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"We are pleased with the important milestones achieved during fiscal 2008 including the initiation of GLP-toxicology studies for LOR-253; the commencement of a Phase II clinical trial for LOR-2040 in AML; and a key licensing transaction for Virulizin(R)", stated Dr. Aiping Young, President and CEO of Lorus. "In addition to the key scientific milestones achieved during fiscal 2008, we have strengthened our financial position through a $6.9 million non-dilutive financing by means of corporate reorganization and initiation of a rights offering. The achievements realized this year have resulted in a necessary increase in research and development expenditures, although we expect our overall expenditures to decrease significantly in fiscal 2009".
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FINANCIAL RESULTS
Due to an increase in research and development activities as described below, loss from operations excluding the gain on sale relating to the arrangement (as discussed below) for the year ended May 31, 2008, increased to $12.6 million from $9.6 million in the same period last year. On the close of the arrangement, in July 2007, the Company realized a gain on the sale of the shares of Old Lorus in the amount of $6.3 million resulting in a net loss for the year ended May 31, 2008 of $6.3 million ($0.03 per share).
Research and development expenses increased to $6.1 million for the year ended May 31, 2008 as compared $3.4 million in the prior year.
The increase in research and development expenditures in the year ended May 31, 2008 is due to a significant increase in activity within our LOR-2040 and Small Molecule development programs, in particular, due to the manufacturing cost of LOR-2040 needed to complete the ongoing Phase I and Phase II clinical studies as well as future potential development initiatives. Other contributing factors include the initiation of an advanced Phase II clinical trial with LOR-2040 in AML, GLP-toxicology studies with LOR-2040 for the treatment of bladder cancer, and the advancement of our small molecule program into GLP-toxicology studies.
For the year ended May 31, 2008, general and administrative expense was $3.9 million compared with $3.8 million in the same period last year. General and administrative expenditures have remained consistent with the prior year.
The Company utilized cash of $10.2 million in operating activities in the year ended May 31, 2008 compared with $6.3 million during the year ended May 31, 2007 reflecting the increase in research and development activities during the year. At May 31, 2008, Lorus had cash and cash equivalents, short-term investments and marketable securities of $9.4 million compared to $12.2 million at May 31, 2007. Lorus believes that its current cash and cash equivalents, short-term investments and marketable securities and interest income will be sufficient to carry out the current research and development plans and operations through to the first quarter of fiscal 2010.
Note re the financial statement information above:
On July 10, 2007 (the "Arrangement Date"), the Company completed a plan of arrangement and corporate reorganization with 4325231 Canada Inc., formerly Lorus Therapeutics Inc., ("Old Lorus"), 6707157 Canada Inc. and Pinnacle International Lands Inc (the "Arrangement"). As a result of the plan of arrangement and reorganization, among other things, each common share of Old Lorus was exchanged for one common share of the Company and the assets (excluding certa
