Bioniche Reports Fiscal 2010 Second Quarter Results

- consolidated revenues in the quarter 62% higher than the previous year due to receipt of licensing milestone revenue -

(all figures are in Canadian dollars unless otherwise noted)

BELLEVILLE, ON, Feb. 10 /PRNewswire-FirstCall/ - Bioniche Life Sciences Inc. (TSX: BNC), a research-based, technology-driven Canadian biopharmaceutical company, today announced financial results for its Fiscal 2010 second quarter, ended December 31, 2009.

"This was a very positive quarter for the Company, the first one in its history to show a profit," stated Graeme McRae, Chairman, President & CEO of Bioniche Life Sciences Inc. "The milestone revenue associated with the July, 2009 licensing agreement with Endo Pharmaceuticals Inc. ("Endo") for exclusive rights to develop and market Urocidin(TM) in North America has enabled this situation. We continue to work diligently with Endo to complete the development of Urocidin(TM) and anticipate future positive financial results at such time as the product is successfully commercialized."

Urocidin(TM) is a patented intravesical formulation of Mycobacterial Cell Wall-DNA Complex (MCC) developed by Bioniche for the treatment of non-muscle-invasive bladder cancer. A U.S. Food and Drug Administration (FDA) fast tracked Phase III registration study of the product for the treatment-refractory indication is currently underway and is expected to report results later this year.

Fiscal 2010 Q2 Financial Results Highlights

Consolidated revenues for the quarter totaled $13.8 million, an increase of $5.3 million, or 62%, over the same period in Fiscal 2009. This positive result is attributed to the receipt of the first milestone payment to the Company from Endo related to an achievement under the above-mentioned licensing agreement. The incoming $6.4 million milestone payment was somewhat offset by decreased sales of Animal Health products in the quarter as compared to last year. The sales decrease relates to sales promotions in the last quarter of Fiscal 2009, recessionary conditions in all markets and the effect of foreign exchange.

Gross profit on product sales totaled $3.7 million in the quarter, as compared to $5.1 million in the same quarter last year. Gross profit as a percentage of product sales totaled 53% this quarter, compared to 59.5% in the second quarter of Fiscal 2009.

For the quarter ended December 31, 2009, expenses before research and development totaled $6.4 million, as compared to $6.8 million in the same quarter last year. This decrease can be attributed to lower sales levels translating to lower cost of sales, and to reductions in sales and marketing expenses due to personnel changes. Management expects sales and marketing costs to increase over the remainder of Fiscal 2010 to sustain and grow the business.

Gross research and development (R&D) expenses in this quarter totaled $4.8 million, compared to $3.2 million for the same period in Fiscal 2009. This increase of $1.6 million, or 49%, relates to the ongoing Phase III clinical program for the Company's Urocidin(TM) bladder cancer therapy, as well as an increased focus on the development of Animal Health reproductive products and vaccines.

The basic and fully-diluted net gain per share for the second quarter of Fiscal 2010 was $0.04, compared to a loss per share of ($0.04) for the corresponding period in Fiscal 2009. Total common shares outstanding at December 31, 2009 were 72,120,814, as compared to 71,160,544 for the corresponding period in Fiscal 2009.

Earnings before interest, taxes, depreciation, amortization and foreign exchange (before research and development) during the second quarter of Fiscal 2010 were $7.4 million, as compared to $1.8 million for the same period in Fiscal 2009, a 321% increase. This significant increase relates to the intake of licensing milestone revenue in the quarter.

At December 31, 2009, the Company's net working capital totaled $19.4 million including $14.5 million in cash, excluding the current portion of non-refundable deferred licensing revenue, as compared to negative working capital of $0.5 million at June 30, 2009.

Long-term liabilities at December 31, 2009 totaled $10.6 million, excluding non-refundable deferred licensing revenue of $20.1 million, which compares to $8.2 million reported at June 30, 2009. The increase reflects the long-term portion of the required repayment of government assistance to the Industrial Technologies Office (ITO - formerly TPC) of $3.1 million, less repayments of capital leases and long-term debt. The up-front payment related to the licensing agreement with Endo is reflected as non-refundable deferred licensing revenue, the current portion being $1.5 million and long-term portion - $20.1 million. The total revenue received was $22.3 million, which will be brought into income over the next 15 years.

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 approximately 190 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. Bioniche has been named one of the Top 50 Best Small and Medium-Sized Employers in Canada for 2009. For more information, please visit www.Bioniche.com or www.sedar.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

                     INTERIM CONSOLIDATED BALANCE SHEETS

                                                          As at        As at
                                                    December 31,     June 30,
                                                           2009         2009
    (thousands of Canadian dollars)                           $            $
    -------------------------------------------------------------------------

    ASSETS
    Current
    Cash and cash equivalents                            14,350        5,950
    Accounts receivable                                   5,038        3,720
    Inventories                                           6,563        5,408
    Prepaid expenses and deposits                         1,918          569
    Income and other taxes recoverable                        6            -
    Restricted cash                                         190        1,227
    -------------------------------------------------------------------------
                                                         28,065       16,874
    -------------------------------------------------------------------------
    Long-term
    Property, plant and equipment                        10,098        9,494
    Intangible assets                                     6,361        6,792
    Goodwill                                                456          456
    Long-term accounts receivable                         1,089        1,025
    -------------------------------------------------------------------------
                                                         46,069       34,641
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Revolving credit facility                                 -        4,448
    Accounts payable and accrued liabilities              7,087       11,607
    Income and other taxes payable                            -          321
    Deferred government assistance                           48          342
    Current portion of long-term debt and
     obligations under capital leases                       611          635
    Current portion of repayable government
     assistance                                             926            -
    Current portion of non-refundable deferred
     licensing revenue                                    1,486            -
    -------------------------------------------------------------------------
                                                         10,158       17,353
    -------------------------------------------------------------------------
    Long-term
    Long-term debt                                        1,016        1,149
    Obligations under capital leases                      1,169        1,225
    Repayable government assistance                       5,646        2,476
    Deferred government incentives                        2,729        3,335
    Non-refundable deferred licensing revenue            20,096            -
    -------------------------------------------------------------------------
                                                         40,814       25,538
    -------------------------------------------------------------------------
    Shareholders' equity
    Share capital                                        96,025       95,855
    Other paid-in capital                                 8,649        8,540
    Deficit                                             (99,419)     (95,292)
    -------------------------------------------------------------------------
                                                          5,255        9,103
    -------------------------------------------------------------------------
                                                         46,069       34,641
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Bioniche Life Sciences Inc.

        INTERIM CONSOLIDATED STATEMENTS OF INCOME (LOSS), COMPREHENSIVE
                         INCOME (LOSS), AND DEFICIT

    For the three and six months ended December 31

                              Current    Last Year      Current         Last
    (thousands of Canadian    Quarter      Quarter Year to Date Year to Date
     dollar, except share        2009         2008         2009         2008
     and per share amounts)         $            $            $            $
    -------------------------------------------------------------------------

    REVENUE,
    Sales                       7,029        8,551       12,935       16,595
    Gain on sale of
     intangible assets              -            -          883            -
    Licensing                   6,757            -        7,090            -
    -------------------------------------------------------------------------
                               13,786        8,551       20,908       16,595
    -------------------------------------------------------------------------

    EXPENSES
    Cost of sales
     (excluding
     amortization)              3,294        3,463        6,065        7,213
    Administration              1,646        1,579        3,431        3,098
    Marketing and selling       1,469        1,755        2,950        3,425
    Financial expenses            164          760          352        1,227
    Amortization of
     property, plant and
     equipment                    260          338          567          676
    Amortization and
     writedown of
     intangible assets            189          194          431          408
    Foreign exchange loss
     (gain)                       144          (30)         264           37
    -------------------------------------------------------------------------
                                7,166        8,059       14,060       16,084
    -------------------------------------------------------------------------
    Income before research
     and development
     expenses and other
     items                      6,620          492        6,848          511
    Research and
     development expenses,
     gross                      4,754        3,185        8,154        7,030
    Repayable government
     assistance                     -            -        3,884            -
    Less: government
     incentives, net             (790)        (490)      (1,193)      (1,006)
    -------------------------------------------------------------------------
    Income (loss) before
     income taxes               2,656       (2,203)      (3,997)      (5,513)
    Provision for income
     taxes                          -          162          130          177
    -------------------------------------------------------------------------

    Net income (loss) and
     comprehensive income
     (loss) for the period      2,656       (2,365)      (4,127)      (5,690)
    Transition adjustment
     due to change in
     accounting policy              -            -            -          (39)
    Deficit, beginning of
     period                  (102,075)     (88,116)     (95,292)     (84,752)
    -------------------------------------------------------------------------

    Deficit, end of period    (99,419)     (90,481)     (99,419)     (90,481)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic and diluted net
     income (loss) per
     share                       0.04        (0.04)       (0.06)       (0.08)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted-average number
     of common shares
     outstanding           72,008,694   71,018,609   71,941,789   69,106,748
    Weighted-average
     fully-diluted number
     of common shares      72,108,797   71,018,609   72,041,922   69,106,748



    Bioniche Life Sciences Inc.

                       INTERIM CONSOLIDATED STATEMENTS
                                OF CASH FLOWS

    For the three and six months ended December 31

                              Current    Last Year      Current         Last
                              Quarter      Quarter Year to Date Year to Date
    (thousands of Canadian       2009         2008         2009         2008
     dollars)                       $            $            $            $
    -------------------------------------------------------------------------

    OPERATING ACTIVITIES
    Net income (loss) for
     the period                 2,658       (2,365)      (4,128)      (5,690)
    Add (deduct) non-cash
     items:
      Amortization                449          532          946        1,084
      Unrealized foreign
       exchange loss (gain)        (1)         460          (25)         367
      Change in unrealized
       loss on foreign
       currency embedded
       derivatives                  -            -            -           60
      Accreted interest on
       discounted
       receivables and
       interest-free loans
       and amortization of
       financial expenses         103          597          211          947
      Stock-based
       compensation                49           63          109          125
      Employee share
       ownership plan             137          163          137          340
      Government assistance
       obligation                   -            -        3,884            -
      Amortization of
       deferred government
       incentive                 (667)           -         (844)           -
      Licensing revenue          (371)           -         (704)           -
      Write-off of intangible
       assets                       -            -           52            -
      Gain on sale of
       intangible assets            -            -         (883)           -
      Deemed government
       assistance                 (15)           -          (74)           -
    -------------------------------------------------------------------------
                                2,342         (550)      (1,319)      (2,767)
    Decrease in restricted
     cash                         911            -        1,037            -
    Net change in non-cash
     working capital
     balances                  (1,034)         764       (6,028)         196
    Net change in deferred
     licensing revenue              -                    22,286            -
    -------------------------------------------------------------------------
    Cash provided by (used
     in) operating
     activities                 2,219          214       15,976       (2,571)
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Government incentives
     received on account of
     property, plant and
     equipment                     51           53           51           53
    Proceeds on sale of
     intangible assets              -            -          606            -
    Proceeds on disposal of
     property, plant and
     equipment                      6            -            6            -
    Purchases of property,
     plant and equipment       (1,136)        (385)      (1,375)        (523)
    -------------------------------------------------------------------------
    Cash used in investing
     activities                (1,079)        (332)        (712)        (470)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Proceeds from deferred
     government incentives          -          102            -          102
    Proceeds from repayable
     government assistance          -          143           54          776
    Payment of financing
     fees - revolving credit
     facility                       -          (11)      (2,117)         (11)
    Proceeds from revolving
     credit facility                -        8,591            -       16,976
    Repayment of revolving
     credit facility                -       (7,147)      (4,416)     (13,266)
    Repayment of capital
     lease obligations           (151)         (71)        (235)        (130)
    Repayment of senior and
     other long-term debt        (141)        (138)        (150)        (171)
    -------------------------------------------------------------------------
    Cash provided by (used
     in) financing
     activities                  (292)       1,469       (6,864)       4,276
    -------------------------------------------------------------------------

    Net increase in cash and
     cash equivalents during
     the period                   848        1,351        8,400        1,235
    Cash and cash equivalents,
     beginning of period       13,502        4,283        5,950        4,399
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period             14,350        5,634       14,350        5,634
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

SOURCE Bioniche Life Sciences Inc.




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