Bionovo Announces Third Quarter 2010 Highlights and Financial Results

Key Events To Date

The Company held an anticipated meeting with the U.S. Food and Drug Administration (FDA) on the clinical development plan for Menerba in the U.S. Earlier, the Company had a meeting with the FDA regarding Menerba's Chemistry, Manufacturing and Controls (CMC) package, wherein the FDA approved Menerba's CMC plan.

"With agreements on both the clinical development and the CMC requirements, with both the FDA and the EMA, we are confident we can now satisfy the regulatory requirements for bringing Menerba to market," said Dr. Isaac Cohen.

The Company received notification that it had two projects approved for funding at the maximum level under the Qualifying Therapeutic Discovery Project Credit ("QTDP")  program.  Bionovo expects to receive the maximum level allowable under the program for its Menerba and Bezielle programs, for menopausal symptom alleviation and the treatment of advanced breast cancer, respectively, or about $489,000.

"We are extremely pleased that our programs for Menerba and Bezielle have been reviewed and assessed favorably by the federal government resulting in two grants under the QTDP grant program, both grants at the maximum level available," said Isaac Cohen, Bionovo's Chairman and Chief Executive Officer.

The Company announced the publication of a review of results from studies discussing new classes of estrogen receptor modulating drugs with distinct mechanism for pharmacological effect. The review outlines Bionovo's platform of estrogen receptor modulators for conditions associated with menopause, such as hot flashes, menopausal obesity and metabolic syndrome.

"Bionovo's platform for the discovery of unique drugs for women's health and cancer is described in this review. We now know we can selectively regulate estrogen receptors for specific indications that have a better safety profile. This opens the door for new treatments for many afflictions women encounter after menopause," said Dr. Cohen.

The Company announced that it had raised approximately $3.0 million in gross proceeds in a registered direct offering through the sale of common stock and warrants.

Bionovo, Inc.

(A Development Stage Company)

Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except per share amounts)

Three months ended
September 30,

Nine Months ended
September 30,

Accumulated
from February 1,
2002 (Date of
inception) to
September 30,

2010

2009

2010

2009

2010

Revenues

$           68

$         155

$           82

$         162

$                  1,262

Operating expenses:

Research and development

3,673

2,938

10,807

9,493

50,513

General and administrative

987

926

2,627

3,110

20,229

Merger cost

-

-

-

-

1,964

Total operating expenses

4,660

3,864

13,434

12,603

72,706

Loss from operations

(4,592)

(3,709)

(13,352)

(12,441)

(71,444)

Change in fair value of warrant liability

-

-

-

-

831

Interest income

2

5

16

75

2,090

Interest expense

(9)

(22)

(33)

(77)

(493)

Other expense

(28)

-

(39)

(86)

(206)

Net loss

$    (4,627)

$    (3,726)

$  (13,408)

$  (12,529)

$              (69,222)

Basic and diluted net loss per common share

$      (0.21)

$      (0.24)

$      (0.62)

$      (0.82)

$                  (6.58)

Shares used in computing basic and diluted
   net loss per share

21,785

15,287

21,607

15,278

10,517

Bionovo, Inc.

(A Development Stage Company)

Consolidated Balance Sheets

(in thousands, except share amounts)

September 30,
2010

December 31,
2009

(unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$        3,113

$            2,799

Short-term investments

-

13,135

Receivables

69

251

Prepaid expenses

1,133

214

Other current assets

232

161

Total current assets

4,547

16,560

Property and equipment, net

7,121

6,197

Patent pending, net

1,187

822

Other assets

1,184

570

Total assets

$      14,039

$          24,149

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$           386

$               311

Accrued compensation and benefits

344

367

Current portion of capital lease obligations

1,123

476

Current portion of notes payable

54

59

Other current liabilities

1,194

823

Total current liabilities

3,101

2,036

Non-current portion of capital lease obligations

1,019

96

Non-current portion of notes payable

83

121

Total liabilities

4,203

2,253

Commitments and contingencies

Shareholders’ equity:

Preferred stock, $0.0001 par value; 2,000,000 shares authorized; none issued and outstanding

-

-

Common stock $0.0001 par value, 68,000,000 shares authorized, 21,802,842 and 21,503,738 shares outstanding at September 30, 2010 and December 31, 2009, respectively

2

2

Additional paid-in capital

79,056

77,713

Accumulated other comprehensive loss

-

(5)

Accumulated deficit

(69,222)

(55,814)

Total shareholders’ equity

9,836

21,896

Total liabilities and shareholders’ equity

$      14,039

$          24,149

* The balance sheet at December 31, 2009 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.