Bioniche Life Sciences Inc. Reports Fiscal 2014 Second Quarter Results and Announces Strategic Expenditure Review and New One Health Strategy
(all figures are in Canadian dollars unless otherwise noted)
BELLEVILLE, ON, Feb. 6, 2014 /PRNewswire/ - Bioniche Life Sciences Inc. (TSX: BNC), a leading clinical stage biotechnology company, today announced financial results for the second quarter of Fiscal 2014 (ended December 31, 2013). Highlights include:
- Bioniche Animal Health generated 100% year-over-year EBITDA increase;
- Negotiations continuing for the sale of the Animal Health business:
- No public announcement until a binding agreement is executed;
- Implementation of strategic expenditure review and substantial workforce reduction;
- Focused strategy for One Health partnering and divestment:
- Significant reduction in ongoing operational spend;
- Positioning the Company for sustainable future with a focus on Human Health.
Bioniche Animal Health Posts Strong Year-to-Date Results
Bioniche Animal Health (an asset held for sale) generated an EBITDA of $4.0 million on a year-to-date basis at December 31, 2013 as compared to $2.0 million at December 31, 2012. This was achieved through a combination of a 19.2% reduction in expenses, a 2% improvement in margins, and a 4% increase in revenues as compared to the same period in Fiscal 2013.
"Our U.S. business is largely driving these positive results," said Dr. Michael Berendt, Chief Executive Officer of Bioniche Life Sciences Inc. "Improvements in the U.S. economy, a strong U.S. dollar, and positive trends in the livestock industry are fuelling improved revenues. In addition, our European and Export businesses are seeing better results, in part due to the expanded registrations of our lead product, Folltropin, in seven new EU countries."
Bioniche Animal Health Divestment Update
The Company is currently in negotiations with regard to the divestment of its Animal Health business. The divestment process has taken longer than expected. A number of counterparties have completed due diligence and submitted bids in late 2013 and early 2014 and negotiations are ongoing. If successfully concluded, a definitive agreement will be signed and a special shareholders' meeting will be scheduled, at which time shareholders will be asked to vote on the transaction.
Strategic Expenditure Review
Over the last three months, management initiated a strategic review of program expenditures to ensure that the Company's financial resources are dedicated to activities and resources that will drive shareholder value in the short, medium and long term with a focus on optimizing the Company's ability to add value to its Human Health franchise. At the same time, the Company is focused on ensuring that the sales process of Animal Health is successfully completed, and that its investment to date in the One Health division can be recouped through the sale and/or partnership of its associated assets, including the Econiche® vaccine technology and the Vaccine Manufacturing Centre (VMC) in Belleville, Ontario.
As a direct result of the strategic expenditure review, the Company has taken the difficult decision to reduce more than 40 employee positions. In the short term, this will result in severance expenses of approximately $1.2 million, while annual salary and benefits expenses will be reduced by approximately $3 million. In addition, the Company has delisted from the Australian Securities Exchange (ASX), has listed two non-core properties for immediate sale, and has undertaken numerous smaller transactions dedicated to reducing operating expenses on an ongoing basis by negotiating reductions in past supplier invoices and discounts and lower rates for future goods and services. Management is considering additional measures to continue to ensure that the Company is run as efficiently as possible, and will finalize, implement, and announce these measures as the divestment of Animal Health is achieved and as the U.S. regulatory pathway for Urocidin™ is clarified.
Fiscal 2014 Second Quarter and Year-to-Date Financial Results
As a result of the Company's decision to divest the Animal Health business last year, the Fiscal 2014 second quarter financial statements have been segmented into continuing operations (Human Health and One Health business units) and discontinued operations (Animal Health business unit).
The Company's continuing operations recorded no revenues in the quarter, as compared to $0.008 million in the same period in Fiscal 2013. On a year-to-date basis, there was no revenues at December 31, 2013, as compared to $0.08 million at December 31, 2012. In Fiscal 2013, the Company received reimbursement from its former development partner for Urocidin™-related development costs. Such reimbursement was discontinued when the Company regained global rights to Urocidin™ in December, 2012.
Cash and cash equivalents from continuing operations amounted to $11.2 million at December 31, 2013, as compared to $4.2 million at June 30, 2013. This improvement reflects the completion of a $9.8 million Canadian equity offering and related private placement in September, 2013, as well as loan advances from Paladin Labs Inc., less operating and research and development activities and higher financial expenses.
The Company's total liabilities and shareholders' deficiency at December 31, 2013 is $50.5 million, as compared to $61.5 million at June 30, 2013.
Financial expenses settled in cash continue to be a substantial contributor to the Company's average monthly burn rate. These amounted to $1.4 million for the second quarter of Fiscal 2014 compared to $0.9 million recorded in Q2, Fiscal 2013. On a year-to-date basis, such expenses were $2.7 million at December 31, 2013, as compared to $1.7 million at December 31, 2012.
Administration expenses for continuing operations were $1.5 million in the second quarter of Fiscal 2014, as compared to $1.4 million in the second quarter of Fiscal 2013. On a year-to-date basis, administration expenses were $2.8 million in Fiscal 2014 as compared to $3.1 million in the same period of Fiscal 2013. Marketing and selling expenses were $0.2 million in the second quarter of Fiscal 2014, as compared to $0.4 million in the same period last year.
Research and development (R&D) expenditures for continuing operations were $23 million in the second quarter of Fiscal 2014, as compared to $3.1 million in Q2, Fiscal 2013. On a year-to-date basis, such expenditures amounted to $26.1 million at December 31, 2013, as compared to $6.4 at December 31, 2012. This significant change relates to a $20 million impairment of the VMC in Belleville, Ontario due to the corporate decision to scale-back the VMC operations pending the identification of a purchaser or partner for this asset.
"The VMC and Econiche® remain valuable corporate assets," said Mr. Donald Olds, Chief Operating Officer of Bioniche Life Sciences Inc. "Unfortunately, the Company has been unable to capitalize on this asset to date, as uptake of the Company's E. coli O157 cattle vaccine (Econiche®) has been limited, and efforts to gain government support for a national E. coli vaccination program in Canada have not met with success. Our efforts going forward will be focused on the identification of a strategic partner who can bring this vaccine technology and facility forward to commercial success."
The VMC was purpose-built to make this vaccine, but could be modified to make other products. The Company will preserve the VMC for future use by a strategic alliance partner, and it will limit investment to those activities that will drive a partnership.
The basic and fully diluted net loss per Share for the Company's continuing operations for Q2, Fiscal 2014 is ($0.19), as compared to a basic and fully diluted net loss per share of ($0.06) in Q2, Fiscal 2013. On a year-to-date basis, the basic and fully diluted loss per Share for continuing operations is ($0.27), as compared to ($0.12) in Fiscal 2013.
Discontinued Operations (Animal Health)
Revenues for this business unit in Q2, Fiscal 2014 were $8.3 million, as compared to $8.8 million in the same period in Fiscal 2013. Net income in Q2, Fiscal 2014 was $2.1 million, as compared to net income of $1.1 million in Q2, Fiscal 2013. On a year-to-date basis, revenues at December 31, 2013 were $16.1 million, as compared to $15.4 million at December 31, 2012.
The basic and fully diluted net earnings per Share for the Company's discontinued operations for Q2, Fiscal 2014 is $0.02, as compared to earnings of $0.01 in Q2, Fiscal 2013. On a year-to-date basis, the basic and fully diluted earnings per Share for continuing operations is $0.03, as compared to $0.01 in Fiscal 2013.
Q2, Fiscal 2014 Summary
The Company's consolidated cash flow used in operations for the quarter ended December 31, 2013 (both continuing and discontinued operations) was $3.7 million, as compared to cash used in operations of $4.7 million in Q2, Fiscal 2013. On a year-to-date basis, consolidated cash flow used in operations was $8.4 million, as compared to $9.7 million for the first six months of Fiscal 2013.
The average monthly burn rate (before changes in working capital) was $1.0 million for Q2, Fiscal 2014, as compared to $1.1 million for the same quarter in Fiscal 2013. On a year-to-date basis, the average monthly burn rate was $1.1 million, as compared to $1.4 million per month in the first half of Fiscal 2013.
The Company has total Common Shares outstanding at February 5, 2014 of 141,246,810. In addition, the Company has 22,270,912 outstanding Warrants and 11,124,665 outstanding Options, exchangeable for one Common Share upon exercise.
More information on the Company's year-end financial results is provided in the Company's Q2, Fiscal 2014 Management's Discussion and Analysis.
The Company's securities are no longer trading on the Australian Securities Exchange (ASX) effective at close of trading on Monday, February 3, 2014. Holders of CHESS Depositary Interests (CDIs) may continue to access Company news via its website www.Bioniche.com or on www.SEDAR.com.
Shareholder Conference Call and Audio Webcast
Shareholders are reminded that Company representatives will discuss the Q2, Fiscal 2014 (half-year) results and operational changes during a:
Conference Call & Audio Webcast
Wednesday, February 12, 2014
5:00 p.m. EST
To participate in the conference call from North America, call (888) 231-8191 (conference ID: 53209337). A listen-only audio webcast will be available at: http://event.on24.com/r.htm?e=745870&s=1&k=96A58D58177E944F61C95515B0D837F8
A replay of the conference call will be available until February 19, 2014 at midnight by calling 1-855-859-2056 (passcode: 53209337). The webcast will be available for replay using the above link until February 12, 2015.
About Bioniche Life Sciences Inc.
Bioniche Life Sciences Inc. is a clinical stage Canadian biopharmaceutical company focused on the discovery, development, manufacturing, and marketing of proprietary and innovative products for the global human health market. The Company's primary goal is to develop and commercialize products that advance human health and increase shareholder value. 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.
SOURCE Bioniche Life Sciences Inc.