug delivery technology developed at
Hemosol. Discoveries made in the identification of a new stem cell
receptor have led to the development of a pre-clinical drug
candidate in the form of a therapeutic monoclonal antibody targeted
at the treatment of Epo non- responsive anemia (Epo or
erythropoietin, is a well known drug used in the treatment of
chronic anemia). The first presentation of results characterizing
the expression and function of this receptor on hematopoietic
progenitor cells will be made on May 5th at the International
Society of Cellular Therapy meeting in Vancouver. Hemosol has
initiated an active partnering program for this technology that may
address a large segment of the Epo market that is currently
underserved. More Financial Results Scientific and process
development expenses increased to $4.6 million for the quarter
ended March 31, 2005 from $2.1 million for the quarter ended March
31, 2004. This increase was mainly due to increased activity
related to bio-manufacturing as the Company prepares its vial
filling facility for the Health Canada licensing inspection.
Included in this amount is additional depreciation of approximately
$1.0 million for the technical equipment that is now deemed
available for use. Regulatory and clinical expenses of $0.3 million
for the quarter ended March 31, 2005 were unchanged compared to the
same period in fiscal 2004. Administrative expenses decreased to
$0.4 million from $0.8 million primarily due to lower estimates for
capital taxes, reduction in salaries and lower insurance costs.
Marketing and business development expenses increased to $0.2
million in the first quarter from $0.1 million for the same period
in 2004 primarily related to increased activity for business
development costs associated with bio-manufacturing and pipeline
partnering activities. Amortization of deferred charges for the
quarter ended March 31, 2005, were $0.3 million, representing the
charge related to the maintenance of the guarantee of the Company's
$20.0 million credit facility. Net interest expense increased
slightly as a result of lower short- term investments and lower
cash and cash-equivalent balances. Financial Statements to Follow:
The following statements should be read in conjunction with the
applicable notes, which can be found on the Company's website at
http://www.hemosol.com/. Hemosol Corp. (A development stage
company) (Incorporated under the laws of Ontario) CONSOLIDATED
BALANCE SHEETS (unaudited) March 31 December 31 2005 2004 (in
thousands of dollars) $ $
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ASSETS Current Cash and cash equivalents 307 4,230 Cash held in
escrow 1,000 1,000 Prepaids and other assets 345 366 Inventory
1,487 1,329
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Total current assets 3,139 6,925
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Property, plant and equipment, net 81,950 83,104 Patents and
trademarks, net 1,137 1,164 License technology, net 8,934 5,022
Deferred charges, net 579 177
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95,739 96,392
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LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable and
accrued liabilities 7,884 2,538 Short-term debt - 20,000
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Total current liabilities 7,884 22,538
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Long-term debt 20,000 - Minority interest 4,715 5,163
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Total long term liabilities 24,715 5,163
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Total liabilities 32,599 27,701
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Shareholders' equity Common shares 311,711 311,711 Warrants and
options 14,384 14,080 Contributed surplus 9,125 9,125 Deficit
(272,080) (266,225)
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Total shareholders' equity 63,140 68,691
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95,739 96,392
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Hemosol Corp. (A development stage company) (Incorporated under the
laws of Ontario) CONSOLIDATED STATEMENTS OF LOSS (unaudited) Three
months ended March 31 2005 2004 (in thousands of dollars except per
share data) $ $
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EXPENSES Research and development Scientific and process 4,632
2,104 Regulatory and clinical 279 299 Administration 422 778
Marketing and business development 190 107 Support services 183 184
Foreign currency translation gain (1) (9)
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Loss from operations 5,705 3,463 Amortization of deferred charges
347 1,253 Interest income (18) (36) Interest expense 259 265
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Loss before minority interest and income taxes 6,293 4,945 Minority
interest (448) - Provision for current income taxes 10 50
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Net loss for the period 5,855 4,995
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Basic and diluted loss per share 0.10 0.09
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Weighted average number of common shares outstanding (000) 57,196
55,873
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Hemosol Corp. (A development stage company) (Incorporated under the
laws of Ontario) CONSOLIDATED STATEMENTS OF DEFICIT (unaudited)
Three months ended March 31 (in thousands of dollars) 2005 2004
-------------------------------------------------------------------------
Deficit, beginning of period 266,225 253,177 Net loss for the
period 5,855 4,995
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Deficit, end of period 272,080 258,172
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Hemosol Corp. (A development stage company) (Incorporated under the
laws of Ontario) CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Three months ended March 31 2005 2004 (in thousands of dollars) $ $
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OPERATING ACTIVITIES Net loss for the period (5,855) (4,995) Add
(deduct) items not involving cash Amortization of property, plant
and equipment 1,564 543 Amortization of license technology 88 42
Amortization of patents and trademarks 27 29 Amortization of
deferred charges 347 1,253 Minority interest (448) - Stock-based
compensation 64 - Foreign currency translation (gain) loss (1) 9
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(4,214) (3,119) Net change in non-cash working capital balances
related to operations 1,209 (1,693)
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Cash used in operating activities (3,005) (4,812)
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INVESTING ACTIVITIES Purchase of property, plant and equipment
(410) (132)
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Cash used in investing activities (410) (132)
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FINANCING ACTIVITIES Proceeds on issuance of common shares - 180
Deferred charges (509) - Cash released from escrow - 448
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Cash provided by financing activities (509) 628
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Effect of exchange rates on cash and cash equivalents 1 (9)
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Net decrease in cash and cash equivalents during the period (3,923)
(4,325) Cash and cash equivalents, beginning of period 4,230 8,125
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Cash and cash equivalents, end of period 307 3,800
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About Hemosol Hemosol is a biopharmaceutical company focused on the
development and manufacturing of biologics, particularly
blood-related proteins. Hemosol has a broad range of novel
therapeutic products in development, including oxygen therapeutics
and protein-based therapeutics to treat certain infectious
diseases, cancers and anemia. For more information visit Hemosol's
website at http://www.hemosol.com/. The Common Shares are listed on
the NASDAQ Stock Market under the trading symbol "HMSL" and on the
TSX under the trading symbol "HML". Certain statements concerning
Hemosol's future prospects are "forward- looking statements" within
the meaning of the United States Private Securities Litigation
Reform Act of 1995 and other applicable securities legislation.
There can be no assurances that future results will be achieved,
and actual results could differ materially from forecasts and
estimates. Important factors that could cause actual results to
differ materially from forecasts and estimates include, but are not
limited to: Hemosol's ability to successfully implement the Cascade
technology and commercialize products derived there from; Hemosol's
ability to obtain additional financing which is critical to the
implementation of the Cascade technology and to Hemosol's continued
viability as a going concern; Hemosol's ability to obtain
regulatory approvals for its products; Hemosol's ability to
successfully complete clinical trials for its products; Hemosol's
ability to enter into satisfactory arrangements for the supply of
materials used in its manufacturing operations and the sale of
resulting products to customers; technical, manufacturing or
distribution issues; the competitive environment for Hemosol's
products and services; the degree of market penetration of
Hemosol's products; Hemosol's ability to attract and retain clients
for its bio-manufacturing services; the risk that Hemosol may not
become profitable; and other factors set forth in filings with
Canadian securities regulatory authorities and the U.S. Securities
and Exchange Commission. These risks and uncertainties, as well as
others, are discussed in greater detail in the filings of Hemosol
with Canadian securities regulatory authorities and the U.S.
Securities and Exchange Commission. Hemosol makes no commitment to
revise or update any forward-looking statements in order to reflect
events or circumstances after the date any such statement is made.
DATASOURCE: Hemosol Corp. CONTACT: Jason Hogan, Investor &
Media Relations, (416) 361-1331, (800) 789-3419, fax: (416)
815-0080, , http://www.hemosol.com/; Archived images on this
organization are searchable through CNW Photo Archive website at
http://photos.newswire.ca/. Images are free to accredited members
of the media. To request a free copy of this organization's annual
report, please go to http://www.newswire.ca/ and click on
reports@cnw.
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