Bioniche Life Sciences Inc. Reports Fiscal 2011 Third Quarter Results

Thursday, May 12, 2011 General News
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- construction of important new manufacturing facilities completed in the quarter -

(all figures are in Canadian dollars unless

otherwise noted)

BELLEVILLE, ON, May 11 /PRNewswire-FirstCall/ - Bioniche Life Sciences Inc. (TSX: BNC) (ASX: BNC), a research-based, technology-driven Canadian

biopharmaceutical company, today announced financial results for the third quarter of its 2011 fiscal year (ended March 31, 2011).

"The most exciting recent event for the Company has been the Official Opening of our Animal Health and Food Safety Vaccine Manufacturing Centre in our Belleville, Ontario corporate headquarters on April 29th," said Graeme McRae, Chairman, President & CEO of Bioniche Life Sciences Inc. "Although the Official Opening occurred subsequent to the end of Q3, there was substantial activity in the period to complete construction and install new equipment, which will now undergo commissioning and validation. Commercial production is expected to commence later this year."

During the quarter, the Company also completed construction of a pilot-scale fermentation facility adjacent to the new Vaccine Manufacturing Centre. This facility houses fermentation equipment and downstream processing to allow small-scale, bench-top processes to be scaled up and readied for commercial-scale production in the Vaccine Manufacturing Centre. It will be funded in part with a repayable loan from the Federal Economic Development Agency for Southern Ontario (FedDev Ontario).

Fiscal 2011 Third Quarter Financial Results Highlights

Fiscal 2011 third quarter cash and cash equivalents amounted to $26.2 million, as compared to $11 million at Fiscal 2010 year-end (June 30, 2010). This significant increase largely reflects the net proceeds of the Share Offers completed in Canada in December and in Australia in January. The cash position is offset by extensive investment in the above-mentioned Vaccine Manufacturing Centre. The new facility is being funded through a consortium of government and quasi-government repayable long-term loans. The Company is required to expend resources, after which, reimbursement for eligible expenditures is provided by the lenders. This investment is reflected in the long-term corporate assets under Property, Plant and Equipment, which totals $25.8 million at the end of Q3.

Consolidated revenues related to Bioniche Animal Health product sales for the third quarter were $7.2 million, as compared to $6.1 million in the third quarter of Fiscal 2010. Year-to-date revenue from product sales amounts to $20 million, compared to $19.1 million year-to-date in Fiscal 2010. Research collaborations and licensing revenue in Q3, Fiscal 2011 brought total revenue for the quarter to $8.5 million, compared to $15.6 million in the same period last year. The decrease is primarily due to a decrease in milestone-related license revenues in the current period as compared to the same period last year. Milestone revenues are tied to non-linear triggers, and are not expected to be comparative on a quarterly basis. Licensing revenue in Q3 this year reflects the amortization of the up-front payment from Endo Pharmaceuticals Inc. upon signing of the UrocidinTM license, development and supply agreement. The total up-front payment received, C$22.3 million (non-refundable), is being recognized over 15 years, which is the term over which the Company maintains substantive contractual obligations (per Canadian Generally Accepted Accounting Principles - GAAP).

Research and development expenditures in the third quarter of Fiscal 2011 totalled $5.3 million, as compared to $5.1 million in the same period in Fiscal 2010. The R&D expenditures related to the Company's portion of the ongoing UrocidinTM clinical development program, as well as development programs in Animal Health and Food Safety.

Administration expenses grew slightly in Q3, Fiscal 2011, to $2.1 million from $1.7 million in the same period in Fiscal 2010. The increase relates to new hires and annual salary increases based on job performance.

The basic and fully-diluted net loss per share for the third quarter of Fiscal 2011 was ($0.05) compared to a gain per share of $0.06 in the same quarter in Fiscal 2010 reflecting license revenues for that period. The number of Common Shares outstanding at March 31, 2011 was 101,606,703, as compared to 72,499,759 for the corresponding period in Fiscal 2010.

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 more than 200 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. The Company was named one of the Top 50 Small and Medium-Sized Employers in Canada for 2010, based on employee opinion. For more information, please visit

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


As at March 31,  As at June 30,
  2011  2010
(thousands of Canadian dollars)  $  $
Cash and cash equivalents  26,211 11,070
Accounts receivable  6,160  8,601
Income taxes receivable  47 63
Future income tax assets  66 197
Inventories  9,543 6,668
Prepaid expenses and deposits                 1,114 793
  43,141 27,392
Property, plant and equipment  25,837 16,584
Intangible assets  6,425 6,500
Goodwill  456 456
Long-term accounts receivable  2,058 1,156
Future income tax assets  31 51
  77,948 52,139
Accounts payable and accrued liabilities  12,275 9,716
Current portion of long-term debt and obligations under capital leases  617 256
Current portion of repayable government assistance  1,045 960
Current portion of non-refundable    
deferred licensing revenue  1,486 1,486
  15,423 12,418
Accrued pension liability  1,972  
Long-term debt  1,631  1,341
Obligations under capital leases  1,084  1,184
Repayable government assistance  13,023 6,965
Deferred government incentives    2,382
Non-refundable deferred licensing revenue  18,238 19,353
  51,371 43,643
Shareholders' equity    
Share capital  125,052 96,677
Other paid-in capital  8,504 8,700
Deficit  (106,979)  (96,881)
  26,577 8,496
  77,948 52,139 

Bioniche Life Sciences Inc.


For the three and nine months ended March 31 Curren Quarte 2011  Last Year  Quarter  2010  Current  Year to Date  2011  Last Year to Date 2010
(thousands of Canadian dollars, except share and per share amounts)  $    $
Sales  7,177  6,129  19,978  19,064
Research collaborations  919  758  2,563  758
Gain on disposal of intangible assets  —  —  —  883
Licensing  372  8,742  5,161  15,832
  8,468  15,629  27,702  36,537
Cost of sales (excluding amortization)  3,628  3,109  9,668  9,174
Administration  2,069  1,718  7,585  5,149
Marketing and selling  1,611  1,557  5,004  4,507
Financial expenses  301  163  687  515
Amortization of property, plant and equipment  263  242  755  809
Amortization and write-down of intangible assets  232  189  639  620
Foreign exchange loss   224  242  481  506
  8,328  7,220  24,819  21,280
Income before research and development expenses and other items 140  8,409  2,883  15,257
Research and development expenses, gross  5,273  5,092  14,522  13,246
Repayable government assistance  —     3,884
Less: government incentives, net  (653)  (1,067)  (1,687)  (2,260)
(Loss) income before income taxes  (4,480)  4,384  (9,952)  387
Provision for income tax expense      129  130
Net (loss) income and comprehensive (loss) income for the period  (4,480)  4,384  (10,081)  257
Deficit, beginning of period  (102,499)  (102,075)  (96,881)  (95,292)
Premium on share redemption      (17) 
Deficit, end of period  (106,979)  (95,035)  (106,979)  (95,035)
Basic and diluted net (loss) income per share  (0.05)  0.06  (0.12)  0.00
Weighted-average number of common shares outstanding  99,199,406  72,349,969 84,605,217  72,075,862

Bioniche Life Sciences Inc.


For the three and nine months ended March 31        
Current  Quarter  2011  Last Year  Quarter  2010 Current  Year to Date   2011 Last Year to Date  2010
(thousands of Canadian dollars)  $
Net income (loss) for the period  (4,480)  4,384  (10,081)  257
Add (deduct) non-cash items:        
  Amortization  495  431  1,394  1,377
  Unrealized foreign exchange loss (gain)  (8)  (7)  52  (32)
  Accreted interest on discounted receivables and interest-free loans and amortization of financial expenses  232  104  493  315
  Stock-based compensation expense  198  63  335  173
  Employee share ownership plan  216  200  624  337
  Accrued pension expense  37  —  1,972  
  Repayable government assistance  —    —  3,884
  Amortization of deferred government incentives  (490)  (464)  (1,962)  (1,308)
  Licensing revenue  (371)  (372)  (1,115)  (1,076)
  Write-down of intangible assets  —     52
  Future income taxes    —  129 
  Gain on sale of intangible assets  —    —  (883)
  Deemed government assistance  (26)    (57)  (73)
  (4,197)  4,339  (8,216)  3,023
Decrease in restricted cash  —  138    1,174
Net change in non-cash working capital balances  (2,207)  (1,849)  (112)  (7,877)
Net change in non-refundable deferred licensing revenue  —      22,286
Cash provided by (used in) operating activities  (6,404)  2,628  (8,328)  18,606
Proceeds on settlement of long-term accounts receivable    —  100 
Government incentives received on account of property, plant and equipment    135  1,496  186
Proceeds on sale of intangible assets    —    606
Purchase of intangible assets  (178)   (564) 
Procceds on disposal of property, plant and equipment  18  —  24  6
Purchases of property, plant and equipment  (3,777)  (2,283)  (13,874)  (3,659)
Cash used in investing activities  (3,937)  (2,148)  (12,818)  (2,861)
Proceeds from deferred government incentives     690 
Proceeds from government assistance  1,632  691  9,206  744
Repayment of government assistance  (960)   (960) 
Proceeds from long-term debt  —  —  500  
Proceeds from shares issued  13,189  72  30,351  72
Redemption of common shares     (173) 
Payment of share issuance costs   (771)  —  (2,969) 
Payment of financing fees - debt  —    —  (2,117)
Repayment of revolving credit facility    —    (4,416)
Repayment of capital lease obligations  (115)  (24)  (343)  (259)
Repayment of long-term debt  (9)  (141)  (15)  (291)
Cash provided by (used in) financing activities  12,966  598  36,287  (6,267)
Net increase in cash and cash equivalents during the period  2,625  1,078  15,141  9,478
Cash and cash equivalents, beginning of period  23,586  14,350  11,070  5,950
Cash and cash equivalents, end of period  26,211  15,428  26,211  15,428


SOURCE Bioniche Life Sciences Inc.

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