- Q3 revenues of $3.3 million compared to $2.1 million in Q3 2010
- Q3 product revenues of $2.7 million compared to $0.1 million in Q2 2011
- Net Loss of $2.1 million in Q3 2011 compared to $2.9 million in Q3 2010
- In excess of $5.0 million in new product orders received
LAVAL, QUEBEC, CANADA – November 14, 2011 – ProMetic Life Sciences Inc. (TSX: PLI) (“ProMetic”or the “Company“) today reported its financial results for the third quarter of 2011 and subsequent events. All amounts are in Canadian Dollars unless otherwise indicated. The financial information in regards to the three month period ended September 30, 2011 should be read in conjunction with the Company’s financial statements as well as the Management’s Discussion and Analysis dated November 14, 2011.
“We are pleased to see an increasing portion of our growing quarterly revenues come from product sales, underlined by the latest new contracts and follow-on orders under existing supply agreements. ProMetic’s technology is once again demonstrating its appeal to the market place, by offering technological and financial competitive edge.” said Mr. Pierre Laurin, ProMetic’s President and Chief Executive Officer. “We anticipate this trend to continue in the coming quarters with the scaling up of client’s products and manufacturing processes” added Mr. Laurin.
Third Quarter Corporate Highlights and Subsequent Events
- The Company won a first order from a leading Chinese biopharmaceutical company for a large scale biomanufacturing process, successfully continuing to expand its reach in Asia. This initial order relates to the purchase of a proprietary Mimetic LigandTM affinity adsorbent, developed and manufactured by ProMetic’s UK subsidiary, ProMetic Biosciences Ltd, for the manufacturing scale-up of a biosimilar product in China;
- The Company announced the receipt of a $4 million follow-on purchase order pursuant to a long-term supply agreement entered into with a major global pharmaceutical company in 2009. This $4 million purchase order relates to the purchase of a proprietary Mimetic LigandTM affinity adsorbent developed and manufactured by ProMetic’s UK subsidiary, ProMetic Biosciences Ltd and is to be supplied during the third and fourth quarters. of 2011;
- The Company received a $0.73 million follow-on purchase order under its supply agreement with Octapharma. This order relates to the purchase of PrioClear®, a proprietary prion capture resin incorporated into Octapharma’s manufacturing process for its solvent/detergent treated plasma product, Octaplas®LG. Octaplas®LG is currently approved for marketing in 4 countries (Germany, Switzerland, Portugal and Australia) with several more approvals pending in the European Union (United Kingdom, Ireland, Belgium, Netherlands, Luxemburg, Sweden and Finland);
- The Company received a binding forecast from Octapharma for in excess of $2 million of prion capture resin for the first half of 2012. This is in addition to the $0.73 million purchase order announcing the resumption of PrioClear® to Octapharma under its existing supply agreement, bringing total expected deliveries of the product to around $3 Million between December 2011 and June 2012.
- The Company announced that it had been selected to make four presentations at the ASN’s (American Society of Nephrology) Kidney Week conference demonstrating the ability of its orally active lead compounds PBI-4050 and PBI-4419 to significantly reduce fibrosis and sclerosis in kidneys in both acute and chronic settings.
- The creation and implementation of NewCo has enabled the relocation of the US based subsidiary, ProMetic BioTherapeutics, Inc. The relocation is expected to be completed before the end of December 2011. It is estimated that the relocation will result in annual savings of $0.5 million starting in Q4 2011.
- The Company obtained a total of $1.0 million in non-dilutive loans and private placement from long-term supportive shareholders. Of the $1.0 million, the Company secured a $0.5 million loan from Les Castels de Vaudreuil Inc., a company managed by its President and current ProMetic Board member, Mr. Benjamin Wygodny and a $0.15 million private placement;
- The Company secured a $0.8 million repayable working capital grant from the Isle of Man Government’s Department of Economic Development;
- The Company announced the receipt of $0.7 million from Investissement Québec as part of a unique 2011 Tax Credit program to finance the company’s Research and Development Tax Credit. ProMetic will be eligible for an additional $0.25 million in Q4 2011.
“The third quarter of 2011 was characterized by a return to robust product sales, and as a result, our general financial and liquidity situation should continue to improve going forward as we anticipate growth in new product sales and profitability.” Commented Mr Bruce Pritchard, the Company’s Chief Financial Officer. He added, “Despite a poor liquidity situation a quarter end, we also expect in the coming months to significantly improve the gearing of our balance sheet through debt repayment, conversion of shareholders advances into equity and upon recognition of the Celgene related deferred revenues. Additionally, the recent follow-on purchase order and binding forecasts from Octapharma signals the start of reimbursement of the advance on revenues under a supply agreement also showing on our balance sheet. All of this combined should have a positive effect.”
Third Quarter Financial Highlights
From a trading perspective, total revenues for the third quarter of 2011, which were derived from the Protein Technologies unit, were $3.3 million compared with $2.1 million in 2010. Product revenues totalled $2.7 million for the third quarter of 2011 compared to $0.1 million for the second quarter of 2011. The third quarter revenues came from sales of affinity adsorbents to major pharmaceutical companies. The difference in year over year comparison is explained by the higher product sales level for the third quarter of 2011.
The combined costs of goods sold and rechargeable research and development expenses for the quarter ended September 30, 2011, totalled $0.6 million compared to $1.5 million for the quarter ended September 30, 2010. This difference is explained by the difference in the revenue mix. The third quarter of 2011 revenues came mainly from product sales whereas the third quarter of 2010 sales came mainly from service revenues
Non rechargeable research and development expenses were $2.6 million for the quarter ended September 30, 2011, compared to $2.0 million for the quarter ended September 30, 2010.
The Company generated a net loss of $2.1 million or $0.01 per share (basic and diluted), for the third quarter ended September 30, 2011, as compared to a net loss of $2.9 million or $0.01 per share (basic and diluted) for the quarter ended September 30, 2010.
Operating costs for the quarter increased to $5.1 million from $4.5 million in the previous year. This increase was mainly attributable to adverse exchange rate movements offsetting savings in total R&D expenditures.
Looking at the balance sheet, Accounts receivable were $2.9 million as at September 30, 2011, compared to $1.8 million as at December 31, 2010. Accounts receivable consist mostly of trade receivables related to the sale of resin, as well as research and development tax credits receivable related to the activities of the Therapeutics and the Protein Technology Units.
Included in Current liabilities is a sum of $4.3 million relating to Trade payables. This figure has remained level since the second quarter of 2011, but has increased over the year-end position as a result of the company’s cash situation. Based on Management’s plans to maintain the business as a going concern, the company is confident that it will, later during the second half, continue to make progress toward bringing suppliers accounts current.
Current liabilities include deferred revenue, US$6 million of which relates to the elimination of the US$10 million debt referred to above. This US$6 million will be released when the remaining milestone, referred to above, are met. The Company considers it unlikely that it will be unable to meet the required remaining milestone.
Also included in Current Liabilities is a sum of $0.6 million labeled advances from shareholders. During the third quarter, the Company organized the share capital structure of NewCo, issuing 13% of the common shares to those shareholders who advanced $1.5 million for the formation of NewCo earlier in 2011. Consequently, $1.5 million has also been removed from the “Advances from shareholders” figure in the liabilities section of the balance sheet.
The current portion of advance on revenues from the Octapharma supply agreement increased to $1.3 million for the third quarter of 2011 compared to $0.8 million for the second quarter of 2011 This increase is linked to the anticipated orders from Octapharma over the coming 12 months. The overall advance on revenues is expected to decrease sequentially going forward as we resume the ongoing prion capture resin supply under the Octapharma supply agreement.
As at September 30, 2011, our cash position improved to $0.1 million from a bank overdraft position of $0.1 million at June 30, 2011. As described above, the liquidity situation is expected to improve sequentially on a quarterly basis as revenues and profitability continue to improve going forward.
As previously stated by Management, the expected second half of 2011 stronger sales have started to materialize as demonstrated by the recent announcements of various significant purchase orders. As a result, Management believes that the difficult liquidity situation will continue to improve in the coming months and that its overall business prospects remain extremely attractive for the coming quarters. The Company will also continue to closely monitor and control as much as possible its costs structure throughout the business, with a view to driving the Company towards self-sustainment and profitability.
In the Protein Technologies division unit, work will continue to embed the prion-safety technology into the manufacturing processes of NewCo.
The Company will continue to assist Macopharma for the adoption of the P-Capt® filter in the UK. In line with SaBTO’s recommendation, in November 2009, for adoption of the P-Capt® filter for children born after January 1, 1996, the Company is hopeful that sales will commence after the reporting of the PRISM clinical study results, which is expected in late 2011.
In addition to seeking other industrial scale users for the technology, ProMetic will continue to Support Octapharma in the adoption of OctaplasLG®. Octapharma remains positive regarding the ultimate regulatory approval of its OctaplasLG® product by the Medicines and Healthcare products Regulatory Agency (“MHRA”) and its ultimate approval in additional key European Union countries, as evidenced by the recent announcement of a first $0.73 million follow-on purchase order and binding forecast from Octapharma for in excess of $2 million of prion capture resin for the first half of 2012 under the existing supply agreement.
In the Proteins Technologies (Plasma) division, the Company will continue the setting up of its cGMP pilot manufacturing plant, ProMetic NewCo, and the organization of its related share capital structure with a view to commencing operations as soon as possible. This plant, together with the results arising from activities at the Wuhan Institute of Biologic Products will be used by the Company to leverage its other commercial-scale opportunities for its proprietary plasma fractionation technology in other territories.
In the Therapeutics division, the Company will continue to focus on business development activities. Partnering discussions continue with respect to PBI-1402, its NCE analogues and other therapeutics. It is Management’s goal that the Company closes a strategic deal with a major pharmaceutical company and secure funding to further advance its various development programs. ProMetic is currently reviewing various strategic avenues to further advance its most promising lead drug candidates such as PBI-4050 in the clinics
Third Quarter 2011 Conference Call Information
ProMetic will host a conference call at 10:30am (EST) on Tuesday, November 15, 2011. The telephone numbers to access the conference call are (416) 981-9000 (International) and 1-800-926-5197 (Toll-free). A live audio webcast of the conference call will be available through ProMetic’s website at http://prometic.com/en/investors/presentations-webcasts.php
Additional Information in Regards to the Three month Period ended September 30, 2011
About ProMetic Life Sciences Inc.
ProMetic Life Sciences Inc. (“ProMetic”) (http://prometic.com/) is a biopharmaceutical company specialized in the research, development, manufacture and marketing of a variety of commercial applications derived from its proprietary Mimetic LigandTM technology. This technology is used in large-scale purification of biologics and the elimination of pathogens. ProMetic is also active in therapeutic drug development with the mission to bring to market effective, innovative, lower cost, less toxic products for the treatment of hematology and cancer. Its drug discovery platform is focused on replacing complex, expensive proteins with synthetic “drug-like” protein mimetics. Headquartered in Laval (Canada), ProMetic has R&D facilities in the U.K., the U.S. and Canada, manufacturing facilities in the U.K. and business development activities in the US, Europe, Asia and in the Middle-East.
Forward Looking Statements
This press release contains forward-looking statements about ProMetic’s objectives, strategies and businesses that involve risks and uncertainties. These statements are “forward-looking” because they are based on our current expectations about the markets we operate in and on various estimates and assumptions. Actual events or results may differ materially from those anticipated in these forward-looking statements if known or unknown risks affect our business, or if our estimates or assumptions turn out to be inaccurate. Such risks and assumptions include, but are not limited to, ProMetic’s ability to develop, manufacture, and successfully commercialize value-added pharmaceutical products, the availability of funds and resources to pursue R&D projects, the successful and timely completion of clinical studies, the ability of ProMetic to take advantage of business opportunities in the pharmaceutical industry, uncertainties related to the regulatory process and general changes in economic conditions. You will find a more detailed assessment of the risks that could cause actual events or results to materially differ from our current expectations on page 27 of ProMetic’s Annual Information Form for the year ended December 31, 2010, under the heading “Risk and Uncertainties related to ProMetic’s business”. As a result, we cannot guarantee that any forward-looking statement will materialize. We assume no obligation to update any forward-looking statement even if new information becomes available, as a result of future events or for any other reason, unless required by applicable securities laws and regulations. All amounts are in Canadian dollars unless indicated otherwise.